Realty funds have assets worth about $4.7 billion in India, with industry estimates on growth varying widely from $30 billion to $90 billion by 2010.

Analysts warn spiralling prices and interest costs, coupled with shoddy property transaction and ownership records, may sap demand and hasten the property bubble to burst.

“There is hell of a lot more capital available than good transactions," David Ellington, trustee at the San Francisco Employees’ Retirement System, said during his visit to India.

“That is going to heat up the market."

California Public Employees’ Retirement System (CalPERS) ploughed $100 million into an Indian realty fund last month, while American International Group has launched a real estate investment division in India.

A posh seafront apartment in south Mumbai was recently bought at the equivalent of $1,400 a sq ftâ€"doubling from two years ago, and as expensive as an apartment in New York.

Prices in big cities like Mumbai, Delhi, Bangalore, Kolkata and Chennai are rising at 30-40 per cent a year, boosted by scarce land and rising incomes in an economy that has been growing at about 8 per cent for the past three years â€" a trend that is expected to be maintained for many years ahead.

The potential is huge for Asia’s third-largest economy, where demand for homes have jumped on the back of tax breaks and low interest rates over the past five years.

India’s retail real estate market is expected to top $463 billion by 2010, from $292 billion in 2004, according to the property services arm of ICICI Bank Ltd., India’s second-largest lender.