It also adds that 40 per cent of real estate mutual funds can be invested in shares or securities of realty companies.

CIO of Kotak Realty Fund, V Hari Krishna feels that Sebi's Real Estate Mutual Fund guidelines is a positive one, but some structural issues need to be addressed.

"I believe that the capital challenges available within the real estate industry have already been solved to a great extent by the entry of venture capital funds, private equity funds and also international investors into the domestic markets. This whole measure is positive at a macro level but there are certain structural challenges in the architecture of the scheme," said V Hari Krishna.

However, he believes that daily NAV calculations will be difficult for under- development projects. "It is extremely difficult to generate daily NAVs for under-development projects on a day-to-day basis because in most parts of India there is not too much of transactional evidence in terms of regular real estate transactions," he added.

CMD, UTI Mutual Fund, UK Sinha says, "Once the regulations have been amended, only then any mutual fund will be able to file its papers for getting Sebi's approval." Hence, he feels that it would take at least three months for any mutual fund to be able to launch it.

VK Sharma of Anagram Stock Broking feels that real estate stocks will heave a sigh of relief with the news of the real estate MFs.

"I think real estate stocks could take some breathing with this news of real estate mutual funds coming in. If one has to look at it technically, Mahindra Gesco had a good rise almost from the level of Rs 398 to a high of Rs 645, which is more than a 200 points rise," Sharma said.

Sanjay Dutt of Quantum Securities finds the announcement of real estate MFs as a positive sign as it is a good opportunity for pure realty players.

"From a longer term perspective, it is very positive. It will give us a new asset class to invest. One would be able to get in and get out and put small sums of money, which retail investors could not put in the real estate. In terms of the market opportunity and excellent instrument in this space, this development is very good," Sanjay Dutt opines.

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