Morgan Stanley Real Estate made a $68 million foray into India last week when it purchased a minority interest in Mantri Developers Private Ltd. Mantri Developers, a private, Bangalore-based real estate developer that concentrates on residential, office and retail projects, will use the investment to grow its residential business and as a springboard to expand in other property types, according to Sushil Mantri, the development company’s managing director and founder.

“The partnership will be integral to our ability to create value by expanding our presence in Bangalore and other key markets,” Mantri stated in a March 1 announcement of the deal. “This relationship is also an important step in the diversification of our business. We plan to utilize our partner’s relationships and global platform to strategically expand our business by developing other real estate asset types.”

The deal is the largest investment of its kind so far in India, and was only made possible when the Indian government relaxed restrictions on investments in real estate and development by foreigners last year. Investors have been looking for ways to penetrate India’s real estate market for years, so more announcements like Morgan Stanley’s are likely this year, says one investment executive.

“There is pent-up demand on the investor side, so this is square-one for a much broader group of companies coming in,” says Ken Munkacy, COO of New Boston Fund Inc., a value-add, private equity fund that owns and manages more than 17 million sq. ft. of commercial real estate worth approximately $2 billion.

“India has all the right demographics: It has a large and growing middle class, a great legal system based on British law, and a language that is understood by Westerners,” Munkacy says. “And India has a supply void — a need for modern facilities in all asset classes.”

What makes India’s residential market, in particular, so attractive is its rapid urbanization, availability of financing for home purchases and increasing consumer buying power, according to Sonny Kalsi, managing director and global head of Morgan Stanley Real Estate Investing. “We believe India presents an extremely compelling investment story, and expect to be a long-term investor in the real estate sector,” Kalsi says.