Parry Singh, managing director of real estate equity fund Red Fort Capital, 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.
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.
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.
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