Even as investors raise issues about the management moves of London's Alternative Investment Market-listed realty funds, the net asset values of such India-focussed realty entities have fallen as much as 90 per cent in the last one year. This mirrors the sharp fall in the stock and realty markets and poor investor sentiment the world over.

The NAV of Delhi-based Unitech group's Unitech Corporate Parks has fallen nearly 93 per cent, followed by Hirco, Raheja group's Ishaan Real Estate and Trikona Trinity Capital, whose NAVs have gone down by 80 per cent.

Recently, an international investor, Laxey Partners, raised objections to the Hiranandani group's AIM-listed realty fund Hirco's proposals to buy and merge with itself two loss-making India projects of its promoters. Laxey's stand was that the move would lead to a fall in the fund's valuation and a loss to its shareholders.

Explaining the fall in NAVs, Shobhit Agarwal, joint managing director, Capital Markets, Jones Lang LaSalle Meghraj, said, "There is an issue of cash flows as most of their projects have not started generating revenue. When they were listed, everybody valued them on the basis of the land they had, but now investors are valuing them on the cash flow and that is the reason why such a sharp discounting is happening."

The managing director of a US-based pension fund, who did not want to be quoted, blamed the fall on the carnage in stock markets globally and the heavy pullout by investors led by hedge funds. "Last year saw unprecedented pullouts by hedge funds as they faced huge redemption pressure. Lots of investors believed that they have paid too much and sold off. Most of the funds were listed in 2006 when realty prices were high. But now, prices have come down in most parts of the world," he said.

Banking on the low disclosure norms, less regulatory and compliance requirements, wide international capital base and the low filing and reporting costs, about a dozen Indian companies have raised over pound 2 billion from AIM since 2006. Important among them are Hirco (pound 370 million), Unitech Corporate Parks (pound 260 million) and Trinity Trikona (pound 250 million).

However, promoters of these funds are steadfast about the performance of their NAVs. Niranjan Hiranandani of Hiranandani Constructions said, "The fall has to do with the perception of real estate among investors and not on the companies. Our fund has done well after we announced restructuring plans."