After new regulations for foreigners to directly invest in Indian real estate, many institutional and private real estate investors have established joint ventures or opportunity funds to develop office, hotel and residential projects. While the rewards could be handsome, these firms are also taking on significant risks. The Invesment in real estate market in India is not as transparent as it is in US, construction quality is substandard compared to other countries, and bureaucracy and corruption can endanger new projects and create roadblocks to obtaining approvals.
U.S. investors are attracted to investment in Indian real estate because of the insatiable demand for office space, residential and hotel space. The seemingly endless demand, coupled with little or no supply of quality assets, has boosted internal rates of return for new development projects to more than 20%, according to industry experts. Most development opportunity available to foreign investors in india real estate is in the office space, categories of residential and hotel sectors in Bangalore, Hyderabad, Mumbai and Delhi.
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