The year 2007 confirmed yet again the already acknowledged and observed fact of the real estate sector. The sector, paramount in the India-building story, has been rewarding and newsy. Such has been the growth, reach and impact of the sector that the BSE came out with a Realty Index, which would serve as a barometer of the sector.

Clearly, it has been a real estate year. From the eagerly watched debut of the current bellwether entity DLF to significant players like HDIL, Purvankara Projects, Omaxe, and Akruti City, the sector has been enticingly lucrative to all the investors alike.

Here are a few lessons and opportunities, which you as the investors could learn and take with you as the New Year herald new beginnings and new developments:

Explains Anuj Puri, chairman and country head, Jones Lang Lasalle Meghraj, ?All fundamentals are firmly in place, and there have been only isolated overheated pockets. The volume of residential sales had slackened, but is gradually picking up again satisfactorily.?

Lesson: Too many funds have been chasing and continue to chase too few good projects. This has been one of the chief concerns of the sector. Hence, what one can see is the supply of ?quality spaces across sectors?. But still there are geographies, which couldn?t meet existing demand.

However, the year 2007, did not resolve the question of whether special economic zones (SEZs) in India are merely a ?real estate game? or whether they will serve their intended purpose. Nonetheless, an important development, which has caught the attention of both the media and the investors alike, is the scraping of Urban Land Ceiling and Regulation Act (ULCRA).

Opportunity: properties unlocked

The repeal of ULCRA released major tracts of land in Maharashtra, most significantly those held by the Godrej and Wadia groups as well as the Indian Railways. There were landmark auctions of property in Mumbai?s Bandra-Kurla Complex:

Such auctions, of various magnitudes, continue to feature under the purview of the DDA (Delhi Development Authority), JDA (Jaipur Development Authority) and VDA (Vizag Development Authority), among others

But it is the deals, which have created waves in the sector. Here is a list of crucial ones, which would give you an idea of companies, which have struck lucrative deals and which could serve you as a solid investment options:

Opportunities: investment options

a) Mumbai:

* Wadhwa Developers acquired 16,500 sq metres of land area from MMRDA in a bidding process for a total amount of Rs 831 crore or Rs 5.03 lakh per sq metre (November 2007)

*TCG-Hiranandani acquired 28,500 sq metre of land area from MMRDA in a bidding process for a total amount of Rs 1,041 crore or Rs 3.67 lakh per sq metre (November 2007)

* Reliance Industries acquired land for development of multi-level car parking and commercial complex for Rs 941 crore (Rs 3.40 lakh per sq metre – November 2007)

b) Chennai:

Nitesh Estates acquired a 9-acre plot in Boat Club area for a total amount of Rs 642 crore (October 2007)

c) Delhi:

DLF acquired Swatantra Bharat Mills (approx 38 acres) from DCM Shriram for a total price of Rs 1,675 crore (August 2007)

d) Kolkata:

LIC acquired a 5-acre plot from Kolkata Municipal Corporation for a total price of Rs 276.20 crore (October 2007)

The year also saw overseas investment and tie-ups with powerful local players, indicating the growth potential and lucrative element involved in the sector. Here are few of them:

* Bahrain?s Gulf Finance House has signed up with Maharashtra?s State government to invest Rs 40,000 crore for the establishment of a SEZ on 1,600 acre near Panvel at Mumbai.

* A US-based venture fund bought a 1.2-acre plot on Mumbai?s Andheri-Kurla Road from Neelkamal Developers and Bhoomi Realtors India Ltd for Rs 180 crore.

* India?s biggest listed developer, DLF, and Dubai?s Nakheel have announced a joint venture with plans to invest more than $10 billion to build two townships on 40,000 acre.

* Shapoorji Pallonji struck a $290-million deal with foreign investors, including CVC International and Singapore?s GIC. This is the largest land deal in the history of Indian real estate.

* Merrill Lynch & Co bought a 49% stake in seven of DLF?s residential projects for Rs 1,481 crore.

Lesson: The sector holds potential and continuing growth. You need to watch out for the areas in which overseas investments flown into. It is estimated that one-third of the private equity money flow into the country has gone into the sector. And this is an unabated one and one chief factor to note here is the magnitude of money involved.

What you need to take along

According to the Associated Chambers of Commerce and Industry of India (Assocham), FDI in India?s real estate market will reach $30 billion, as part of a total market size of $102 billion, in the next decade. More so, with the India-building story strengthening, the sector is bound to play as a good investment destination.

Not to mention the approval of umpteen SEZs, which are long overdue and which would unlock substantial land bank. Hence, there is an increasing activity in the sector. Furthermore, to sustain the interest and attention in the sector are news like the 2011 Commonwealth Games. This would act as a catalyst in the sector and infrastructure enclaves in Delhi?s NCR region.

Lesson: Keep a long-term perspective of your investments. The reason being a real estate project takes two to three years to fructify. And more importantly, you need to keep a tab on the project developments and revenue generation method. It is either percentage completion or project completion.

Companies like HDIL follow the project completion method, which takes into account revenues after the project is completed, while quite a few follow percentage, which considers revenues of bit by bit constructions.

Data source: Jones Lang Lasalle Meghraj