How do you think the property markets will benefit from the repeal of the Urban Land Ceiling Act?
The government keeps proposing ideas on financing and opening up of the real estate sector, but I do not see any implementation. The repeal of ULCRA is the first thing that has actually happened. But unfortunately, it will not have a significant impact. In Delhi, for instance, the Delhi Development Authority is not holding that much land. Statistics tell us that the government never took over all that much land. I don't know if it would make that much of a difference anywhere, except may be in Mumbai. But the Maharashtragovernment says it would have its own version of the ULCRA. I think each state will look at reinstituting it in some form or the other. I feel abolishing ULCRA will not result in huge construction activity. The key issue is still of financing.

Can you cite specific laws in specific states that need to be amended? In which state is it relatively easier to start a housing project?
In every state, the developer has to go through at least 10 to 12 windows for clearances before the project is finally completed. In Delhi, for instance, developers have to get 17 to 18 approvals -- electricity, water included. Every state has its own set of problems.

South-East Asia adopted the foreign direct investment route. But there was a massive crash in property prices recently. Do you think the same can happen in India once the country opens up the sector?
No. In South-East Asia, banks kept pumping in a lot of money. It got to a point that, as I remember it in Japan, if you were to build an officecomplex you could get 100 per cent loan at 1 or 2 per cent interest. So it made sense for almost everybody to buy land. That kind of thing will never happen in India. Our banks will never loan funds to the developers at such low costs.

The real estate prices have not crashed in India. They have moved to realistic levels. In Japan, they went down to 30 per cent of their peak value. People had to return the money they had borrowed from the banks. So they had no other choice but to sell.

The maximum drop in real estate prices has happened in Mumbai -- up to 30-35 per cent. Nation-wide, there has been a 15-30 per cent fall in real estate prices.

Do you see the interest rates coming down once the sector is opened up and banks are allowed to lend to housing?
Ours is a very high-cost economy. And I don't mind the sector competing with the others. But it should be a level-playing field. For now, if developers want to raise funds, they have to go to the open market where the interest rate is currently2.5 per cent per month. If the project takes two years to get completed, the developers are paying 60 per cent more than the value of the property they are actually buying.

For individuals, I personally feel that eventhough the 15-16 per cent rate of interest charged by the housing finance companies is high, that's the best you can get in this country.

What measures do you expect the government to take for your sector in the coming budget?
All interest payments on housing should be made completely tax-free. I expect the government to open up the sector. But the government must realise that no foreign investor is going to invest in India for the love of it. Be it NRIs or FIIs, they will not invest unless returns are guaranteed.

When do you expect a recovery in the real estate market?
I think a recovery should happen towards the close of the year. A lot of depends on this year's Budget. I think this Budget opens tremendous opportunity for the government to fulfil the election promiseon housing for the economically weaker sections (EWS). The government must use housing to kick-start the economy. Steel and concrete are integral to housing. So once housing gets the critical push, these two sectors will see demand and then the economy will begin to recover.

The states who are going in for a single-window clearance and help the developers are the ones who are going to benefit. I think the southern states are taking the lead. In India, we don't view real estate as an industry. Even though the industry provides many jobs and gives an impetus to other industries, no state will ever give free land for a housing project or a hotel. It's the mindset that if it's real estate, somebody is making money. This needs a change. The governement has only talked about giving infrastructure status to real estate, and not acted on it.

Do you think the government's plans for the EWS are viable?
The projects are viable. But they have to be managed properly. In the case of all projects for the EWS,people who were first allotted those houses, never stay in them. So unless there is proper control and a mechanism, I don't see how that will work. We need to define the needs of the EWS.

Can India emulate the example of any country for housing?
We need to pick the best from five or six key countries which are similar to us. I don't think there is a perfect model for us to follow. Financing in the USA is very easy for housing. In fact, USA monitors the performance of their economy on the basis of housing. For single-window clearance, we can look at Singapore. For FDI, South-East Asia. In fact, I think every country has something good that we can pick from.