HONG KONG— Goldman Sachs Group Inc. is betting $150 million on a real-estate developer looking to expand in Mumbai, the financial capital of India.

The Wall Street investment bank agreed to buy a minority stake in Piramal Realty, the real-estate development arm of Indian conglomerate Piramal Group, to help fund the company’s expansion plans, according to a person familiar with the situation. Piramal Realty plans to use the funds to expand its existing real-estate portfolio in Mumbai and acquire additional properties in the city, the person said.

In the past couple of years, big investors have been lured back into the country’s property markets, encouraged by the pro-business agenda of Prime Minister Narendra Modi and the economy’s improved growth prospects.

They are returning after being burned during the global financial downturn in 2008. Foreign investors flocked to India after the government passed laws in 2005, greatly reducing restrictions on foreigners investing in real estate. They poured billions of dollars into Indian property in the years leading up to the global financial crisis.

Since then, international heavyweights like Goldman Sachs and Blackstone Group LP have returned to the market, cutting deals to take advantage of better prices and reduced competition. Foreign investors have also become more choosy about who they invest with and are including more safeguards in their deals.