Ishaan Real Estate is an investment company that focuses on property development projects in southern and western India.

Ishaan specialises in investing in technology parks and projects in the Indian special economic zones. It also owns other real estate assets including commercial, hotel, retail and residential developments.

Neel Raheja, a director of the investment company, says Indian real estate has attracted a lot of money over recent years although he believes much of this has not been used for income-generating projects.

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He says Ishaan has fully invested its money, with about pound 133m spent across eight projects in Mumbai, Hyderabad, Pune and Bangalore. Ishaan pre-identified seven projects prior to launch. These accounted for 80 per cent of the fund and, since September, the company has made an additional investment of pound 26.2m in a project in Navi Mumbai.

At the beginning of the month, Ishaan reported that adjusted net asset value per share increased 31 per cent to 146.8p as of September 30, 2007. The overall initial portfolio increased in value to �601m, reflecting a rise of 12 per cent after being adjusted for development expenditure.

The company invests 40 per cent stakes in development projects that are majority owned by K Raheja Corp, a leading Indian property development group. The Raheja family, which owns the Raheja companies, has been active in India's real estate market for several decades.

"We have a partner that is putting their money where their mouth is," says Mr Raheja.

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He says the real estate markets of southern and western India are those witnessing the highest business growth and occupancy levels. "The market is more sustainable in terms of demand."

The fund's projects all had planning approval and the regulatory green light prior to investment, he says. The fund will look to invest in the portfolio for two or three investment cycles and will then offer investors either the chance to roll into a real estate investment trust that will own the property or to sell out of their units for cash, he adds.

The Indian real estate cycle is not going through a similar value downturn as that of the UK, according to Mr Raheja. "We haven't seen demand slowing for real estate in India. There is still a good core market." He says the fund has benefited from the slowdown in the markets in the US and the UK as investors have changed their allocations to property in India.

The problem is not sourcing the money but finding the right assets to buy. The fund will keep locating projects that will produce an internal rate of return of about 20 per cent on a leveraged basis.

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Mr Raheja says India's economic outlook continues to be positive, pointing to strong economic fundamentals, consumption-driven growth and healthy corporate balance sheets.