Domestic Realty Companies Faces Challenges Post Dubai Storm

Domestic Realty Companies faces Challenges Post Dubai Debt fallout

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Domestic realty companies which are planning to tap the primary markets may not see a smooth sailing as the Dubai debt crisis is likely to undermine investor confidence in the sector.

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As many as nine realty companies, including Emmar MGF, have filed their draft red herring prospectus (DRHP) with the market regulator Sebi aiming to raise about Rs 15,000 crore.

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“It will not be surprising if some realty companies defer their share sale plan.

The Dubai debt crisis will not give any positive signal to investors in realty companies and IPOs of companies like Emmar MGF will face huge challenge,”

SMC Capitals‘ equity head Jagannadham Thunuguntla said.

🙂

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As per the DRHP filed with the Sebi, nine relators are planning to raise an estimated Rs 15,000 crore through the initial public offers (IPOs).

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This includes Emmar MGF’s Rs 4,000 crore issue, followed by Sahara Prime City (Rs 3,400 crore), Lodha Developers (Rs 2,700 crore), BPTP (Rs 2,000 crore), and Godrej Properties (Rs 500 crore).

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Last month, the Dubai government-owned investment company Dubai World asked for a six-month delay on repaying its $ 59 billion debts.

Dubai Shakeout Leaves Thousand of Indian Families Worried

Dubai Debt Fallout Leaves Thousand of Indian Families Worried

The $59-billion debt woes of state-run Dubai World, one of the largest global conglomerates, has left thousands of Indian families worried, as the region accounts for half of the country’s $25-billion remittances.

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Gulf countries employ five million Indians, out of the 25 million total strength of the Indian diaspora in 130 countries, and Dubai being a key driver of the region’s economy, a shakeout there is seen unsettling the job market — and the incomes of relatives.

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Market experts have expressed that there will be at least 25-percent contraction in the job market and there may be a ripple effect on most Middle East countries because of Dubai World bust.

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They also said that Middle East meltdown is not a last month generated phenomena  rather it has been there for the past one year.

Infact, people have been coming back to India for the past one year.

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🙂

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Market experts and policy makers have expressed concern over the prospect of Indians employed in the Gulf losing their jobs.

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However they insist that much would depend on Dubai world Bust’s impact on the real economy there and employment.

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Many relatives of Indian expatriates in the Gulf have expressed concern and worries over the prospect of the loss of jobs in Gulf  in the wake of Dubai World Fiasco !!

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Many of families have taken huge amount of home loans to construct houses or to buy flats.

(With the dependence of paying it through the remittances they generally receive from their relatives working in Gulf).

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Now, they have worries like if their close family member working in Gulf loses the job then it will get impossible to repay the loan amount in full.

😦

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In Andhra Pradesh, which accounts for the largest share of remittances from the Gulf after Kerala, the realty industry feel there is an underlying worry that the Dubai World episode may just be the tip of the iceberg.

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Experts over there feel that things might go from bad to worse when the Dubai companies announce their financial results in December and January and many more could lose jobs.

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Analysts, nevertheless, maintained that while the future plans of Dubai World in India may be affected, the existing ones may not suffer much.

🙂

Dubai Woes to Hit India Hard? “No” Says India’s Think Tank :)

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Indian policy-makers are not really worried over the potential adverse impact on the country’s economy because of the multi-billion-dollar debt default risk faced by Dubai World, ranked among the largest conglomerates in the region.

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Commerce Minister Anand Sharma said “India is a very large economy. It is a resilient economy”.

“I don’t think some development in real estate in Dubai will have an impact on the Indian economy” he added.

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🙂

He also said “As far as India is concerned, the housing, real estate sector and construction industry are all doing well.

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This is confirmed by the increasing demand for construction materials, cement and steel,”

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Finance Secretary Ashok Chawla also saw little impact of the Dubai World’s woes on the country’s economy.

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Though he was a trifle more circumspect and preferred to watch the situation before hazarding a guess.

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“We will have to study what the issue is, what is the problem, what will be the possible implication if any for the Indian economy, the people and corporates,” Chawla told.

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🙂

Asked if the crisis will impact money flows into India,since the Gulf region accounts for over half the total inward remittances worth over $25 billion annually from expatriate Indians,

Chawla said: “It’s unlikely.”

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The state-run Dubai World stunned the global financial world Thursday when it announced it would need to restructure its debt, estimated at $59 billion, to preempt default and asked creditors for a six-month deferment.

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The conglomerate, which has a host of companies under its fold, has interests in a wide range of businesses such as realty, infrastructure, logistics and economic zones.

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And that is not just in the region but across a clutch of countries including India.

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🙂

Indian equities reacted adversely to the development, with the benchmark sensitive index (Sensex) of the Bombay Stock Exchange (BSE) down as much as 634.16 points, or 3.76 percent, midway into the trading session Friday.

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It later recovered and closed with a loss of some 220 points, or 1.3 percent over the previous close.

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🙂

“Indian markets have rallied more than 100 percent from the lows a year ago,mostly backed by news of recovery and not necessarily on fundamentals,”

said Jagannadham Thunuguntla of brokerage firm SMC Capital.

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“This is why such news will have a negative impact on our markets and we will be dragged down,” Thunuguntla, who heads the equities division of SMC Capital told.

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Even some Gulf-based companies, like Emmar, which have business interests in India, said there will be virtually no impact on their ongoing projects in India.

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The response was similar from India’s leading engineering and construction major Larsen and Toubro Ltd, which said its exposure in Dubai was around $20-$25 million.

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🙂