Mumbai: Property developers may raise $4.7 billion (Rs18,706 crore) selling shares this fiscal year, more than the amount raised by them in the past two years, as real estate companies seek to meet demand, Ernst & Young said.

Developers need funds to build more houses in a nation that may have a shortage of 45 million homes by 2012, according to the Ernst & Young study, which cited National Housing Bank estimates. Property developers have raised $4 billion in share sales in the past two years, Ernst & Young said. DLF Ltd, the nation’s biggest developer, raised $2.2 billion in June and six others, including Housing Development & Infrastructure Ltd and Omaxe Ltd, sold a combined $1.5 billion of shares this year.

Thinking big: DLF Hamilton Court in Gurgaon. DLF Ltd, the country’s biggest developer, raised $2.2 billion from the primary market in June.

Indians are spending more of their rising incomes on houses in an economy that grew an average 8.6% the past four years, according to central bank data. Construction of houses accounts for 80% of the real estate industry, Ernst & Young said in the study, which was released in Mumbai on Thursday.

“There has been an increased focus from the developer side on strategic alliances, creation of land banks, geographic expansion and raising capital to fund their extensive development pipeline," said Ganesh Raj, a senior partner at Ernst & Young, in the report.

About 80% of 50 global investors surveyed by Ernst & Young said India was an “excellent" investment destination compared with China, Malaysia, Indonesia and Thailand. Investors and developers are also turning to smaller centres such as Pune, Indore, Nashik and Coimbatore after price rises in large cities including Mumbai, New Delhi, Bangalore and Hyderabad, the study found.

“The investor and developer focus is evidently shifting to the relatively smaller cities and hence there is great likelihood of such emerging cities leading the transformation of the Indian real estate sector," the study said. DLF, which has risen 31% since its listing, rose Rs8.35, or 1.1%, to 747 at 1:53pm in Bombay Stock Exchange trading. Omaxe rose 0.3% to Rs339.15. India’s real estate sector was forecast to grow to $90 billion by 2015 from $12 billion in 2005, Moody’s Investors Service had said in June.