Dubai’s financial meltdown

    Dubai’s financial meltdown

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    “There are two markets to consider in this situation – the one in India and the another in Dubai. There are four factors involved in the Indian market – demand, supply, finance and sentiments. At this stage, sentiments due to the collapse of in Dubai are the most vulnerable and may get hit, while demand, supply and finance in India will remain untouched,” says , chairman & country head, in a statement isued to the media.

    “What is happening in Dubai is a corporate default situation. 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 locally driven. Nevertheless, it is conceivable that the RBI may take a cautious approach in terms of liquidity in the real estate sector, which would not be good news in light of the fact that FDI norms for Indian real estate are on the verge of being relaxed,” states Puri.

    “It was evident that Dubai’s real estate market was not long-term sustainable, since it was not driven by end user demand. For a long time now, a multitude of apartments there have been standing unsold, held largely by speculator / investors who had bought them to sell them at higher prices that never happened. The big question now is how many of these investors have the ability to service their mortgages.”

    “There would be real danger on a global scale if the Sovereign defaults, in which case everyone – India included – would face issues. However, any kind of specific predictions would be premature at this time. The next few weeks will reveal whether the Dubai situation will stay at the corporate default level, or whether it will escalate into Sovereign default,” informs Puri.

    — IndiaRetailing Bureau