For years, India lacked a world class realty show. Despite the inherent potential, the real estate market in the country was characterized by lack of institutional funding support and absence of global-class developers. This environment is now set to change, thanks to a deftly nuanced step that the Union government took in February 2005. By lowering the minimum land area for development by foreign investors to 25 acres from the earlier floor of 100 acres, the government has thrown open the lucrative parts of the Indian realty market to global investors for the first time.

The removal in restrictions could galvanise FDI activity. Despite the fact that in 2002, the Central government allowed up to 100% foreign direct investment (FDI) for setting up townships, the flow of FDI investments has been stymied by the 100 acre criterion. Reason: in metropolitan cities and even satellite cities and state capitals, acquiring such a large chunk of land has been a challenge.

To be sure, the market itself has been booming— India’s US $12 billion realty segment is estimated to be growing at a steady clip of over 30 per cent. There’s also been FDI activity in fits and starts and India attracted between $1.5-2 billion worth of foreign direct investment between 2003 and 2004. Foreign players have begun tying up with Indian realty majors for operations across India.

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