Mumbai: Foreign investors may keep themselves away from Indian realty as lower asset prices in the U.S. and the potential for better returns there skew the risk-reward equation against emerging markets such as India, say private equity experts, reported Business Standard.

"Real estate developers face a double whammy of slowdown in the overall growth and hardening of interest rates, while the perceived risk-reward equation for India is going down," said S Sriniwasan, CEO, Kotak Real Estate Fund.

Take a pension fund in the U.S., which has the option to invest in the real estate in India or other markets. As the level of information is better in other markets, investors find it easier to take a call there.

"These are existing assets, so there's no development risk unlike in India. Also, if they are investing at home, there's no currency or political risk compared to here. As they can make a return 18-20 percent in the U.S., they are wondering if it is worth going to India for an additional 5 percent," said a real estate expert.

In April, Citi Venture and AIG put off plans to invest Rs 1500 crore in Mumbai-based real estate developer Akruti City.

Experts say PE majors are delaying decision because of the uncertainty. But developers are beginning to accept the reality, and offering better terms. This is evident in the financing terms they are accepting these days.