The Hindu Business Line : Dawnay Day plans to invest $1.5 b in Indian realty

Dawnay Day is looking at investing $1.5 billion in Indian realty in the next two years. Mr Alok Vajpeyi, Vice-Chairman and Managing Director of Dawnay Day, says that at the moment, the company is investing proprietary money into the Indian real estate markets. Excerpts from CNBC-TV18's exclusive interview with Alok Vajpeyi:

Have you already raised this money or are they in planning stages? How much of it has already been invested?

At the moment, we are investing proprietary money, which is our own money, into the Indian real estate markets, which is divided into two areas — the commercial space as well as residential developments because you can't do anything in India without taking development risk and the other is we have to set up a four-star hotel business for which we are acquiring the land and we will build our own hotels and we will operate them ourselves.

How do you view the Budget proposals of giving the tax holiday for five years on the four-star hotels especially in Delhi because of the Commonwealth Games and the 12.5-per cent service tax on commercial property?

One is positive, while the other is negative. Unfortunately, our hotels could probably take a bit of time to become profitable. I think our first hotel will come up early next year, so the five-year tax holiday is a great thing but that is probably better for the hotels in existence today. In terms of the service tax on rental, let us see how that develops but I am told that is certainly not good news for either buyers or rentals.

Given the trend in interest rate, as well as the consternation that we are seeing in the equity markets, do you expect real estate prices in some pockets of India to get cheaper before the longer term becomes bullish?

If you look at the interest rate scenario, there is no real estate market anywhere in the world that may continue going up or down; macro factors such as interest rates will be strong determinants and as interest rates have gone, the underlying thesis is that they will basically trade in a range bound manner; they are high.

I think they will have an effect on property prices. But property prices will also be determined by the amount of supply.

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