Friday, November 27, 2009

Dubai Crisis Hitting Indian Real Estate

Dubai the much touted "financial" and "commercial" destination has become a desert bust.

MSM is trying to hide the crisis but they are not going to get away ... Will India's Housing Bubble should follow similar traits as what happened in Dubai?


shailesh said...

Realty IPOs in the pipeline may remain just pipedream

MUMBAI: The financial troubles in Dubai, the desert state which over the last few years had gotten used to showcasing its grand real estate properties like Burj Dubai and The Palm to the world’s billionaires, could be a warning sign for all real estate investors. Afterall the current debt rollover, which many say is technically a default, has its roots in those grand real estate projects.

“The Dubai factor will affect investor sentiment and they will be more cautious,’’ the official said. The not-so-good performance of several real estate IPOs will also play on investors’ mind when these offers hit the street. Stocks of some of the realty companies that had gone public during the 2005-2007 boom period, are currently trading at discounts as high as 75%. The excessive supply of stocks of realty companies could also affect forthcoming IPOs, market players said.

One of the way out could be slash the IPO price drastically, a move that many feel unlikely to go down easily with the promoters of these companies. For investors however this could prove to be a good opportunity to pick up fundamentally good realty stocks at attractive valuations, said an independent investment analyst.

shailesh said...

Pranab plays down Dubai crisis, says nothing to worry

"Even, among the developing countries of Asia, in terms of growth impact of the crisis, South Asian economies appear to have been the most resilient so far," he said.

The finance minister said the important lesson learnt from the current crisis was that Asian economies were not decoupled from the rest of the world.

"Good fundamentals, in turn, provided scope for strong policy responses in many countries, including fiscal programmes, supplemented by accommodative monetary and bank lending policies," he said, adding, that these stimulus packages provided a boost to domestic demand throughout the region.

On the domestic economy, he said, "Our economy has shown remarkable resilience to the crisis, because the financial system had no exposure to the toxic assets."

The Reserve Bank of India [ Get Quote ] had also taken pre-emptive steps to contain bank exposure to real estate bubble in the domestic economy, he added.

Cool Head said...

I suspect that there is a lot of corruption in this IPO business. Most recent IPOs were worthless;if a common investor like you and me can realize this, how come the big mutual funds and institutions do not get it? Simple, they must be getting lots of bribes to make the issue a "success". Even with the poor performance of realty and power IPOs (I wonder why anybody would pay a premium for such a cheap commodity as power) you will see a lot of mutual funds subscribing (that too at a premium to the already inflated price).IMO the whole system is corrupt and will not reform until the end sucker (also known as retail investor) stops subscribing to the IPOs as well as buying the units of these scammy mutual funds.

Anonymous said...

Ha ha ha ha ha...

I got suckered too. Sometime back, there was a big song and dance about Reliance Power IPO...I applied for the max possible :))

I was very lucky I got selected too!! I got some 15 shares at about 400 rs (I think) and now its at about 140 rupees!! A drop of about 70%!!!!

Mercifully for me, Anil bhai took mercy upon me and only gave me 15 pieces of the garbage...So my losses are not life threatening. People tell me that if I hold onto 10 years I will make a lot of money!! On a govt. regulated commodity like power!!

However, the lesson I learnt was for IPO's don't buy it...there are no greater fools out there..You are the greatest fool if you buy an IPO. If you are seriously interested give it a year or two and you will get the same IPO at a minimum 50% discount...and some idea of the track record.

And oh by the way another lesson - stay away from the ambani brothers!! They are conning the nation blind. In fact they are worse that the likes of Sundaas Bhai, if that's possible!

Shriniwas K said...

Please read the new post for analysis.

@Cool Head and Anonymous -

When everybody is out to loot you - corrupt MFs, unscrupulous IPOs - Rpower, Emaar, Indiabulls power, etc. Ponzy Retail Investment cos like Swindliabulls, Reliscammer, Scarekhan, EdelWaste, etc on one hand

Robbers and thieves for Gold, Currency that you may store in house on one hand

Government sponsored hyper inflation where Milk and sugar in India costs more than what it does in California that eats up your saving on one hand

Then real estate goons on another hand.

Which one is better - I guess the RE goon, coz at least if you do your research well, you will end up with tangible asset which no one can steal unless the Maoists come to power and redistribute wealth.

@Vik, please change/let me change the layout of the blog man - now this blog has a nice history of the whole crisis, It has to be preserved well - I will spend some time to beautify it.

Avinash said...

I think the Dubai crisis is sort of a ripple effect of the US Crisis. It had to show up somewhere again.

It is like Warren Buffet:
When the tide comes down, you know who's swimming in the buff.
Dubai seems to be one!

Well, the global crisis will not end easily. I am happy I can buy some more stocks when the market falls this time again.

rajni sharma said...
This comment has been removed by the author.
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