Indian realtors unfazed by Dubai crisis

New Delhi, Nov 27 : 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.

Parsvnath Developers chairman Pradeep Jain said: "I do not foresee any concern in Indian real estate market as it is entirely different from Dubai property market."

According to Mumbai-based Hiranandani Group, which is developing a 90-storey housing project in Dubai through a joint venture with ETA-ASCON group: "Already we have sold 97 percent of the project and received 70 percent of the money."

"Almost 85 percent of the construction has been completed. The project will be completed by June next year."

Omaxe chairman Rohtas Goel said the realtor had made an upfront payment of Rs.40 crore for two property projects in Dubai to Nakheel, but since it has been put on hold the company has asked for refund of the amount.

"We hope to get refund within one month's time," he said.

Emaar Properties, one of the largest real estate companies in the world, said the Dubai World default will have "no impact" its financial position or operations.

"Emaar has a strong balance sheet of $17 billion approx and in comparison its has a very low debt obligation," the company said.