The Indian real estate sector has witnessed sustained growth over the last couple of years. Historically the developers have used private sources for their funding requirements, however, during the last 2 to 3 years Indian Banks have increased their exposure to the real estate sector considerably – both by lending to the developers and loans to buyers at attractive interest rates.

The other important factor is the sustained economic growth of the Indian economy due to which there is adequate demand for commercial and residential properties. The economic boom has created higher disposable income in the hands of the large middle class population which craves for better lifestyle creating further demand for malls, multiplexes, hotels, etc. Over the last one year, a large number of developers have raised funds through IPOs and have listed their flagship companies. Over the last 3 years the entire outlook for the sector has changed and there has been more transparency.

In January, 2005, the Government came out with workable FDI guidelines which has influenced the flow of foreign investment into the sector. However there is no denying that the lure of India’s booming real estate industry is the prime attraction for foreign investors.