Dubai, which is home to the world’s tallest tower, has started showing signs of cracks. And its ripple effect could be felt in India especially on the real estate sector which is dependent on Dubai for investments.
In fact, Emaar one of the biggest realtors in Dubai has already made its plans to go public in India with a local partner MGF but realty firms are not losing hope.
“Abu Dhabi is going to bail Dubai out. In one property we have sold 97 per cent so that is not affected. The other project might be delayed,” said Niranjan Hiranandani, chairman of Hiranandani Constructions.
Several companies from India Inc who have been exposed to Dubai may have some concerns.
Indian realty firm Omaxe has an exposure of over $9.6 million through a JV which they now want to exit.
Even Sobha Group is building two residential towers and hotels there and BSEL Infra has a total investment of $375 million in UAE.
SKIL Infra had invested $300-350 million in Oman while Sheth Developers, which is building two residential towers in UAE, had invested $545 million.
Experts feel that if the situation worsens the damage could go beyond real estate firms.
“It's very limited as yet because it is just a corporate default. If it manifests into a larger default which will include a sovereign, then it won't be only limited to real estate but will have further ramifications,” said Anuj Puri, chairman of Jones lang Lasalle Meghraj.
More than two dozen realty companies are waiting in the wings to get listed and raise more than Rs 20,000-25,000 crore. But with the current condition and uncertain future for the industry, the companies will now have to be really conservative on their valuations.