India's realty majors Friday said the debt crisis of Dubai World, one of the largest global conglomerates, would not affect the domestic property sector but fund managers and real estate consultants disagreed.
According to Parry Singh, managing director of real estate equity fund Red Fort Capital: 'The recent crisis will certainly impact the Indian realty sector which has not even fully recovered from the Lehman (Brothers) crisis.'
He said the debt crisis many again drive banks to tighten their credit policy, a move that could jeopardise the credit flow into the realty sector.
'It will also adversely affect the sentiments of investors. Indian developers get lots of funds from Dubai that will be severely affected,' Singh said.
Faced with funding crisis, the Dubai government Wednesday asked the creditors of state-owned Dubai World and property group Nakheel for a six-month standstill on interest payment.
Singh said a large number of buyers of high-end projects are from Dubai. If they become reluctant to buy properties following the crisis, the realty companies will be hit, he added.
'However, the severity of the damage is yet to be calculated.'
Added Anuj Puri, chairman of real estate service provider Jones Lang LaSalle Meghraj (JLLM): 'There will be certain impact of this crisis in terms of business sentiments even when the indian realty sector seems robust.'
If the default in Dubai turns into a sovereign default, there would be 'real economic issues', which may hit several countries, he added.
According to engineering and construction major Larson and Toubro, the Dubai debt crisis is 'worse' than the financial crisis that followed the collapse of Lehman Brothers in September 2008.
'It is worse than the Lehman crisis, especially for the Indian realty sector, as the exposure is greater and the impact more local,' said a senior official of L&T.
The company has the exposure of about $20 billion in Dubai.
Meanwhile, Emaar MGF, a joint venture between Dubai-based Emaar group and MGF Developers in India, said its operations would not be affected by the developments in Dubai.
'Our business and funding plans are on track,' the company said in a statement.
Rajiv Talwar, executive director of construction major DLF, said India's property market was robust.
'Indian property market is very robust and largely dominated by internal demand. So, there will be no adverse impact on us,' Talwar said.
R. Nagaraju, vice-president of developer Unitech, also believes the crisis will have no major impact on Indian real estate sector as Indian realtors have little exposure in Dubai.
Sunday, November 29, 2009
Dubai World Debt Might Affect INDIA
Dubai World debt crisis may soon turn into a nightmare for the Indian workers, top policymakers fear.
“It may work against the workers who are on short-term contracts. They may find renewal tough,” K Mohandas, secretary of Ministry of Overseas Indian Affairs, told Express.
However, the global recession has not forced a permanent return of Indians from the Middle East in huge numbers as feared, he added.
Union ministers Pranab Mukherjee and Vayalar Ravi too sounded calm.
Annual remittances to India from UAE is about 2 billion US dollars, out of the $52 billion sent by Indian expats from across the world.
Two-thirds of the six million people living in Dubai are Indians, more than 60 per cent of them Malayalis, much to the worry of Kerala’s Finance Minister T M Thomas Isaac.
“One main fear,” he notes, “is that the credit to reality sector in Dubai would be frozen for some time. It could seriously affect the construction sector, thereby our workers.” There is also concern about the fate of Kochi’s Smart City project as the Dubai-based real estate giant TECOM is already alleged to be in a bad shape.
Most of the Indians employed in the UAE, according to recruitment agencies, are in the real estate sector, financial services and retail.
“The Middle East meltdown,” says E Balaji of Chennai-based headhunting firm Ma Foi Management Consultants, “will lead to at least 25 per cent contraction in the job market. It can have a ripple effect.”
“It may work against the workers who are on short-term contracts. They may find renewal tough,” K Mohandas, secretary of Ministry of Overseas Indian Affairs, told Express.
However, the global recession has not forced a permanent return of Indians from the Middle East in huge numbers as feared, he added.
Union ministers Pranab Mukherjee and Vayalar Ravi too sounded calm.
Annual remittances to India from UAE is about 2 billion US dollars, out of the $52 billion sent by Indian expats from across the world.
Two-thirds of the six million people living in Dubai are Indians, more than 60 per cent of them Malayalis, much to the worry of Kerala’s Finance Minister T M Thomas Isaac.
“One main fear,” he notes, “is that the credit to reality sector in Dubai would be frozen for some time. It could seriously affect the construction sector, thereby our workers.” There is also concern about the fate of Kochi’s Smart City project as the Dubai-based real estate giant TECOM is already alleged to be in a bad shape.
Most of the Indians employed in the UAE, according to recruitment agencies, are in the real estate sector, financial services and retail.
“The Middle East meltdown,” says E Balaji of Chennai-based headhunting firm Ma Foi Management Consultants, “will lead to at least 25 per cent contraction in the job market. It can have a ripple effect.”
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