After the government and Reserve Bank tightened the capital flows to real estate in the past one year, now its seems the regulators are easing the capital flow to the sector.

The Foreign Investment Promotion Board (FIPB) - a wing of the Economic Affairs Ministry which approves foreign investment proposals - has allowed two foreign investors to invest Rs 600 crore in two Mumbai based developers.

FIPB has approved a proposal of  IL&FS Investment Advisors, Mauritius based private equity arm of IL&FS, to pick up a 60% stake in the Mumbai Based developers, HBS Realtors. IL&FS Investment Advisors will pick up the stake for Rs 300 crore.

In another case, FIPB has also allowed the foriegn entities of private equity firm Sun Apollo, to buy a 49% stake Keystone Realtors for Rs 300 crore. The investing entities are Mauritius based Mausmi SA Investments and Cyprus based Mausmi Ventures. Mumbai based Keystone Realtors, also known as Rustomjee Group, have been in business since 1996..

This could signify that the government is now relaxing the investment inflows into the sensitive real estate sector. RBI and the policy makers were apprehensive about heavy inflows to the real estate sector as that contributed to high inflation in the domestic economy. Besides, the government was also suspecting roundtripping of capital via PE route.

There are more deals awaiting FIPB approval. Nand Khemka-promoted Sun Group and the Qatar's Barwa Real Estate have formed a 50-50 joint venture land bank company named Sun-Barwa Land. Sun-Barwa would need FIPB approval to invest in Indian real estate market. Sun Group and Barwa together would raise capital from Qatari and Middle Eastern investors.

Another recent deal in the real estate sector was that of Ajay Piramal-promoted real estate fund Indiareit's acquisition of 15% stake in Mumbai-based developer Neptune group for around Rs 300 crore.

Delhi-based Unitech Ltd is also in the market to raise about $560 million from private equity funds, accoridng to a report in Business Standard on January 14.

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