Industry players said it would take about a year from now for the first real estate fund to hit the market.

In the draft guidelines, Sebi has proposed that an investment trust to deal with real estate investments should be created with the trustees being either a bank, trust company of a bank, public financial institution, insurance company, or a corporate entity. The trust would launch real estate schemes and would be managed by a real estate investment management company.

The trust and the management company for such real estate funds must have "a net worth of not less than Rs 5 crore, adequate infrastructure, and professionals with requisite experience in related field," Sebi said. "All schemes must be appraised by an appraisal agency, rated by a credit rating agency and also valued by a valuer," the regulator said. "The valuations must follow either national Indian valuation standards or the International Valuation Standards." Elvin Fernandez, IVSC chairman, welcomed the draft regulations saying "The IVSC is pleased to note this timely introduction of a REIT framework in India and for emphasis to be placed on the conduct of professional valuations recognising in particular IVS as issued by this committee.
The Eighth Edition of IVS (IVS 2007) issued in July 2007 adequately guides valuers on such valuations and we do also have a White Paper (for general guidance) entitled The Valuation of Real Estate Serving as Collateral for Securitised Instruments” that can be found on our website."
The draft regulations can be found on the SEBI website www.sebi.gov.in