July 22 (Bloomberg) -- Donald Trump Jr., whose father built a multibillion dollar fortune in real estate, plans to set up a fund of as much as $1 billion to buy property in India, betting on the nation's economic growth.

Trump may create the privately held fund together with investors including an Indian family, he said in a telephone interview from New York yesterday.

``The fund will be for acquisitions of real estate in the high end and across the spectrum,'' said Trump, 30. ``I see a lot of opportunities. We'll start it off relatively small and grow it as we get more familiar with the Indian market.''

New York-based Trump Organization Inc. also plans a residential and hotel project in Mumbai with a local partner to tap the growing wealth of middle- and higher-income Indians. The city is India's biggest trading center for stocks, bonds, commodities, diamonds and gold, and home to some of the country's largest companies including Reliance Industries Ltd. and State Bank of India.

``Our entry has to be in Mumbai and that's where everything is going on right now in terms of the high-end real estate,'' Trump said. ``That's the place where one is going to achieve the highest prices per square foot. It sets the tone for all of the other future developments.''

India's $912 billion economy grew an average 8.8 percent since 2004 and is forecast to expand as much as 8.5 percent in the year to March 31, according to the central bank.

More Millionaires

The number of Indians with financial assets of more than a million dollars grew the fastest in the world, at 23 percent, in 2007, according to the World Wealth report by Merrill Lynch & Co. and Cap Gemini SA released on June 24. The number of millionaires in China rose 20 percent, and Brazil saw 19 percent growth.

``The market place is beginning to understand and appreciate luxury, so there is a great opening for us there as well as in resorts,'' said Trump.

Real estate prices in India have climbed for five straight years, boosted by a six-year equity market boom and rising incomes.

The rally in property prices may end this year as a falling stock prices and rising interest rates slow sales and make it tougher for smaller developers to borrow money. The 14-stock Bombay Stock Exchange Realty Index has declined 63 percent this year, almost double the 32 percent drop in the benchmark Sensex.

``The pendulum has started shifting back a little bit to the point where prices have started to become a bit more reasonable,'' said Trump. ``It will allow companies such as ours to justify buying land. It's a good opportunity for us.''

To contact the reporters on this story: Sumit Sharma in Mumbai at sumitsharma@bloomberg.net

Last Updated: July 21, 2008 20:12 EDT