“Realty developers normally create special purpose vehicles (SPVs). Foreign funds then acquire stake in such ventures as per the FDI norms. They are investing directly and through venture capital funds in India,” said an analyst. Though there’re no figures readily available, market estimates are that foreign funds have invested around $4-4.5 billion last year.

Another $ 12-13 billion is waiting in the wings to enter the realty sector. Funds from Middle East, Hong Kong, London and the US are active in the realty market, but the identity of investors who put money in such funds is unknown, analysts say. Besides, there’s the market route. Realty companies like Unitech, Hiranandanis and Rahejas have tapped the AIM market of the London Stock Exchange recently and mopped up huge funds. Unitech alone had raised over $700 million from the London’s AIM.

The RBI has already warned about the real estate market and cautioned banks against overexposure to the overheated segment. The exposure of public sector banks to the realty sector had doubled in 2005-06, raising concerns about the safety of this lending.