The boom in the real estate industry has attracted a large number of realty funds to tap into this market. Recently, IL&FS Investment Managers (IIML), the private equity investment arm of Infrastructure Leasing & Financial Services (IL&FS), announced the closure of a real estate fund at about US$ 895 million, exceeding its target of US$ 750 million.

IL&FS India Realty Fund–II, which is the second IL&FS fund focused on the real estate sector, also exceeds the corpus of IIML’s first similar fund, which had raised US$ 525 million from international investors in April 2006.

Real estate has been responsible for India emerging as one of the top destinations in Asia for attracting private equity investments. According to a report by global realty consultants, Cushman & Wakefield, titled ‘The Metamorphosis – Changing dynamics of the Indian Realty Sector’, PE funds struck 79 deals in the country during August 2007–August 2008 amounting to US$ 6 billion, a rise of 100 per cent over the same period a year ago.

Foreign direct investment (FDI) in real estate has also been rising over the years. The real estate sector, thrown open in 2004–05, saw the FDI picking up significantly between FY 2004–05 and FY 2007–08; it was US$ 38. 71 million in 2005–06 surging to US$ 470.18 million in 2006–07 and rising to US$ 2.18 billion in 2007–08.

Moreover, the Indian real estate sector is expected to receive US$ 25 billion as foreign direct investment in the next 10 years, according to an Assocham study.

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