India's real estate sector is back as market valuation of these companies are back to highs.Stock are again flirting with 52 week high charts.But there is something that makes be uncomfortable about realty stocks in particular.Due to Indian demographics young population and growing income foreign investors are also attracked towards these high flying real estate companies to make quick gain. Some names includes HSBC Holdings, Morgan Stanley , Row Rice etc.

To give you an example Unitech buys land and book revenue from projects before they are built. Really ? Yes not only that interest on undeveloped properties are marked as capital instead of expense. No doubt that net profit is soaring.

Another developer HDIL recently caught by IT department for cooking their books.Market almost ignored the news and stock is back to 52 week high.

Real estate transactoins are complex and they require strict guidelines for accounting purpose. Due to lack of these guidelines companies are playing with books and net profit are decided in a meeting not on real business.This is scarry .. it's scarrier than Satyam episode. If this bubble bursts it has potential to affect international funds and local banks equally .

Indiabulls real estate has market valuation of 10000 crore. Why ? Don't know . Just because they have real estate business. Companies like Omax are buying lands in remote areas and showing them as land bank is balance sheet.

What's the biggest surprise is that how can these companies go through eyes of big investors and institutional investors who closely examine the books before making investments. An investment by MF gives common investor extra comfort. But truth is that these real estate companies are smarter than equity research analyst.