Indian real estate firms not affected by Dubai crisis

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Maaxy

05 December, 2009

The link with Dubai was two-fold. One was that some Indian real estate companies had plans to invest in Dubai. Also, Dubai-based developers, largely owned by the government of that country, were keen investors in the Indian real estate market

INDIAN REAL estate companies have put up a brave front claiming that they will remain unaffected by the Dubai crisis due to their limited exposure to that market. The market seemed to have bought their story at least to some extent. Real estate stocks crashed on Friday before recovering along with the rest of the market, ending the day down 0.55%, less than the 1.38% decline in the Sensex. Industry officials point out that the impact on India’s real estate industry is unlikely to be significant.

They say the link with Dubai were two-fold. One was that some Indian real estate companies had plans to invest in Dubai. Also, Dubai-based developers, largely owned by the government of that country, were keen investors in the Indian real estate market.

According to Anuj Puri, chairman and country head of Jones Lang LaSalle Meghraj, a real estate consultant, Dubai’s real estate market was not sustainable in the long-term, as it was not driven by end user demand. “This would not have a major direct impact on India’s real estate market, which is largely locally driven,” he added.

An official of India’s largest real estate company DLF said its contact with Dubai-based entities were minimal. DLF executive director Rajeev Talwar said: “Luckily for us, we do not have any exposure to that market. The one deal for which we were negotiating fell through.” DLF was close to finalising a joint venture with the now troubled Nakheel, a Dubai-based developer.

“The plans to enter Dubai have been postponed for a while,” added a DLF official. Both Unitech MD Sanjay Chandra and the Managing Director of Parsvnath Developers, Pradeep Jain, insisted that they have nothing to do with any Dubai-based entities. Another Indian real-estate developer, Omaxe, had in June 2008, formed a new subsidiary, Rohtas Holdings (Gulf), which were supposed to venture into the construction of two residential projects in Dubai at a cost of Rs 2,850 crores. Omaxe Chairman and Managing Director Rohtas Goel said the company had paid Rs 40 crores as the first installment for buying land for these projects. The rights to develop these projects are awaited. “There has been a slowdown in the Dubai real estate market. Looking at the current situation, we are considering exiting the two projects,” he said. Goel declined to comment when asked on what could happen to the Rs 40 crores that has been paid.