The study says foreign investors are keenly looking at India for parking their surpluses as real estate is a hot market and returns on such investments are expected to be higher in the near future.
ASSOCHAM is of the view that the high interest rate regime would be subdued in the future.
The country, growing at 10 per cent per annum for at least a decade, would create huge space for overseas investors in the sector.
The domestic real estate market at present is estimated at 15 billion dollars, in which the Foreign Direct Investment component is to the tune of four billion dollars.
The study estimates that the bank credit to the sector would be of the order of Rs 3,50,000 crore, which will multiple substantially in the coming years.
The existing laws are regarded as restrictive as foreign developers can undertake construction activities only in a minimum space of 50,000 sq feet.
There is widespread expectation among developers that the government would lift the ceiling of 50,000 sq ft. There is pressure on the government by real estate developers to liberalise FDI norms.
ASSOCHAM President Sajjan Jindal was hopeful that the ceiling would be enhanced to a minimum of two lakh sq ft in a gradual manner in a decade.
The hassle factor deters foreign investors from putting their money in India as approvals from Centre and States are a cumbersome affair.
The study says multiple approvals will have to be done away with.
India is regarded as the most lucrative market in the Asian region, with returns ranging between 20 to 25 per cent. The best of Asia offers only a return of 15 to 18 per cent.
The study is of the view that most of FDI will come by way of private equity rather than the institutional route.