Foreign investment in the integrated residential township sector is on a high growth path after the Central government allowed up to 100% foreign direct investment (FDI) last year.

So far, $1.63bn worth of investment has been committed for the development of integrated townships with a minimum area of 100 acres.

"Although the policies governing investment in the sector are still restrictive in terms of pre-conditions for interested parties, major developers from Southeast Asia and other regions, have been active in JVs with domestic property developers to execute large township projects in major Indian cities," said Anurag Munshi, associate director, Jones Lang Lasalle-India.

The first FDI project in India to get the nod earlier this year was a 100 acre residential township proposed for development in New Delhi's suburban district Gurgaon.

This project developed by Feedback Ventures, an infrastructure and property firm, in collaboration with Malaysian developers, Kontur Bintang and Westport, is estimated at $160m.

IJM Berhad, another Malaysian firm, is also involved in two projects - a 2,200 unit apartment project worth $150m, in association with Andhra Pradesh Housing Board (APHB) and a 500 acre integrated township ($350m) in SAS Nagar, Mohali in Punjab with the Punjab Urban Development Authority (PUDA).

Canada-based Royal Indian Raj International Corporation (RIRIC) is coming up with the $791m worth Royal Garden City, a fully integrated township development in Bangalore.

According to Manoj C Benjamin, chairman and CEO, RIRIC, when the Royal Garden City is completed it will have designed transportation and utilities as well as environmental and other infrastructure spread across 20-square kms.

There are two other prominent projects in Bangalore and Chennai involving Singapore-based developers Keppel Land and Lee Kim Tah Holdings respectively.

While Keppel Land's $70m Bangalore project is in association with Purvankara Projects, Lee Kim Tah Holding has signed an MoU for a $115m project in Chennai, with the State Industries Promotion Corporation of Tamil Nadu (Sipcot).

According to Girish Deshpande, associate director and Madhurima Das, manager, corporate finance and recovery, PricewaterCoopers (PwC), it is estimated that the urban housing sector in India will require investments worth $25bn over the next five-year period.

Reduced interest rates for housing loans, tax sops on housing and the volatility in the stock market have boosted demand in this segment, they added.

Integrated townships offer another investment avenue for NRIs looking for opportunities to park their funds.

"These major projects, committed since FDI was allowed last year in the sector, is testimony to the fact that regional developers are optimistic about the Indian property market, particularly the residential segment," said Mr Munshi.

However, a marginal relaxation in foreign investment prerequisites is needed to further align the Indian real estate market with it regional counterparts, he added.