MUMBAI, INDIA-The Supreme Court has reversed an earlier ruling that blocked five former textile mills from selling their land to developers.The ruling by India’s highest court clears the way for the sale of prime real estate in the center of India’s land-starved financial capital. “The order will surely benefit the textile mills and the developers,” says Rakesh Choudhari, chief operating officer of Keynote Capitals Ltd., though he did not expect the order to affect property prices since it had been anticipated. “They will stabilize but will not fall,” he says.

The redevelopment of mill land in Mumbai had been blocked by a High Court ruling that the sale of mill land must conform to development controls. Those controls allow the owner to sell one-third while handing over one-third of the land to the municipal corporation for open spaces and the rest to the Maharashtra Housing and Area Development Authority for low-cost housing. It declared illegal the sale of 50 acres of mill land by the National Textile Corp. The Supreme Court has now reversed that ruling.

While the land is being sold to local developers, the ruling is likely to appeal as well to international investors. Jones Lang LaSalle estimates that India has already attracted between $1.5 billion and $2 billion in investment capital in the past 12 months. This was mainly from US, Middle Eastern and Asia Pacific investors, but interest from European players is growing rapidly.

By the end of the year, they estimate foreign direct investment in Indian real estate will be between $4 billion and $5 billion. The total property-investment stock is estimated to be worth between $10 billion and $60 billion.

The most demand is likely to be for hotels and retail to supply India’s burgeoning middle classes. A DTZ Tie Leung report says there are 40 shopping centers in the country totaling 12.4 million sf, but by 2007 there is likely to be more than 75 million feet.

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