Dubai’s Pain is India’s Gain

By Ubaid Parkar

A plaque on the Statue of Liberty in New York has the following inscription, “…Give me your tired, your poor…” Dubai, on the other hand imposed a subtle underlying statement, “Just give me your money.” Dubai, the synonym for the rich and the affluent, a constant banner of almost any industry, the global billboard is now looking down an empty barrel.

A delay of repaying of a debt of around $80 billion to its creditors has raised some concerns on the viability of Dubai being a sound financial investment destination. The extension for the maturities has been requested for 30th May, 2010. Abu Dhabi, the distant cousin of Dubai, has come forward with a $10billion bail-out rescue.

Global financial experts have indicated this as a sign of a double-dip recession. Mr Uttam Jhavar of the Morya Group reckons, “There is a definite crisis and this is an offshoot of the global recession. But I think there is an opportunity for the India now and that is one way it can be looked at.”

The whole fiasco is a result of not only bad timing but questionable decisions as well. Finances were obtained for dreamy budgets, the returns of which were used to finance dreamier budgets. And with the global recession spreading like an epidemic, the timing could not be worse. Add to this, the lack of transparency discouraged any intimation to the local markets there for preparing for such an eventuality. Wijin Joe, a marketing manager and a resident of Dubai, sums up the state of affairs, “It is true that Dubai played high stakes and by sheer misfortune got their fingers burnt very badly.”

The furious construction has upset the demand-supply equilibrium. The supply, both residential and commercial, exceeds demand. There should be a need based construction rather than the other way round. Say’s Law of economics does not work all the time.

India, for instance, has an appetite for such supply. India has had headlines like the recent “Home Sales in Mumbai Increased By 97%” and “Hyderabad’s Realty Market Attracts Home Buyers” implies that the corrections took their course of action and are now slowly and steadily stabilizing. “Considering the situation and the impact of the crash in Dubai, Non-Resident Indians (NRIs) there will be inclined to invest in India” states Mr Jhavar

Indian laborers in the UAE have been a good source of foreign income. This income was attributed to the construction sector. Emaar Properties, for instance, has joint ventures with India including plans to build malls in this country. Emaar also has and has had constructions in Hyderabad (Boulder Hills, Lanco Hills and Hyderabad International Convention Centre). Mr Uttam Jhavar’s Morya Group also has a Dubai branch called Dubai Properties.

India has been, for quite sometime now, an investment destination for countries around the world. With a few stray exceptions, India is well insulated against the impact of the Dubai crash. India was also relatively well protected from the recession.

The outlook for the Asia Pacific market looks promising as per a survey by the Urban Land Institute (ULI) and PricewaterhouseCoopers LLP (PwC). As per their recent report, Mumbai is ranked second only to Shanghai as the most promising development market. “Deliberating the demand-supply factor, investments will be made in regions respective to the psyche of the people, be it Hyderabad, Mumbai or Noida. The Indian market will definitely grow in 2010 albeit at a calculated pace as sentiments are still a bit cautious. The markets are gaining confidence steadily. But growth in India cannot be overlooked at all” adds Mr Jhavar.