Soham

India's hot property sector should draw in more overseas inflows this year and help to achieve a 2007-08 target for total foreign direct investment (FDI) of $30 billion, a senior government official said yesterday.

The country had attracted investments worth $3 billion in the real estate and construction sector, out of a total FDI of $19 billion, in the fiscal year that ended in March, said Ajay Dua, secretary with the department of industrial policy and promotion.

Rapid growth

Real estate prices in India have doubled in the last two years, helped by a fast-expanding economy that has boosted incomes and spurred demand for shopping malls, houses and offices.

Although demand has slowed after a sharp increase in domestic interest rates some firms such as DLF Ltd, which is launching India's biggest initial public offering of up to $2.4 billion, expects strong earnings growth and steady real estate prices.

DLF Vice Chairman Rajiv Singh said on Tuesday he expected prices to mostly hold at current levels, with some variation depending on location.The company's offering opens for subscription June 11-14.

Speaking at the GCC conference, Commerce Minister Kamal Nath said: "I invite GCC-based companies and entrepreneurs to come forward and finance infrastructure projects in India."

The minister said some Gulf companies such as Emaar Properties and Nakheel were already in the process of building special economic zones in India along with their Indian partners.

Nath also urged Gulf banks to register with Indian regulators to enable their rich clients to invest in the Indian stock market, which has risen 4.5 per cent this year after rallying 47 per cent in 2006.