Real estate now bottom choice for fund managers

Real estate companies were never a favourite among fund managers. Now after several scams coming out with links to various real estate companies, fund managers feel the sector is not the place to be in.

The real estate index at the Bombay Stock Exchange fell by 29% over the last one month since the scams broke out.

The chief investment officer of a leading mutual fund firm said that they have minimised their exposure into real estate sector at low levels.

"The real estate companies that we have some exposure are the ones where we have faith in their promoters and management," said S Naren, CIO- equities, ICICI Prudential AMC. "It is new and will take some time to evolve."

The head of a mutual fund advised retail investors to stay away from these companies.

"I am not very comfortable with their business model, transparency issues and operational management and hence would stay out of them and ask the retail investors also to stay away from them," said the mutual fund head. He, however, added that it will take some time for this industry to get into real shape and the current shake up is good for it.

Market players also accept the fact that while the real estate companies witnessed sharp correction in their share prices over the past few days, it was challenging for them to exit from those stocks. "The foreign investors liked the real estate sector but now they too are selling," said Naren.

 

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