Why is the real estate story in India being suddenly discovered now?
About two to two-and-a-half years ago too, real estate investing was very much there. However, it was done by very few, that is, those with surplus cash or who have seen real estate investing in other countries. While there was interest, there were no avenues to invest.

Two years ago, the government allowed venture funds to invest in real estate. Now real estate mutual funds (REMFs) have been approved. With this the options available for investing in real estate have widened.

Further, one needed Rs 25-40 lakh to participate in real estate earlier. There was no opportunity for those with Rs 5-10 lakh. That has now changed.

What drove the prices in some pockets and to the steep corrections later?
The surge was uncalled for. Any hike has to be justified by the productivity of the land. But the land has not been productive. There is a herd mentality here. If one starts constructing IT buildings, everyone follows, without knowing the demand-supply status. This results in oversupply of assets of a similar kind in certain pockets. So the developer is under pressure from customers as a result of excess supply situation and is desperate, resulting in panic selling. If you look at Delhi, Gurgaon or Faridabad, this has been the case. Another aspect that led to the shoot up and later correction was the entry of speculative buyers rather than actual users.

For individuals who hold real estate with a longer perspective of, say, three years, there is no real threat. But if you hold with an idea of making money, like in the stock market, then real estate is a risky bet.

Milestone appears focussed more on Tier-II and III cities. Is the risk-return profile not higher in these areas?
We believe that India would continue to grow at 7-7.5 per cent. But this growth cannot come from the top four cities because the economic activity is no longer concentrated in these cities; it has expanded into the top 25 cities. So we are concentrating on these 25 cities besides the four metros. The amount of new activity/investments in these cities may not happen even in the top metros. Cities such as Mysore, Vizag or Mangalore will attract future investments. We believe India's growth will come out of these cities and are, therefore, are taking a futuristic view.

Given the expected demand, we expect higher returns on our investments in Tier II and Tier III cities compared to Tier I.

You seem to be heavy on land holdings in cities such as Ahmedabad, Nagpur and Chennai? What are the advantages you see in these places?
Although Chennai is considered a metro, it is not really one. While it has lot of characteristics of a metro, prices have not gone up like the other metros. One can still afford a house or land. It has diversified industries such as auto and foundry. It has attracted a lot of investments from industries without much price increase so far. So believe Chennai is set to witness the next boom.

We also believe that Ahmedabad would be the next Mumbai with a stable government and plans to set up a financial city ($2 billion project). World-class infrastructure is being built there. Despite the proximity to Mumbai, the price in Ahmedabad is less than 20 per cent of that in the former. We see this going up.

Nagpur is in the heart of the country. When Boeing sets up their maintenance base for Asia there and MIHAN (Multimodal International Hub Airport at Nagpur) comes up, this city will see a change. It would be a city for logistics.