Policy changes introduced by the Government in February 2005 allowed 100 percent foreign investments in construction projects with fast-track approvals. But the real attraction for foreign investors is potential investment returns of 25 percent and more in Indian projects that might be hard to come by in the US and in Western Europe today.

A report by property consultants Jones Lang LaSalle Meghraj estimates that $10 bn foreign investment will be injected into the Indian real estate sector in the next 12-18 months. International companies like Ayala of the Philippines, Signature from Dubai, Och-Ziff Capital, EurIndia and Old Lane have indicated their interest in entering the Indian real estate market soon. On the cards is sizeable FDI inflow from Malaysia, followed by the UK, US, Israel and Singapore.

Industry sources say over 90 foreign investors are already in the country tapping investment avenues. Nearly two dozen US funds are raising $3.5 bn for investments in Indian realty.