No place like home, local real estate developers have realised.
Just three years ago, most had their eyes riveted on international markets, particularly Dubai and elsewhere in the Middle East.
Today, many of those plans remain shelved or in a go-slow mode, while the committed projects struggle to scrape through.
The focus is back on India.
“Indian developers in Dubai who had already committed to certain projects are delivering, but surely the projects are not at a very high pace. Most of them are not backtracking, but the bull rush of Indian developers is not at the pace that it was at the peak as India seems to offer better returns on investment in this scenario,” said Jitendra Panniker, a Dubai-based real estate consultant.
“The market currently has precipitated to a more realistic pricing and hence is still a good investment from a mid-to-long term perspective, given Dubai’s commitment of becoming a world-class city. Prices are reaching realistic levels and so it’s a buyers’ market,” he said.
The rates for the world’s tallest tower Burj Khalifa in Dubai is testimony enough to the correction the Middle East market has witnessed. According to sources, what sold at more than $3,000 per sq ft during the peak period is today at around $900-1,000 per sq ft.
Some real estate consultants believe Dubai is a good bet for the medium-to-long term. But given the slowdown in the region, the focus is on India all the way for the developers now.
Among the many players bullish on the Middle-East markets was Mumbai-based Ajmera Properties, which holds a land parcel in Bahrain for a planned project of a tower meant for mixed development. The project would have marked the developer’s foray into international markets.
“We are right now going slow on this. We do intend to execute the project, but not at the moment, as the market is not conducive,” said Nimish Ajmera, director, Ajmera Properties.
The group will now focus only on the local market, he said.
Among others, Hiranandani, Sobha Developers and Dheeraj Group had started work on their Dubai projects.
Sources in Hircon International Llc, Hiranandani Group’s joint venture, said the slump in the region has resulted in a slight delay in completion of its ambitious 23 Marina project, proposed to be the world’s tallest residential tower, of which nearly 97% has already been sold out.
Sobha Real Estate has completed around four projects in Dubai in the last two years and has managed to sell around 65-70% of the total saleable area.
“Prices have been a challenge, but there has been some momentum in the past 3-4 months,” said Ajay Ramachandran, vice chairman, Sobha Real Estate. On future projects, he said the company would be careful, but there were still pockets of opportunities.
A detailed questionnaire on updates and sales figures of Dheeraj Group’s projects in Dubai remained unanswered.
Ackruti City, too, had plans to enter the Middle East market, with top officials saying they were keen. However, today, the company dismisses any such plan as mere speculation. “We will not be looking at any international market in the immediate future, as we have our hands full,” said a spokesperson.
Pankaj Kapoor, founder and CEO, Liases Foras, a Mumbai- based real estate research firm, explains the emphasis on local projects. “Earlier, developers were looking at creating a global image, but now most of them have realised that real estate is more a local story.”
Interestingly, even as Indian players shy away from the Middle-East region, a Dubai-based source said its main market — Dubai — has seen growing interest from Russians, Chinese and Iranians based out of western countries.
So, are Indian developers missing an opportunity in a market they had rushed into in full force and are now pulling back?
Consultants aren’t sure.
“Even if a developer had to focus on this market, the approach has to be that of care and caution with a medium or long-term view,” said Pranay Vakil, chairman-India, Knight Frank India. “Having said that, if one wants to make money, he has to act against the tide. There are investors who look at this market with a long-term view.”
Vakil suggests developers look at markets like Singapore and Europe now, though not many players are keen on an international foray.
“We might look at this market, but not for the next one year at least,” said Niranjan Hiranandani, managing director, Hiranandani group.