Is the ongoing Dubai crisis a new danger signal for Indian realty sector? Well, even though many are considering any such thought as premature, it is a fact that many are others are terming this as a new danger competent enough to dampen the spirits of a resurgent Indian realty sector.
Is this the result of any misgiving? We would have been happier if the same had proved to be true. On the contrary, it is a reality that the existing debt overturn, which many regard as is technically a default, has its roots in those grand real estate projects. What is more frightening, reports are also suggesting that ill-effects of exploding of this construction-led bubble in the desert could soon be felt on the IPO street in India too.
By now it has become a reality that India has not been able to proceed substantially with regard to real estate IPOs and hence the overall investor sentiment is dejected. But owing to the Dubai crisis, from this time forth any going could get harsh for merchant bankers and promoters of real estate companies, especially who are contriving to tap investors for funds.
It has been learnt that nine real estate companies have already filed their draft prospectus with Sebi, planning to take advantage of investors so as to increase an expected Rs 15,000 crore over the next few months. Even though merchant bankers are trying to erect a brave face saying that Dubai’s troubles will mainly be restricted to the region, brokers and dealers, who directly deal with investors on a daily basis, have started to feel the brunt of the debacle.
One official of an India-based financial services company has already stated, that the Dubai factor will affect investor sentiment and they will be more cautious. The paltry performance of a number of real estate IPOs will also play on investors’ mind when these offers hit the street.
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