A country’s economic growth depends on the policies adopted by the government to facilitate investments mainly in the economic and industrial sector. Similarly, the Government of India’s liberalization and economic reforms programme progresses stressing on industrial policy reforms that have reduced the industrial licensing requirements, removed restrictions on investment and expansion, and facilitated easy access to foreign technology and foreign direct investment. The economic reforms and flexible FDI policies adopted by Indian Government have encouraged an increasing number of countries to invest in India. India has displaced US as the second-most favored destination for foreign direct investment (FDI) in the world.

As the investment scenario in India changes, India which has attracted more than three times foreign investment at US$ 7.96 billion during the first half of 2005-06 fiscal, as against US$ 2.38 billion during the corresponding period of 2004-05, making India amongst the "dominant host countries" for FDI in Asia and the Pacific (APAC). The government policies on FDI offer opportunities for foreign investors to invest in different sectors like 100 percent in power trading, processing, development of new airports, laying of natural gas pipelines, petroleum infrastructure and warehousing of coffee and rubber. Limit for telecoms services firms have been raised from 49 per cent to 74 per cent. Moreover, the recently approved 51 percent FDI in the retail sector is sure to boost the investment as well as employment opportunities in the country.

Increased inflow of Real Estate investments in India arising out of flexible FDI policies is sure to have a direct and positive impact on the real restate scenario of India. More and more of Non Resident Indians are interested in investing in India. More investments mean more job opportunities and more jobs means more workforces. This has created a huge demand and supply gap in housing in India. PricewaterhouseCoopers estimates that the urban housing sector in India will require investments worth US $ 25 billion over the next five-year period. This again has opened up opportunities for foreign investments in the realty sector. Despite the fact that in 2002, the Central government allowed up to 100% FDI for setting up townships, the flow of FDI investments has been stymied by the 100 acre criterion since acquiring such a large chunk of land was impossible in metropolitan cities and even satellite cities and state capitals. But a landmark decision taken by the Union government in 2005, where the minimum land area for development by foreign investors was lowered from the earlier floor of 100 acres to 25 acres has thrown open the lucrative parts of the Indian realty market to global investors. Another perceptible spin-off of the easing of FDI policies will be the impact on quality and inevitable acceleration in construction activities.

The size of the Indian real estate sector is estimated to be approximately $ 12 billion, growing at 30% per annum and is estimated to be close to $100 billion by end of the decade. The advent of private equity capital and investor-friendly FDI policies will help to tap into newer and more cost effective talent pools for extension of the urban markets leading to a more balanced growth across primary and secondary business destinations propelling boom in the realty industry.