The impact of Lehman Brothers filing for bankruptcy will impact those Indian real estate developers who have not structured their agreement carefully, opines Sanjay Dutt, joint managing director, Cushman & Wakefield. He does not forsee a situation where projects would get shelved. "Most of the funds that were committed has been delivered." Dutt is of the opinion that if projects get shelved it is mostly because of changing market dynamics and not because of lack of liquidity.
Experts think that in a bid to de-risk these investment bankers would trade their private equity placements. India is still a growth story and as far as the real estate investment is concerned it is very attractive from a long-term perspective.
Reflecting on the same lines, Shobhit Agarwal, joint managing director, capital markets, Jones Lang Lasele Meghraj says, that Indian impact of the buyout of Merrill Lynch and collapse of Lehman Brothers, the world's third and fourth largest investment banks, would be limited. With Merrill there will be no impact, says Aggarwal "as there is a shakeup on the banking side only".
He expects the industrial side to continue on a straight line. The asset management money is mainly third party fund and the bigger picture would take some time to unfold.
While explaining the reason for fall in realty stocks, he says, "it is a result of temporary negative sentiments". He thinks there will be no impact on investments though he predicts that the volume of FDI will sink. He also expects fund managers to become more cautious in the future.
"In the next six to twelve months I see a lot of PE funds who had limited exposure before, coming into the market," says, Dutt. This is a time to watch out for as it is a golden era where opportunities will be in abundance.
Vimal Shah, managing director, Akruti City, told FE, "Lehman Brothers development will not directly impact the real estate market much. However, the sentiment is getting impacted to some extent".
According to Shobhit Agarwal, "Lehman Brother's real estate holdings comprise Orbit, Anant Raj and IVRCL on the equity level and Unitech and DB Realty on the project level".
Bigger realty firms like DLF, Ansal API, Unitech has had exposure to these firms.
Last year DLF had diluted 49% of its stake in seven mid income housing (MIG) to Merrill Lynch. According to a DLF spokesperson, "We have received Rs 14.81 billion from them for dilution of stakes in these projects". He clarified, "Since we have already received the money, we are not worried about the buy out."