A senior Unitech executive, who didn't wish to be named, told that an European pension fund, a Japanese bank and some Europe-based HNIs have invested in the Unitech fund. Unitech International Real Estate Fund is an independent fund launched by Unitech on the lines of Unitech Corporate Park (UCP). It is an AIM-listed entity which owns Unitech's IT parks.

Unitech's asset management arm, Unitech Realty Advisors, will advise on the deployment of fund, which has a horizon of 10 years. The entire corpus of $300 mn will be deployed in Unitech's residential projects spread across the country in the next few months.

The real estate sector is facing a tough time, with residential segment being the worst hit. Housing sales have declined by up to 80% in most markets across the country leading to a major cash crunch for developers.

Residential projects in India generally work on the self-finance model, with home buyers making payment in advance for the houses to be delivered usually three years later. But with fewer home buyers in the market, several developers are stuck with projects, raising the probability of late deliveries. A sluggish demand and the rising cost of capital and construction have forced investors to shun real estate on Dalal Street too. The shares of realty firms have been in a free-float mode, touching all time-lows, in most cases.

Unitech's scrip touched a 52-week low of Rs 135.10 on BSE on Wednesday before closing at Rs 137, down 11% from the previous close. Unitech has lost almost 75% off its January peak. Country's largest realty developer, DLF, is faring no better. The company was prompted to announce a buyback of its shares after its scrip plunged to Rs 350 on July 2, a decline of 71% this year. The buyback move seems to have had no impact on the investors' sentiments, with DLF scrip closing on Thursday at Rs 393, down 17% from Rs 475, moments before the buyback details were announced.

Analysts have been routinely downgrading real estate sector, given the rising inflation and interest rates and sluggish demand. Credit Suisse cut its rating for DLF from `neutral' to `underperform' and Unitech's to `neutral'.