Commercial real estate saw prices rising on the back of strong demand arising from a 9% economic growth. Ganesh Raj, partner at Ernst and Young, said over the past few years, real estate has grown at an unprecedented rate of about 30% and is expected to grow at 25% for the next three to four years. He said the sector is likely to rise from at present $48 billion to $140 billion by 2012, showing a compounded annual growth of 21%.

Despite rising interest rates, realty did not have any problem in raising funds for projects. With high return of over 20% per annum, private equity funds were lining up to invest. According to one estimate, around $3 billion foreign direct investments have already come in 2007.

Above that, foreign funds with around $30 billion corpus are waiting outside to invest, said a senior official of a global consultancy firm. But they are not yet able to put money because of unavailability of good projects. Biggies like Merrill Lynch, Morgan Stanley, George Soros Quantum fund and Blackstone, among others, have shown huge interests.

Booming stock market has helped the sector to raise funds from domestic market. A number of companies like Emaar-MGF are preparing to enter the market to raise funds. Raj said, market capitalisation of the real estate sector is only around 4.2% of the total m-cap of bourses, which is below the global standard of 15%, reflecting opportunity for growth.

With huge inflow of funds, activities in the sector are likely to rise. Experts said prices were expected to stabilise or to go downward with more supply coming in, which in turn will fuel demand. Commercial realty has been witnessing hectic activities, mainly because of higher growth in IT/ITes, retail and financial sectors.