Impact of Dubai debt restructuring in Indian realty market
Friday, 11 December 2009
MOMBAY, Dec 10 (Economic Times): Dubai's real estate was characterised by buildings that were the tallest, widest, biggest and so on. So, when two companies announced that they will need six more months to service their debt, reactions went into overdrive.
What is happening in Dubai, is a corporate default situation involving Nakheel and Emaar, explains Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj. "However, the sovereign has not defaulted. So, the condition is presently restricted only to real estate. This would not have a major direct impact on India's real estate market, which is largely driven by local demand," he says.
Sukhraj Nahar, chairman of the Nahar Group, has a marketing set-up in Dubai for his Mumbai-based real estate offerings and he expects the problems facing the Dubai companies to get sorted out, albeit eventually. "These things happen in all countries; debt gets restructured and it isn't the end of the world," he smiles.
He draws a parallel with the scenario that Mumbai's realty market faced, in the second half of 2008 and points out that the situation is 'almost back to normal' now.
"The UAE, like other countries in the GCC, is a source of buyers for Indian real estate and the NRIs constitute a large chunk of buyers in recent times.
If one looks at the impact that this debt restructuring could have on Indian real estate, it will probably result in fence-sitters among NRIs turning into aggressive buyers of Indian real estate. Those who do not have a 'home, back home' will want to lock in an Indian home at the earliest," he points out.
Anuj Puri is a bit circumspect. "There are four factors involved in the Indian real estate market - demand, supply, finance and sentiments," he explains. "Sentiments, due to the collapse of real estate in Dubai, are the most vulnerable and may get hit, while demand, supply and finance in India will remain untouched."
What is happening in Dubai, is a corporate default situation involving Nakheel and Emaar, explains Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj. "However, the sovereign has not defaulted. So, the condition is presently restricted only to real estate. This would not have a major direct impact on India's real estate market, which is largely driven by local demand," he says.
Sukhraj Nahar, chairman of the Nahar Group, has a marketing set-up in Dubai for his Mumbai-based real estate offerings and he expects the problems facing the Dubai companies to get sorted out, albeit eventually. "These things happen in all countries; debt gets restructured and it isn't the end of the world," he smiles.
He draws a parallel with the scenario that Mumbai's realty market faced, in the second half of 2008 and points out that the situation is 'almost back to normal' now.
"The UAE, like other countries in the GCC, is a source of buyers for Indian real estate and the NRIs constitute a large chunk of buyers in recent times.
If one looks at the impact that this debt restructuring could have on Indian real estate, it will probably result in fence-sitters among NRIs turning into aggressive buyers of Indian real estate. Those who do not have a 'home, back home' will want to lock in an Indian home at the earliest," he points out.
Anuj Puri is a bit circumspect. "There are four factors involved in the Indian real estate market - demand, supply, finance and sentiments," he explains. "Sentiments, due to the collapse of real estate in Dubai, are the most vulnerable and may get hit, while demand, supply and finance in India will remain untouched."