Give Me Love (Give Me Peace On Earth)

Give Me Love (Give Me Peace On Earth)                             27 January 2023

The 2,786 real estate and properties transactions totalled US$ 2.29 billion, during the week, ending 27 January 2023. The sum of transactions was 285 plots, sold for US$ 463 million, and 2,043 apartments and villas, selling for US$ 1.201 billion. The top two transactions were for land, the highest in Al Safouh Second, sold for US$ 38 million, and the other for a plot in Al Thanyah Fifth, for US$ 33 million. Al Hebiah Fifth recorded the most transactions, with 135 sales worth US$ 113 million, followed by Al Yufrah 1, with fifty-six sales transactions, worth US$ 90 million, and Al Yufrah 2, with twenty sales transactions, worth US$ 6 million. The top three transfers for apartments and villas were Palm Jumeirah were for US$ 23 million, the next in Al Bada for US$ 13 million and in Al Mezhar First for US$ 11 million. The mortgaged properties for the week reached US$ 425 million, whilst sixty properties were granted between first-degree relatives worth US$ 213 million.

This week, Damac Properties officially announced the launch of Damac Bay by Cavalli, located in Dubai Harbour. The project, designed by the Cavali brand, is a forty-two storey, triple- tower property which will offer a range of 1 B/R to 5 B/R super-luxury duplexes and will highlight a Cavalli-inspired bridge that coils across its rooftops; the first thirty-two floors will house all units from 1 B/R to 3 B/R, whilst the 3 B/R to 5 B/R units will be found  on the upper floors. All residents will have access to a white-sanded private beach and a range of food and beverage outlets, whilst the towers’ podium level will have a maritime getaway in the form of an elegantly crafted water maze and snorkelling excursions. Other features will include three infinity pools, at the top of each tower, a rooftop area fitted with a state-of-the-art opera pavilion and the showpiece enormous water fountain located in the central tower.

According to AirDXB, there has been a surge in homeowners, who previously were renting in the short-term rental market, turning to long-term contracts. Consequently, there is a reduced supply of short-term rentals available, which in turn will see rents inevitably rising higher and the short-term rental sector becoming more attractive. The premier short-term rentals company noted marked increases last year, with occupancy levels topping 99% in March, dipping to 87% over the next six months, before rising to 90% in September and 93% in Q4. The most popular areas for short-term rentals continue to be Dubai Marina, JBR, Downtown Dubai and Bluewaters Island, with Palm Jumeirah remaining a hotspot.  It sees the likes of JLT, JVC, Business Bay and Meydan are becoming more attractive because of their proximity to hubs and the fact they are cheaper alternatives. Dubai has always been a magnet for entrepreneurs and investors and as its popularity surges, and with tourist numbers also quickly heading north, the outlook for the sector is bullish.

Last week, Emirates announced a major ramp up in operations to China – this week it seems to be Australia’s turn. As another indicator of the marked upturn in global air travel, the carrier is to operate sixty-three weekly services to the land Down Under, with a 55k capacity. Commencing on 26 March, the world’s largest long-haul airline will increase daily services, from two to three flights from via Singapore to Melbourne, and will also restart services to Christchurch, via Sydney; it will also add a third direct service to Sydney from 01 May. These additional flights will offer more than 500k additional seats to and from Australia in a year.

Speaking to Australia’s ABC, Tim Clark, the president of Emirates, noted that “I would say you will get to that (lower pricing) in the middle of next year, maybe even sooner.” With Chinese tourists travelling for the first time in three years, this will keep demand high but that consumers could see cheaper flight prices by mid-next year, once the airline industry gets back to “equilibrium”. He indicated that airlines would need to hit the “sweet spot of price” that ensures what consumers pay is “commensurate with the margins that the business needs to sustain itself”, but once equilibrium is restored, prices will be readjusted lower. However, he added the caveat that “whether they’ll go down to pre pandemic (levels), I don’t know.”

Dubai Health Authority posted that the emirate is home to nearly 4.5k private medical facilities – 45% higher than five years ago in 2018. Included in that total, there were fifty-six hospitals, fifty-seven day-care surgery centres, fifty-nine diagnostic centres, twenty-one specialised centres for People of Determination, and 1.6k specialised outpatient clinics. The facilities also include 417 school clinics, 154 home healthcare agencies, nine fertility centres, six dialysis centres, three cord blood and stem cell centres, a gastrointestinal endoscopy centre, forty-nine dental laboratories, seventeen telehealth centres, four patient transfer service centres, fifty-seven facilities for traditional, complementary and alternative medicine, 1.4k pharmaceutical facilities, seventeen medicine storage facilities, and 410 optical centres. It has also seen a 61% hike in licensed medical professionals to reach 55.2k last year and expects that this figure could grow by between 10% – 15% this year. According to the latest Medical Tourism Index, Dubai ranks No. 1 in the MENA region and sixth globally for medical tourism, with the city ranking fifth globally on the sub-index of Quality of Facilities & Services.

This week, the FTA announced that it will start early corporate tax registration for certain categories of companies and that they would receive invitations to register using the Emara Tax platform for digital services; this early registration phase will be in place until May at which time, the tax authorities will open the process for other companies and businesses. The FTA will provide more information about registration for corporate tax “in due course”. Introduced a year ago, and starting, as from 01 June 2023, the new federal tax will have a 9% rate on all registered companies, with a profit of over US$ 102k, (AED 375k), i.e. taxable profits below that threshold will be subject to a zero rate. The tax will not apply on salaries or other personal income from employment. In comparison to other developed countries, the UAE tax rate stacks up well, with the Tax Foundation in Washington DC estimating that the average tax rates for countries in the EU and OECD are 21.3% and 23.04%. It also Indicated that corporate tax rates have declined over the past forty years, with the global average down from more than 40% to between 25%-30%.

Following two major US$ 7.4 billion investments last year – at DP World’s flagship UAE assets, Jebel Ali Port, Jebel Ali Free Zone, and National Industries Park – Moody’s has upgraded DP World’s ratings, a sure indicator of investor confidence in the company’s business and future prospects. The ratings agency noted that its diversified global port operations in strategic, fast-growing emerging market locations, solid profitability, and long-term growth potential were the main drivers behind the improved rating.

According to Mohamed Al Hadari, the listing of eleven companies on the country’s bourses in 2023 will raise more than US$ 2.18 billion, and, in addition, four free-zone entities and two special purpose acquisition companies (SPACS) are in the listing pipeline. The deputy chief executive of the Securities and Commodities Authority also commented that the next two years will see “significant growth and development in the local markets and IPO markets.” It is expected that these listings will boost the liquidity of local capital markets, attract more retail investors and improve trading efficiency. He also concluded that “it will also make the UAE markets even more attractive to foreign investors, who are investing in the future of one of the best-performing economies in the world.” The quicker than expected rebound from the pandemic, and the high energy prices, buoyed the local markets, that last year witnessed twelve IPOs, raising US$ 11 billion. Of the twelve IPOs, four state-owned entities – DEWA, Salik, Empower and Tecom – raised US$ 8.3 billion, with DEWA “contributing US$ 6.1 billion of that total; in November, schools’ operator Taaleem also listed its shares on the DFM, raising US$ 205 million. The Dubai government also announced a US$ 545 million market maker fund to encourage the listing of more private companies from sectors such as energy, logistics and retail.

Last year, the seven listed banks in the UAE reported a combined net profit of US$ 9.03 billion, with the highest being First Abu Dhabi Bank, posting a figure 7.0% higher at US$ 3.65 billion. The leading two Dubai financial institutions were Emirates NBD and DIB – with profits 40.0% higher at US$ 3.54 billion, and by 26% to US$ 1.50 billion. The former’s profit was driven by strong regional economic growth and the success of its diversified business model, with its Q4 profit, at US$ 1.06 billion, up 94% year-on-year, attributable to improving margins and a lower cost of risk; total income came in 36.0% higher to US$ 9.95 billion, driven by increased transaction volumes and improved margins. International operations, accounting for 39% of the bank’s total income, helped the bank to diversify and expand its operations. Customer deposits rose 10.0%, year on year, to US$ 137.1 billion, while the total assets of the bank grew 8.0% to US$ 202.2 billion. Consequently, a 50% increase in dividends, to US$ 0.163 a share, was proposed

Emirates Islamic posted a 51% hike to a record profit of US$ 338 million, as total income climbed 33%, driven by “higher funded income and non-funded income with a significant reduction in the cost of risk reflecting the strong economic recovery.” The bank’s operating expenses increased 29% on the year, as it invests for future growth, with its total assets rising 15% to US$ 20,4 billion. There were also increases in both customer financing and customer deposits – by 14% to US$ 13.2 billion and by 19% to US$ 15.3 billion; current account and savings account balances remained at 74% of total deposits, with its non-performing financing ratio improving to 7.0%. It also posted that 38% of its total staff numbers are Emiratis.

Dubai Islamic Bank posted increased 2022 revenue and net profit figures – by 19.0% to US$ 3.84 billion and by 25.0% to US$ 1.49 billion; provisions for bad loans fell by 14.0% on the year to US$ 572 million, “demonstrating resilience of the financing book”. Overall, net financing and sukuk investments last year grew by 5.0% annually to US$ 64.9 billion, whilst total assets were more than 3% higher on the year at US$ 78.5 billion. The country’s biggest Sharia-compliant lender by assets, which recorded its strongest ever year, proposed a 30% dividend.

Assisted by the current property boom, Deyaar posted a very credible 184% surge in net profit last year to US$ 39 million, as revenue rose 62.0% to US$ 220 million; in the year, total assets grew 7.0% to US$ 1.68 billion. The company, majority owned by Dubai Islamic Bank, invested US$ 708 million in developing the Midtown project in Dubai Production City, and also last year it completed a capital restructuring programme, as it wrote off accumulated losses worth US$ 463 million from previous years. During 2022, it received its final settlement payment of US$ 54 million relating to a long-standing dispute with master developer Limitless. It also has plans to invest US$ 82 million in three Al Furjan projects to build about four hundred residential units and hotel apartments.

The DFM opened on Monday, 23 January 2023, 51 points (1.5%) higher on the previous fortnight, shed 24 points (0.9%) to close on 3,329 by Friday 27 January. Emaar Properties, US$ 0.03 higher the previous fortnight, lost US$ 0.04 to close the week on US$ 1.56. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 3.50, US$ 1.52, and US$ 0.40 and closed on US$ 0.65, US$ 3.53, US$ 1.53 and US$ 0.40. On 27 January, trading was at 133 million shares, with a value of US$ 73 million, compared to 107 million shares, with a value of US$ 48 million, on 20 January 2023.

By Friday, 27 January 2023, Brent, US$ 9.03 (11.1%) higher the previous fortnight, shed US$ 0.97 to (1.1%) to close on US$ 86.66.  Gold, US$ 125 (6.9%) higher the previous five weeks, rose a further US$ 18 (0.9%) to close, at 1,946, on Friday 27 January.

Airbus is planning to hire 13k new workers this year, with many of the vacancies being in technology roles, which will add a further 10% to its current payroll of 130k; of the new positions, 7k will be newly created posts, and the balance will be in Europe. About 25% of the jobs will be the fields of decarbonisation, digital transformation, software engineering and cyber technology, and 33% of the total will be young graduates.  In a statement, it posted that “we call on talented individuals from all over the world to join us in our journey to make sustainable aerospace a reality and to help us build a better, more diverse, and inclusive workplace for all our employees.”

An improved performance in Q4 2022 saw Boeing narrowing its 2021 loss, by 83.8% from US$ 4.1 billion to US$ 663 million on the year, driven by higher commercial deliveries. Over the period, the plane maker posted a 35% hike in revenue to almost US$ 20.0 billion, with a total company backlog of US$ 404 billion. The commercial plane division’s revenue increased 94% on the year to more than US$ 9.2 billion, driven by higher 737 and 787 deliveries; in Q4, the unit delivered 152 planes, with a backlog of more than 4.5k planes valued at US$ 330 billion. The company posted it is manufacturing thirty-one 737s per month, to be ramped up to fifty per month by 2025, whilst its 787 programme continues at a low production rate, reaching only five per month by Q4 2023 and ten per month by 2025. Its operating cash flow improved to over US$ 3.4 billion, from US$ 716 million.

The Chinese-owned London Electric Vehicle Company, owned by Geely, announced a major investment to become a high-volume, all-electric brand, with a range of commercial and passenger vehicles. LEVC’s Chief Executive Alex Nan confirmed “Geely will make consistent investments into LEVC because this is a very unique project.” This comes after the company, badly mauled by the pandemic, laid off 130 staff last October. The Chinese owners took control of its UK subsidiary in 2013, and to date has invested US$ 620 million building a hybrid US$ 82k taxi model which has a battery providing 103 km of range and a petrol range-extender giving an extra 480 km. Meanwhile, it announced that it would look for other investors for its zero-emission portfolio and would consider partnering with other carmakers to develop new technology. Its Coventry factory has the capacity to build 3k taxis a year, running on a single shift, that could easily be increased to 20k. LEVC is exploring a range of commercial and passenger car models on a common electric platform, and can lean on other group brands that already have EVs to “move forward in a fast, agile way”. In its portfolio, Geely boasts Lotus, Volvo, Polestar – via a joint venture with Volvo – and Zeekr, which has just filed for an US IPO, in December.

Despite the global economy heading to a marked slowdown, demand for luxury cars heads in the other direction, with the likes of Rolls Royce, Bentley and Lamborghini witnessing increased 2022 sales – by 8% to 6.0k units, 4% to 15.2k and 10% to 9.2k respectively. Sales were boosted because there was increased demand for EVs, a greater selection of SUVs made by high-end brands, as well as the option to customise new cars.

LVMH posted strong sales, driven by the holiday shopping season, with a second straight record year, with Q4 revenue 9.0% higher to US$ 25 billion – and this despite geopolitical tensions and high cost of living. The world’s biggest luxury group reported that stronger sales in Europe, US and Japan made up for losses in China due to ongoing Covid lockdowns, as its Asian business witnessed a 20% decline in the first nine months of the year. The French conglomerate, whose brands include Tiffany’s, Christian Dior, Sephora, Hennessey and Moët, noted that its flagship brand Louis Vuitton posted record revenue of US$ 21.7 billion. The company is seen as a bellwether for the sector, with forecasts that the personal luxury market will grow at least 3-8% this year, even given a downturn in global economic conditions.

Millions of users were impacted on Wednesday when Microsoft Corp was hit with a networking outage that took down its global cloud platform Azure, along with services such as Teams and Outlook., with only China and its platform for governments not being hit. The tech giant later discovered the problem involved network connectivity affecting clients on the internet to Azure, as well as connectivity between services in datacentres. It later confirmed that it had rolled back a network change that it believed was causing the issue. This is not the first time that the platform has had issues – the second largest cloud services provider, after Amazon, faced outages last year. Among the services affected were Microsoft Teams, (used by 280 global million users), Microsoft Exchange Online, SharePoint Online, and OneDrive for Business,

Two of the world’s leading payments companies, Visa and MasterCard, posted healthy results, with the former reporting a 6.0% rise in net profit to US$ 4.2 billion because of higher payment volumes, cross-border transactions and processed transactions; revenue was up 12.0% to US$ 7.9 billion. The company’s cash, cash equivalents and investment securities stood at US$ 18.9 billion, at the end of 2022. Over the last three month of the year, the company recorded a 10% increase in processed transactions to 52.5 billion. Over the three-month period, Visa repurchased 15.6 million shares, at an average price of US$ 198.74 each, for US$ 3.1 billion, with US$ 14 billion of remaining authorised funds for share repurchase as of 31 December. Its board of directors declared a quarterly cash dividend of US$ 0.45 a share

MasterCard posted a 6.0%, year on year, hike in Q4 net profits to US$ 2.5 billion, but flat quarter on quarter. Revenue increased by 12.0% to US$ 5.8 billion, driven by a boost in cross-border transactions, (growing 31%), and a recovery in global spending; operating expenses rose 10.0% to US$ 2.6 billion. In the quarter, the aggregate dollar amount of purchases made with MasterCard-branded cards, surged 11%. The company’s diluted earnings per share rose 9% to US$ 2.62, whilst its share value, almost 11% higher YTD, nudged up 0.7% to US$ 385 in yesterday’s trading. For the year, net income was 14.0% higher at US$ 9.9 billion, as revenue climbed 18.0% to US$ 22.2 billion.

It has been more than a bad week for Gautam Adani who started last Monday as the world’s third richest person and ended today as the seventh; he is still worth some US$ 97.6 billion. To say that the Indian billionaire is in trouble is an understatement, with seven of his listed companies losing US$ 48 billion in market cap, and US bonds of his companies also tanking, following a scathing report by Hindenburg Research which had flagged concerns about debt levels and the use of tax havens. It also noted that the conglomerate was on a “precarious financial footing”, and that “sky-high valuations” had pushed the share prices of seven listed Adani companies as much as 85% beyond actual value. The rout took shares of Adani Enterprises, the group’s flagship company, well below the offer price of its record US$ 2.45 billion secondary sale starting today which had initially been offered at a discount. The company had set a floor price of US$ 38.18 a share and a cap of US$ 40.19. But on Friday, the stock slumped to as low as US$ 33.28— well below the lower end of the price offering. It is reported that Indian regulators are studying the US report as it continues to probe into offshore fund holdings of the Adani Group. There are valid concerns that there will be a knock-on impact on the Indian market and for Indian banks, with exposure to the Adani empire; there are estimates that in the fiscal year ending last March, they are exposed to about 40% of the US$ 24.5 billion of Adani Group debt.

In a bid to deter gold smugglers, Indian authorities are planning to slash the import duty on gold, as illicit gold imports boomed after COVID-19, impacting badly on the official market whose market revenue, including those of banks and refiners, plummeted. If this were to happen, and the fact that it would make gold purchases cheaper, it would greatly benefit not only the retail sector, ahead of peak demand season, but also the operations of domestic gold refineries, as well as supporting global prices. Last July, the Modi government decided to lift the basic import duty by 5.0% to 12.5% to support the sinking rupee and help bring down the growing trade deficit. The effective rate now stands at 18.45% when the likes of the 2.5% agriculture infrastructure development levy and other taxes are added. This rise has been a godsend for smugglers, who had struggled the prior two years because of the pandemic and travel restrictions; their market price undercuts current official domestic rates by some US$ 40 per oz. In the first eleven months of 2022, 3.1k tonnes of “illegal” gold was seized by customs and other agencies – the highest amount since pre-Covid. It was also reported that December imports were a marked 79% down on the year – its lowest level in over twenty years – and a sure sign that the government should take immediate action,

The ECB’s President Christine Lagarde is in the news again, this time warning that China’s reopening is “something that will be a positive for China mostly, something that will be a positive for the rest of the world, but we will have inflationary pressure on many of us, simply because the level of energy that was consumed by China last year was certainly less than what they will consume this year”. There is no doubt that she could be right but the fact that China is returning to some sort of normalcy, the opening of supply chains will be a driver in reducing inflation. The IEA has also noted that there will indeed be more competition for natural gas purchases which would push prices north again.

Meanwhile, the central bank, which had raised rates four times last year, bringing its deposit rate to 2%, also confirmed that said it would be increasing rates further in 2023 to address sky-high inflation, with every likelihood of two separate 0.50% rate hikes next month and in March; there are also signs that the ECB will continue to raise rates in the months thereafter if inflation rates still hover near double digit levels. Although the rate has dipped last month to 9.2%, with November also seeing a slight decline, it is still well above the bank’s 2.0% target.

A UBS survey concluded that Australian supermarket prices rises speeded up over the last quarter ending 31 December, with food prices at their two major supermarkets up 9.2% on the year. Meat prices were up 10%, (with pork 16% higher) and lamb (up 10%) leading the way, whilst dairy prices rose 14% over the year, driven by a 24% surge for cheese and an 18% hike in butter; however, milk production continues to fall, down 7%. Fruit and vegetable prices stabilised in the quarter. Woolworths posted the biggest price increases, rising by 0.9% to 9.3%, on the quarter, followed by Coles that saw a quarterly hike of 1.0% to 9.1%.  The bank’s Evidence Lab tracks the online prices of more than 60k different products at Australia’s two main supermarket groups and noted that Coles prices were marginally lower because of its aggressive discounting to try and make up some of the market share it had lost in recent times. Woolworths has generally raised food prices more than its main rival Coles over the past four years, but of late this has changed with Coles’ price rises 9.8% higher, year on year, to its rival’s 8.9%.  Although many expect inflation to have already peaked, it is expected price pressures will be slower to follow suit. On Wednesday, official figures saw the CPI rise to 7.8% on the year, and 1.9% on the quarter. The biggest increases were seen in domestic holiday travel and accommodation (13.3%), electricity (8.6%), and international holiday travel and accommodation (7.6%).

Another week and another record for Lebanon, with news that inflation reached 171.2% as the country endures its worst ever economic crisis; this rose 6.7% from November’s return and 122% on the year. The main drivers behind these shocking figures are triple digit jumps in communication, food, water and energy costs. Bad as it is, the current inflation mark has some way to go before it reaches its 741% 1987 peak during the country’s fifteen-year civil war ending in 1990 and is behind Sudan’s 741% level posted in 2021  – and its 180% hike forecast for last year. The economic melee has seen Lebanese fleeing the country, as unemployment tops the 50% level, with more than half the population sliding below the national poverty line. Easy as it sounds, the country could receive a US$ 3 million IMF assistance package, (which would release a further US$ 11 billion package by international donors), conditional on the formation of a new government, the election of a president and political consensus across political lines. To date, nothing has happened even after the six-year term of former president Michel Aoun expired at the end of October and the absence of a cabinet, eight months after the last elections.

Mainly attributable to rising interest rates on its debt, as well as having to support households with their energy bills, UK December borrowing costs hit record levels, topping US$ 157 billion – the highest ever figure since records started in 1993. Borrowing – the difference between government spending and government receipts – reached US$ 33.8 billion, with interest costs, almost doubling on the year to US$ 21.0 billion. The ONS said total public sector debt reached US$ 3.08 trillion at the end of December, equating to 99.5% of GDP – a level last seen over sixty years ago. Although gas prices have started to decline, they are still almost double what they were before February 2022, the month Russia invaded Ukraine; these price hikes are the main driver behind why inflation is surging; It is estimated that the government’s Energy Price Guarantee scheme, which limits average household bills to US$ 3.1k per year, along with it cutting energy bills in by US$ 493 this winter, added a further US$ 8.6 billion to December’s borrowing figures. Furthermore, since many gilts are “index-linked”, the government’s repayment has risen since they rise in line with the Retail Prices Index measure of inflation which is currently at double-digit levels. There is no doubt that the Chancellor, Jeremy Hunt faces a Herculean task to get the public finances back to some form of normality, with borrowing at unprecedented levels, along with debt interest payments, government spending too high, and the economy in a marked downturn.

Today, he set out a plan to help lift the UK’s economic growth, but warned it is “unlikely” that there will be room for any “significant” tax cuts in the Budget, whilst admitting what everybody already knew, that the country was going through “a difficult patch”, but insisted the country “can get through it and we can get to the other side”. The Chancellor reckons that “the biggest tax cut that we can give the British people is to halve inflation, that means the value of their weekly shop won’t continue to go up, and the value of their pay packet won’t continue to be eroded”. His plan would focus on four pillars, or “four Es” – enterprise, education, employment and everywhere – with the Institute of Directors adding a fifth – empty because his strategy  did not include any concrete plans and lacked any substantial detail.

It still remains a conundrum on how he can boost economic growth and cut inflation levels, (which at 10.5% is still five times more than the BoE’s 2.0% target), to get public debt levels much lower. Another quandary is that the BoE uses the Consumer Price Index as its measuring base, whereas the government has the Retail Price Index as its guideline when it comes to measuring inflation. In November, the CPI was at 10.7% whilst the RPI came in 3.3% higher at 14.0%. The government issues “gilts”, also known as bonds, to suit big investors such as private pension funds, whose pay-outs to customers are linked to RPI and therefore need an asset linked to it. Why does the government continue to pay higher debt issue than going for a cheaper option?

The chances of the UK and EU changing their post-Brexit relationship are slim, a new report has found, with Changing Europe (UKICE) concluding that there was little chance of either of the two parties changing their post-Brexit relationship – and this despite the island nation’s economy being badly hit by the change and the fact that recent polls would support a move back into the bloc. Even three years after the UK left the dysfunctional EU, discussions are still ongoing on the final outcome of implementing Brexit, with the main area of dispute involving the management of the largely open border between Northern Ireland, which is part of the United Kingdom and EU member, Ireland. There are still major problems in other sectors including financial services, fisheries and energy. The report noted that relations were “far from either settled or stable”, but it indicated that neither side seemed likely to want to reassess the 2020 Trade and Cooperation Agreement.

Despite the pressure of high interest rates and widespread fears of a looming recession, in Q4, the US economy expanded at 2.9%, on an annual basis; however, this was 0.3% lower than the previous quarter’s figure of 3.2%. The money seems to be on a similar reduction in the current quarter, perhaps followed by a weak recession in Q2. Overall annual growth was 2.1%, down from 5.9% a year earlier. Such better than expected figures do point to the probability of further rate hikes, starting with 0.25% next week, and that they could remain at these higher levels in the short-term. Although inflation has declined from 9.1% to 6.5%, over the past four months, the figure is still more than triple that of the Fed’s 2.0% target,  whilst unemployment is set to rise by over 30% from 3.5% to 4.6% by the end of this year.

This week, the US announced that it would send thirty-one M1 Abrams battle tanks to help Ukraine in its war against Russia, after the Biden administration U-turning on its original stance of arguing that the tanks would be difficult to deliver, expensive to maintain and challenging for Ukrainian troops to operate.  Finally, Germany has agreed to initially send fourteen Leopard 2 tanks, (but a total of 114 over an unspecified period of time), in a move that will allow other European nations to send German-made tanks from their own stocks; this comes after months of Ukraine lobbying Western allies to send the military equipment. Ukraine’s President Volodymyr Zelensky said, “it was an important step on the path to victory”, with Russia condemning the moves as a “blatant provocation.” This could be a turning point in the war that would allow Ukraine regain momentum and regain land previously lost to the Russian aggressors. Unfortunately, this can only prolong the conflict, with the number of deaths, which already numbers tens of thousands, continuing to climb. So much for Give Me Love (Give Me Peace On Earth).

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To Take The Money And Run!

To Take The Money And Run!                                            20 January 2023

The 2,704 real estate and properties transactions totalled US$ 3.54 billion, during the week, ending 20 January 2023. The sum of transactions was 235 plots, sold for US$ 308 million, and 1,944 apartments and villas, selling for US$ 1.20 billion. The top three transactions were all for land, the highest in Al Thanyah Fifth, sold for US$ 21 million, and the others for plots in Al Hebiah Fifth, for US$ 7 million, and Warsan Fourth for US$ 7 million. Al Hebiah Fifth recorded the most transactions, with 134 sales worth US$ 123 million, followed by Al Jadaf, with twenty-six sales transactions, worth US$ 37 million, and Jabal Ali First, with fourteen sales transactions, worth US$ 13 million. The top three transfers for apartments and villas were all for apartments – the first in Wadi Al Safa 5, at US$ 37 million, the next in Island 2 for US$ 10 million and In Al Wasl for US$ 10 million. The mortgaged properties for the week reached US$ 1.91 billion, whilst 104 properties were granted between first-degree relatives worth US$ 272 million.

According to Betterhomes, Dubai property prices are expected to grow in 2023 – but at the much lower pace of 5%, rather than the 11% and 21% witnessed in the prior two years; last year, over 60% more units, at 92k, were sold than in 2021, with sales of apartments, 73% higher and villas just 3%. The consultancy noted that rising rates and the strong dollar had been a factor in consumers’ ability to pay more for properties but that the rate hikes had been less felt because it is estimated that 70% of Dubai sale are for cash, whereas in other developed countries the rate can be as low as 20%.  Betterhomes indicated that last year, their top non-resident buyers were Russians, accounting for 15% of transactions, followed by Britons, 12%, Indians, 11%, Italians 7% and French, 4%.  Completing their top ten were buyers from Pakistan, Lebanon, China, the US/Canada and Kyrgyzstan. Among Dubai residents the top buying nations were from India, UK, Russia, Italy and Canada. Last year it appears that 34k units were added to Dubai’s property portfolio, with the same number expected in 2023. (The Real Estate Registration Department in Sharjah has revealed that real estate transactions in that emirate during 2022 touched a US$ 6.54 billion).

Last year, Dubai’s property sector had a record year with real estate transactions nearing US$ 144 billion, (AED 528 billion – the first time it had crossed the half a trillion dirham landmark), and 76.5% higher on the year. When it comes to volume, the 122.7k transactions posted last year was up 44.7% compared to 2021, with 80.2k investors registering 115.2k new real estate investments, valued at US$ 72.0 billion, equating to a 59.5% increase on the year. The number of investors in 2022 grew 53% compared to 2021. Sheikh Hamdan bin Mohammed noted the sector’s “exceptional performance” will help achieve Dubai’s vision to be “one of the world’s top three cities”. Dubai’s Crown Prince reiterated that “the results also support the goal of the Dubai Economic Agenda D33 … to double the size of Dubai’s economy by 2033. The sector is a pillar of Dubai’s strategy for sustainable development and a vital driver of its 2024 Urban Master Plan”. 

2022 was a record year for Dubai’s ultra-luxury property market sector, with 219 sales of homes, valued at US$ 10 million and over, with residences in the likes of Emirates Hills, Jumeirah Bay Island and The Palm Jumeirah witnessing average price hikes of 44%; one of the main drivers behind the staggering price rises has been the dearth of supply. Knight Frank noted that last year’s total sales equated to the total sales seen between 2010 and 2020; in 2010, there were only eleven such sales. The consultancy also confirmed that the country remains the second-most likely target — after the UK — for a home purchase this year by the region’s wealthy, and that Dubai also remains one of the world’s most affordable luxury home markets.

Meanwhile, Luxhabitat Sotheby’s International Realty reported that the emirate’s prime residential market registered US$ 8.35 billion of transactions in Q4 – 40% higher on the quarter; over that period over 9.8k units were sold with an average price of US$ 1.88 million. It noted that “this steep rise in prices is being driven primarily by interest in high-end branded residences, with some of the preferred prime areas such as Jumeirah Bay seeing investors willing to pay any price”. Knight Frank reported that villas on The Palm are the most expensive in Dubai, with average transaction prices at about US$ 886 per sq ft, with average 49.4% rate rises; it also reported 2022 villa price increases of 22% and 20% in Mohammed bin Rashid City and Dubai Hills Estate – and for apartments in Dubai Hills Estate and The Palm by 22% and 20%.

The Dubai Media Office confirmed that fifty-five property projects were completed in the emirate last year, and a combined value of US$ 3.24 billion, with the number 57% higher and the value up 8%, compared to 2021. It also noted that there are “350 real estate projects currently being developed, reinforcing Dubai’s status as one of the world’s leading real estate investment destinations.” Last year, 80.2k investors registered 115.1k new property investments valued at US$ 72.0 billion – with increases in both volume, at 59.5% and in value of 78.4% – as the number of investors increased by 53%, compared to 2021.The value of property transactions rose by 76.5% in line with the 44.7% jump in transactions to 122.7k. By year end, there were 140 developers and 13.0k property brokers registered with the DLD.

In 1960, Dubai had a population of just 20k which had grown 13.8 times to 276k by 1980; twenty years later, the population had more than trebled to 862k in 2000, with an almost quadrupling to 3.411 million by 2020. Last year, Dubai Media Office reported that by 2040 the population could top 5.8 million, equating to a mere 70% hike in numbers.  To this observer, this figure seems to be very conservative, and the population could easily double by then. (Over the past sixty years, the urban and built area of the emirate has increased 170-fold from 3.2 sq km).

The following illustrates how numbers have changed over the years and that the occupancy rate per unit has nudged lower. The ratio of apartments to villas hovered just under 82:18, whilst the occupancy per unit has dipped to 4.60. The 2040 calculation uses the 82:18 ratio and Occupancy at 4.46. If the population were to rise to 5.8 million by 2040, over the nineteen-year period, that would indicate an extra 543.6k residential units needed, at an average annual rate of 28.6k units.

2010280,60065,100345,7001,905,000 5.51
2015397,70085,100482,8002,447,000 5.07
2020581,100130,500711,6003,411,000 4.79
2021617,900138,500756,4003,478,000 4.60
20401,066,000234,0001,300,0005,800,000 4.46
Dubai Property21 Jan 23

This week, Saman Developers released its US$ 680 million plans for 2023 which includes twelve new projects including five-star hotels and around 2.4k housing units. The Dubai-based realtor expects a quadrupling of activity and has already lined up six projects with new concepts for H1 2023. Last year, it delivered the US$ 30 million Samana Hills project, and launched Samana Waves, Samana Miami and Samana Santorini projects – all of which were 100% sold out. The company was the first developer in Dubai to create and set the trend of private swimming pools in residential projects – in non-hotel projects with title deeds. In November 2022, it launched Samana Holidays, which almost doubled the investment returns of Samana homeowners from 8% to 15% and has targeted five hundred units to convert them into holiday homes (serviced apartments) for short-term rentals. The converted units are expected to generate over US$ 10 million in revenue in five months.

Dubai has retained its crown as the most popular destination in the world in a survey by TripAdvisor Travellers’ Choice Awards.; points are awarded based on the quality and quantity of reviews and ratings submitted by millions of worldwide travellers. This is just another award that supports the goal of the recently launched D33 Economic Agenda to consolidate Dubai’s status as one of the world’s top three destinations for tourism and business.

Just ahead of the new Lunar Year, Emirates announced that it would ramp up its operations to China, in response to strong travel demand and the easing of that country’s Covid restrictions. From today, the airline will resume passenger services to Shanghai, starting with two weekly flights operated by an Airbus A380, adding two more weekly flights on 02 February. In addition, it will increase services to Guangzhou, with daily non-stop flights from 01 February, and will start non-stop daily flights to Beijing from 15 March; by then, Emirates will be flying twenty-one times a week in and out of China.

The Ministry of Energy has indicated its target is to see the UAE in the top ten hydrogen-producing countries globally. Sharif Al Olama, speaking at the Abu Dhabi Sustainability Week, noted that the UAE had taken “great strides” in developing clean hydrogen technologies to reduce the cost of hydrogen, as a sustainable source of energy. He also noted that “we in the UAE aim to capture 25% of the low carbon hydrogen key markets and aspire to be one of the top ten hydrogen producing countries in the world within this decade.” French investment bank Natixis estimates that investment in hydrogen will exceed US$ 300 billion by 2030. It is reported that Siemens Energy is developing a US$ 14 million hydrogen pilot project with DEWA, aiming to demonstrate how hydrogen can be produced from solar power and how to store and re-electrify the clean fuel. The country’s target is to invest over US$ 163 billion, (to achieve net-zero emissions by 2050), in clean and renewable energy projects over the next three decades.

Although no other financial details were released, e& has increased its stake in UK’s Vodafone Group to 12% and now owns an “aggregate 3,272.3 million shares, representing 12% of Vodafone’s issued share capital, (excluding treasury shares)”. The country’s biggest telecom’s operator, formerly known as Etisalat, is seeking to diversify its international operations. Last May, it had acquired a 9.8% stake in the UK telco for US$ 4.4 billion and had increased its stake to 11% last month. E& has operations in sixteen countries across the Middle East, Asia and Africa, serving more than 156 million customers.

The DFM opened on Monday, 16 January 2023, 22 points (0.7%) higher on the previous week, gained 29 points (0.9%) to close on 3,353 by Friday 20 January. Emaar Properties, US$ 0.02 higher the previous week gained US$ 0.01 to close the week on US$ 1.60. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.63, US$ 3.50, US$ 1.53, and US$ 0.40 and closed on US$ 0.65, US$ 3.50, US$ 1.52 and US$ 0.40. On 20 January, trading was at 107 million shares, with a value of US$ 48 million, compared to 74 million shares, with a value of US$ 49 million, on 13 January 2023.

By Friday, 20 January 2023, Brent, US$ 6.68 (8.6%) higher the previous week, gained US$ 2.35 (2.8%) to close on US$ 87.63.  Gold, US$ 120 (6.7%) higher the previous four weeks, rose a further US$ 5 (0.2%) to close, at 1,928, on Friday 20 January.

JP Morgan Chase confirmed a provision of US$ 1.4 billion in their accounts, set aside for the possibility of a mild recession, despite a strong Q4 performance of its trading unit and surpassing market forecasts. Its chief executive, Jamie Dimon, confirmed that there was more competition for deposits as higher rates that has resulted in customers migrating to investments and other cash alternatives, meaning the bank was “going to have to change saving rates”. The US biggest lender’s supremo noted that “we still do not know the ultimate effect of the headwinds coming from geopolitical tensions, including the war in Ukraine, the vulnerable state of energy and food supplies, persistent inflation … and the unprecedented quantitative tightening.”

Genesis, which earlier in the month posted that it was retrenching 30% of its staff, has filed for bankruptcy, having been hit by the collapse of another crypto firm, Three Arrows Capital, which went bankrupt last June, owing the cryptocurrency lender US$ 1.2 billion. The firm, part of the Digital Currency Group (DCG), a conglomerate of more than two hundred crypto-focused businesses, has also been charged by the SEC with illegally selling crypto assets to investors. The fall of Genesis is linked to that of FTX which went under last November amid allegations of fraud and is but the latest shock to rattle the crypto sector. It is also in dispute with Gemini over the fate of US$ 900 million in assets that Gemini customers deposited with the lender, but since November, some 340k of their clients have been unable to withdraw funds, when Genesis halted withdrawals because of the volatility in the crypto markets.

This week, Microsoft confirmed that, ahead of a possible recession, it would eliminate 10k positions, (less than 5% of its workforce), and take a US$ 1.2 billion hit from changes to its line-up of hardware products and from consolidating leases. The tech giant is the latest to slash its payroll, just two years after the onset of Covid saw such companies go on massive recruitment drives to satisfy the increased demand at that time. Chief Executive Satya Nadella indicated that customers wanted to “optimise their digital spend to do more with less” and “exercise caution as some parts of the world are in a recession and other parts are anticipating one.”

Continuing the redundancy trend endemic with tech giants, Google parent Alphabet is laying off 12k, (6.3%), of its nearly 190k employees, after a review across its product areas and functions. Its chief executive, Sundar Pichai, commented that “I take full responsibility for the decisions that led us here,” and that “we have undertaken a rigorous review across product areas and functions to ensure that our people and roles are aligned with our highest priorities as a company”. In line with its peers, the firm, after boosting hiring at the height of the Covid-19 pandemic, has seen demand slowing, as interest rates rise and recession fears grow. At the start of 2023, Verily, a biotechnology unit of Alphabet, said it was cutting about 15% of its staff. Its market had fallen by over 30%, in the past twelve months, but jumped over 2.0% on the latest news, closing today on US$ 94.97. In Q3, Alphabet’s year on year profit declined 27.0% to US$ 13.9 billion, with a spend of US$ 10.3 billion on R&D, equating to 14.3% of the quarter’s total revenue – 34% higher compared to the same period on 2021.

Earlier in the month, Amazon reported that it would be laying of more than 6%, (18k), of its workforce, with the world’s biggest e-commerce company, warning of the repercussions from the continuing economic slowdown. Last November, Meta confirmed that the company would lay off 11k staff, equating to over 13% of the total payroll, amid declining revenue. A month earlier, Apple noted that it would be paused hiring for most jobs, excluding R&D. Hewlett Packard has already indicated that it would lay off as many as 6k staff over the next three years. Then, there are the shenanigans at Twitter which saw its staff numbers halved in November, following the arrival of its new owner, Elon Musk.

Although adding 8.9 million new subscribers in Q4, with total sales 2.0% higher at US$ 7.85 billion, Netflix posted a 90.6%, year on year, slump in quarterly profits to US$ 55 million. At the same time, Reed Hastings, the firm’s founder and executive chairman, confirmed he was stepping down saying that “going forward, I will be serving as executive chairman, a role that founders often take after they pass the CEO baton to others”. COO Greg Peters has been appointed Ted Sarandos’s co-chief executive and a member of the Netflix board. The news brought some light relief for its market value, with shares rising 6.4% on the day, to US$ 335.87, having had slumped 37% YTD. The Q4 forecast sees increases in both revenue and net income to US$8.17 billion and US$ 1.27 billion.

It is expected that struggling British Steel could be the beneficiary of a US$ 372 million government hand-out, following requests from Business Secretary Grant Shapps and Levelling-up Secretary Michael Gove. Any loan would be dependent on the company committing to securing jobs at the company and making additional substantial investments, with any money received to be spent on decarbonisation. Department for Business, Energy and Industrial Strategy commented that it “recognises the vital role that steel plays within the UK economy, supporting local jobs and economic growth”, and was “committed to securing a sustainable and competitive future for the UK steel sector”. Three years ago, British Steel was bought out of insolvency by Jingye, which became its third owner in four years.

Marks & Spencer posted that because of a US$ 595 million revamp of many of its outlets, it expects to add a further 3.4k jobs to its headcount. This year, it also plans to open eight “full-line” stores in major cities, including Manchester, Liverpool and Birmingham, with seven of them relocations, of which five will be former Debenham outlets. It will also open twelve new Simply Food outlets in 2023, and once completed, the changes will see a reduction overall in the number of M&S’s traditional shops, from 247 to 180 over the next five years, as the firm looks to expand its grocery trade. Its chief executive, Stuart Machin said the programme was about “making sure we have the right stores, in the right place, with the right space”. This latest announcement comes after the retailer posted a healthy festive season, with a 6.3% rise in like-for-like sales across its food halls in the thirteen weeks to 31 December as well as clothing and home store sales rising 8.6%.

M&S was one of several UK retailers which had a Happy Christmas, with latest sales data for the festive season also seeing apparently impressive returns from Tesco, Sainsbury’s, Next, DFS, Greggs and B&M.  M&S reported like for like sales, in the three months to 31 December, 7.2% higher, driven by strong demand for clothing and home goods in both volume and value, and food sales up 6.3%. Tesco posted a 5.3% hike in like for like sales, in the nineteen weeks to 07 January – marginally below expectations but still robust in such trying economic times. However, the rise was down to goods being more expensive – due to the pace of price rises or inflation – as opposed to people buying more items. Sainsbury’s, which also owns Argos, reported same store sales 5.3% higher in the four months to 07 January, with walk-in sales at Argos rising strongly. Cold weather in December helped Next post a sales increase of 4.8% in the nine weeks to 30 December and was the main driver for the retailer to lift its full year profit forecast by 5.6% to US$ 1.06 billion. The furniture company, DFS indicated a 10.6% rise in H2 profits but warned that order numbers were softening ahead of the expected recession. B&M posted a 6.4% sales increase in what it refers to its “golden quarter” ending 24 December. Last on the list of “Christmas winners” comes Greggs, with the ubiquitous bakery chain seeing Q4 sales to 31 December jump 18.2%.

On the flip side, Asos said sales dipped 3% in the four months to 31 December, not helped by being “affected by disruption in the delivery market” during December when Royal Mail staged a number of strikes. Consequently, the on-line fashion retailer had to initiate earlier cut-off dates for Christmas and New Year deliveries. Halfords posted a profit warning, cutting its earlier full year profits forecast of US$ 80 million – US$ 93 million forecast to US$ 62 million – US$ 74 million. Two impacting factors were weaker customer demand and a dearth of skilled technicians.

Outbidding the likes of Disney Star, Sony and Zee among other broadcasters, Viacom 18’s US$ 117 million bid was enough to acquire the media rights of the women’s Indian Premier League T20 tournament for the next five years.  The BCCI is keen to see the number of participating teams increase from its current number of three. In August last year, Disney Star won the rights to broadcast men’s and women’s International Cricket Council events through for the next five years, in a deal reported to be worth US$ 3 billion. Two months earlier Disney-owned DIS.N Star India retained the television broadcast rights to the men’s IPL for the same amount.

Siemens has signed a US$ 3.25 billion deal to deliver 1.2k electric freight locomotives, and to provide servicing for thirty-five years. The trains will be assembled in the Indian Railways Factory in Gujarat state over the next eleven years, with deliveries starting in Q1 2025. The German engineering company also noted that “these new locomotives…can replace between 500k to 800k trucks over their lifecycle.” It also confirmed that it was also looking at other train contracts in India, the world’s largest rail market, with twenty-four million passengers travelling daily on more than 22k trains.

After the Glazers, the current owners of the club, confirmed that they would be interested in a potential sale, chemical giant, INEOS, has formally entered the bidding process to buy Manchester United. Its founder, billionaire Jim Ratcliffe, a lifelong fan of the club had already expressed interest in buying the club last August and now it is official. INEOS has long been involved in sport, with the company acting as principal partners to eight-times Formula One champions Mercedes, owning the INEOS Grenadiers cycling team and serving as performance partner to the New Zealand rugby team. The energy giant also acquired French Ligue 1 club Nice in 2019 but failed last year in an attempt to buy Chelsea FC, which was subsequently acquired by US-based Clearlake Capital.

To say that the Glazer family are unpopular with the fans is more of an understatement. Troubles started almost straightaway with the family using loans, the majority of which were secured against the club’s assets and incurring annual interest payments of over US$ 74 million. The balance was financed via PIK loans and these payment in kind loans were later sold to hedge funds. The interest on the PIKs rolled up at 14.25% pa. Despite this, the Glazers did not pay down any of the PIK loans in the first five years they owned the club until after January 2010, the club carried out a successful US$ 618 million (GBP 500 million) bond issue, and by March 2010, the PIKs stood at around US$ 256 million. The PIKs were eventually paid off in November 2010 by unspecified means. It is reported that the family has received more than US$ 1.24 billion in dividends, during their ownership of the club, and that the last financials posted saw the club’s net debt 22.7% higher on the year to US$ 638 million

With many businesses passing on any inflation-driven costs onto customers, Japan’s inflation rate has jumped to a fresh forty-one-year high; the 4% level is double that of the BoJ’s 2.0% target. Whether the bankers decide to hike rates, in a bid to cut inflation, remains to be seen, but indicators show that rates are to move north this quarter. This week, the BOJ surprised investors by announcing that it would keep rates near zero, (despite the increasing cost of everything from food to fuel). Analysts seem to agree that “the BOJ will [eventually] end its negative interest rate policy”.

The Office for National Statistics noted that UK house prices and rents continued to rise, as late as November, whilst every man and his dog are predicting a slowdown. Private rental prices rose by 4.2% in the year to December – this is the highest increase recorded since records began seven years ago. UK property prices jumped 10.3% over the past twelve months, down on October’s 12.4% return. On a regional basis, there was a 10.9% annual increase in England, a 10.7% rise in Wales, a 5.5% jump in Scotland and 10.7% growth in Northern Ireland. The typical UK house price in November was US$ 365k, US$ 35k higher than a year earlier but down on October’s figure of US$ 367k.

India has confirmed that the Modi government is committed to boost investment in Sri Lanka, to help pull it from its worst economic crisis, (driven by shortage of foreign currency, surging inflation and a steep recession), since its 04 February 1948 independence. The troubled island nation can only secure a US$ 2.9 billion bailout from the IMF once it has its two biggest bilateral lenders’ backing, (China and India), who are owed US$ 7.4 billion and US$ 1 billion, to reach a final agreement. India has already confirmed to the IMF that it strongly supports Sri Lanka’s debt restructuring plan.

There are reports that the UAE is in early discussions with India to trade non-oil commodities in Indian rupees. The country is one of the Gulf state’s biggest trade partners with many of the related contracts currently in US$. India will not be the only nation looking to trade in their home currency, as the likes of China will be discussing similar terms.

The European Parliament is looking to lift the immunity of two more MEPs, Belgium’s Marc Tarabella and Italian, Andrea Cozzolino supposedly involved in the corruption scandal, known as Qatargate, which is besetting the legislative body. The former failed to declare a trip to Qatar in 2020, which the country paid for – a breach of European Parliament’s rules.  The latter was the chair of the parliament’s delegation working with the Maghreb region, which includes Morocco – one of the countries allegedly offering politicians cash to influence decision-making in the EU – and he was also on the committee investigating the use of Pegasus spyware by third countries.

With US November consumer price inflation declining to 7.1% in November, whilst the eurozone equivalent figure remains in double digits at 10%, it seems that the ECB supremo, Christine Lagarde may have to eat a little humble pie; for a long time, she used to claim that the US Fed had a bigger inflation problem than the European Central Bank and now she has to admit that the eurozone may be in more trouble. Having declared a 0.5% rate hike last week, the fact is that US inflation is finally heading south, attributable to hefty rises in H2 2022 that saw borrowing costs jump to 4.5%. In contrast, the apparently dormant ECB only started raising their rates later, at an less aggressive level, with the bank’s chief indicating that there were “reasons to believe” price pressures in Europe would surge in early 2023. To the neutral observer, it is apparent that more rate hikes, (probably at least two rate hikes, totalling at least 1.0% in Q1) are on the horizon in the ECB’s belated attempt to tame European inflation and return to their long-standing 2% target.

Although he anticipates inflation will decline rapidly this year, (at a much faster rate than expected), BoE Governor Andrew Bailey indicated that he expected inflation likely to fall rapidly this year as energy prices decline, but that rates are expected to maintain their 4.5% level. However, the BoE supremo warned that a long, shallow recession was still on the cards and was worried that the many vacancies for jobs would mean employees are in a stronger bargaining position for wage rises, which could help push prices higher. Over the past three months to December, inflation has continued to head south having touched 11.1% in October, followed by 10.7%, and then 10.5% in December. Early next month, a 0.50% rate hike is inevitable, with the main interest rage rising to 4.0%, with it reaching its 4.5% peak rate by the end of Q3.

Often thought to be the most profitable banks in the world, the Australian Big Four – ANZ, CBA, NBA and Westpac – pulled in almost a staggering US$ 21 billion, (AUD 30 billion) profit last year. This comes at the same time that many of the banks’ customers are struggling with surging cost of living expenses and the fact that mortgage rates will continue to rise because of interest rates moving higher and as banks seek to recover their increased costs. However, with home values having seen their biggest decline in recent times, and the weakening of consumer spending, banks will have to be more careful when raising mortgage rates at a higher pace than the cash rate, or keep savings rates on hold, in order to finance their rising funding costs. It seems that at least nine non-bank lenders have already increased variable rates by more than the RBA’s 3% – cash rate rise since May 2022, due to their reliance on wholesale funding; these institutions do not have retail savings accounts and are wholly reliant on wholesale markets for their funding, putting them under pressure as rates have risen. Traditional banks have managed to build up savings balances and were also helped by the government’s TFF – a term funding facility, amounting to US$ 131 billion, (of which US$ 92 billion involve the Big Four), of three-year emergency loans from the RBA, at fixed rates as low as 0.1%, which is due to be repaid before 2024. It seems that Australian bankers continue To Take The Money And Run!

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Wind of Change

Wind of Change                                                                            13 January 2023

The 2,574 real estate and properties transactions totalled US$ 2.21 billion, during the week, ending 13 January 2023. The sum of transactions was 221 plots, sold for US$ 322 million, and 1,889 apartments and villas, selling for US$ 1.34 billion. The top three transactions were all for land, the highest in Jabal Ali First, sold for US$ 13 million, and the other for plots in Wadi Al Safa 4 for US$ 12 million and Al Thanya Fourth for US$ 11 million. Al Hebiah Fifth recorded the most transactions, with 112 sales worth US$ 118 million, followed by Al Jadaf, with twenty-five sales transactions, worth US$ 16 million, and Jabal Ali First, with twenty-one sales transactions, worth US$ 31 million. The top three transfers for apartments and villas were all for apartments – the first in Al Raffa, at US$ 34 million, the next in Al Jadaf for US$ 33 million and In Island 2 for US$ 32 million. The mortgaged properties for the week reached US$ 411 million, whilst ninety-two properties were granted between first-degree relatives worth US$ 136 million.

The latest CBRE report confirmed that Dubai’s property market had a record year in 2022 with total transactions of 90.9k, easily surpassing the previous 2008 record of 81.2k. Over the year, average property prices increased by 9.5%, with apartments up 9.0% and villas 12.8% higher, as sales prices ended the year at US$ 318 per sq ft and US$ 377 per sq ft. The most expensive area in the apartment segment is Jumeriah, at US$ 633 per sq ft, and for villas, Palm Jumeirah at US$ 1,068 per sq ft. It has to be noted that 2022 prices are still below those set in 2014 – apartments trailing by 21.5% and villas still 4.2% lower. Property rents went through the roof last year – with increases of 27.1% for apartments and 24.9% for villas. CBRE also indicated that villa rents now stand at US$ 76.9k – 45.3% up on 2019 rates – and apartments 17.2% higher at US$ 25.9k. (Whether such rises can continue at these levels into this year remains unlikely but there will be some growth in both sectors). According to Zoom Properties, the top areas to buy apartments were Business Bay, (10.3k transactions, valued at US$ 4.8 billion), Dubai Marina, (7.4k transactions), JVC, Downtown Dubai, Dubai Creek Harbour and Palm Jumeirah.

In a bid to cash in on the current boom in the luxury Dubai residential market, MAG has released a further four ultra-luxurious mansions, in addition to the eight already released, at its Ritz-Carlton Residences project. The Sky Mansions, part of the Keturah Resort, are each priced at US$ 54 million, with each having four floors,  eight bedrooms, a majlis, media room, lounges, spa, gym and cinema, with the added bonus of a private mooring for up to 120 ft yachts. The overall Keturah Resort, which also contains a Ritz-Carlton hotel, offers homeowners access to the beach and will have a private members-only club, a women’s club, a kids club, Michelin-star restaurants and a retail promenade.

A massive US$ 5.45 billion project, located in Dubai South, has been announced by Azizi Developments, which will boast a two km long glass-covered, air-conditioned boulevard, which will comprise shopping areas, commercial space, restaurants, and other amenities. The mixed-use development will also feature luxury villas, residences, hospitals, schools and commercial/recreational space, as well having its own large swimmable crystal lagoon, with three km of beach-like shores and water features, along with vast parks. The developer, which has recently bought the fifteen million sq ft plot of land, with twenty-four million sq ft of GFA, will be the master developer in charge of constructing the buildings, roads and all infrastructure, and has signed an agreement with KEO International Consultants for the masterplan consultancy.

Dubai’s hospitality sector continues to improve and ended the year on a high, with most indicators heading north in December; revenue per available room and average daily rate jumped to US$ 186 and US$ 243, 31.1% and 33.8% higher compared to pre-Covid December 2019. STR noted that “overall, tourism demand has been returning to Dubai throughout 2022 and December was no exception with 397,910 more rooms sold, representing a 13% increase over 2019.” However, hotel occupancy rates dipped 2.0% to 76.6%, compared to 2019 levels. During December, 397.9k rooms were sold and on New Year’s Eve occupancy, ADR and RevPAR came in at 91%, US$ 481 and US$ 437. This week, Euromonitor International ranked Dubai as the second most attractive  global city destination, behind Paris but ahead of Amsterdam, Madrid and Rome.

New guidelines relating to Emirates’ Skywards Miles loyalty programme will see passengers having to pay more for upgrades to Business and First-Class travel, but at the same time offering increased bonus miles for all of its Platinum, Gold, and Silver members. The transition will be completed by the end of this month. Under the change, it appears that Skywards Platinum members will earn a further 100% of the Economy Flex+ Miles – increasing from 75%, whilst Gold and Silver members will earn 75% and 30% – up from the previous 50% and 25% respectively. The programme boasts thirty million members, many of whom may well be disappointed with the news that makes it harder to trade up on future flights.

Latest OAG data sees Dubai International Airport featuring in five of the top ten global busiest routes in terms of seats, noting that with the post-pandemic recovery, coming in better than expected, resulted in a robust growth in passenger traffic; the survey covers the twelve months starting in October 2021. The UAE’s Federal Authority for Identity and Citizenship data showed that Dubai received 21.8 million passengers in 2022, through Dubai’s two airports, and that DIA was the world’s busiest international airport, last month with total seats of 4.556 million. Cairo-Jeddah was the busiest global route – 3.234 million seats – followed by Dubai-Riyadh, with forty flights per day and 3.191 million seats. The four other routes involving DIA were Dubai-LHR, Dubai-Jeddah, Mumbai-Dubai and Delhi-Dubai coming in fourth, sixth, eighth and tenth with 2.697 million, 2.425 million, 1.977 million and 1.898 million seats respectively.

OAG also ranked Emirates as twentieth in a global airline list of on-time performance (OTP) of 81.13%, one place behind its neighbour Etihad, scoring 81.14%. On-time performance is gauged on flights that arrive or depart within fifteen minutes of their scheduled times. The two local airlines also had one of the lowest flight cancellations rates of 0.55% – Emirates – and 0.02% for Etihad in 2022 and were the only two Gulf carriers that made it to the top twenty list of 2022. Globally, Garuda Indonesia, South Africa’s Safair, German low-cost carrier Eurowings, Thai AirAsia and South Korea’s Jeju Airlines were the top five most punctual airlines last year. According to OAG, the top ten airports by punctuality in the Middle East and Africa were Durban King Shaka International, Cape Town, Amman Queen Alia International, Bahrain, Muscat, Addis Ababa, Beirut, Abu Dhabi International, Doha and Jazan.

The total foreign assets held by the Central Bank of the UAE (CBUAE) increased on a monthly basis by 0.41% to US$ 118.8 billion at the end of last October, mainly attributable to the monthly increase in bank balances and deposits with banks abroad by 2.2%, to reach US$ 67.1 billion. Foreign securities, within the foreign assets of the Central Bank, nudged 1.44% higher to US$ 33.1 billion. Meanwhile, other foreign assets decreased 8.3% to US$ 15.8 billion but increased on an annual basis by 22.7%.

The DMCC confirmed that, by the end of 2022, it attracted over 3k new member company registrations – a year on year increase of 22.7%. The record growth was attributable to several factors including the growing demand from commodities, global trade and blockchain/web3 businesses and rising international interest. To back up its claims to be the biggest and best free zone in the world, DMCC was named Global Free Zone of the Year by the Financial Times’ fDi Magazine for the eighth consecutive year.

The Arab Monetary Fund posted that, by the end of last year, the market cap of Arab stock exchanges exceeded US$ 4 trillion, with the values of the DFM at US$ 158.4 billion. The local bourse’s value was lower than the likes of the Saudi Stock Exchange, the Abu Dhabi Securities Exchange and the Qatar Stock Exchange with values of US$ 2.63 trillion, US$ 714.6 billion and US$ 167.09 billion; however, it was ahead of the market caps of the Boursa Kuwait’s US$ 152.7 billion, Muscat Stock Exchange’s US$ 61.6 billion and Bahrain’s bourse’s US$ 30.2 billion.

Taaleem Holdings posted a 14.3% hike in its Q4, (ending 30 November), profits to US$ 14 million, driven by higher enrolments, leading to higher revenue. The Dubai school operator, the first education company to be listed on the DFM, saw quarterly revenue rise 32.4%, to US$ 63 million, as total expenses rose 38.0% to US$ 50 million, including finance costs more than doubling to nearly US$ 2 million. Earnings before interest, taxes, depreciation and amortisation rose 22.1 to US$ 21 million, an EBITDA margin of 33.8%. Taaleem, formerly known as Beacon Education, was founded in Dubai in 2004, and operates twenty-six schools in the UAE, with 28.2k pupils enrolled.

The DFM opened on Monday, 09 January 2023, 34 points (1.0%) lower on the previous week, gained 22 points (0.7%) to close on 3,324 by Friday 13 January. Emaar Properties, US$ 0.09 lower the previous fortnight gained US$ 0.02 to close the week on US$ 1.59. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.62, US$ 3.57, US$ 1.53, and US$ 0.40 and closed on US$ 0.63, US$ 3.50, US$ 1.53 and US$ 0.40. On 13 January, trading was at 74 million shares, with a value of US$ 49 million, compared to 58 million shares, with a value of US$ 28 million, on 09 January 2023.

By Friday, 13 January 2023 Brent, US$ 7.36 (8.6%) lower the previous week, gained US$ 6.68 (8.6%) to close on US$ 85.28.  Gold, US$ 68 (3.8%) higher the previous three weeks, rose a further US$ 52 (2.8%) to close, at 1,923, on Friday 13 January.

The start of the week saw oil prices rising on the back of news that China was reopening its borders, with Brent trading 3.33% higher at US$ 81.11; only last week, Brent registered its biggest weekly loss – at 8.6% – since 2016. This came about after nearly three years of strict strict entry requirements, and as China is the world’s biggest crude oil importer, it was inevitable that there would be a boost in oil prices, with the lockdown slowing growth. As the Lunar New Year approaches, the holiday season could be a welcome boon for both international and national travel.

Northumberland battery firm Britishvolt, which is planning a US$ 4.62 billion “Gigafactory”, for electric cars, “is in discussions with a consortium of investors concerning the potential majority sale of the company”, indicating a deal would allow it to “pursue” plans to build a “strong and viable” battery manufacturing business in the UK. It has already had to delay production until Q3 2025, and the sale is expected to provide funding to continue its plans to build the site, which if completed would employ 3k people. The government had earlier promised US$ 122 million to the company but had refused to allow any funding to be drawn down early but this sale appears to allow it to develop the factory, until it can begin actually making a profit from the sale of batteries.

Admitting that he had made “some costly mistakes”, James Watt has had to pay out US$ 609k. Brewdog’s supremo admitted that he thought that some cans of his iconic beer were actually made out of solid gold but were actually gold-plated in a 2021 beer can promotion. Some winners complained to the Advertising Standards Authority, who agreed that the advertising was misleading and found in favour of the consumers. The chief executive of the Scottish brewer confirmed that he had contacted all fifty winners to offer the “full cash amount” as an alternative to the prize if they were unhappy” and indicated that he now owns forty of those “gold” cans.

According to reports, Subway could be up for sale and, that being the case, it could be valued at over US$ 10 billion. The sandwich maker, a privately held company, owned by its two founding families for more than five decades, has a presence in over one hundred countries, with 37k outlets, making it one of the largest global quick-service restaurant brands. If the sale were to go through, it seems likely that the buyer will either be a corporate buyer or a private-equity firm.

This week, Goldman Sachs Group started cutting the first of a reported 3.2k positions, from its 49.1k workforce, (6.5%), across the firm, as in line with its peers, it is set for a tough 2023 economic environment, after adding significant numbers of new staff during the pandemic. It would appear that its investment banking division will be impacted most, as the sector has suffered a major slowdown in corporate dealmaking activity because of volatile global financial markets; on a global scale, the investment banking sector lost 41.8%, on the year ,to US$ 77.0 billion and the value of mergers and acquisitions globally slumped 38.0% to US$ 3.66 trillion. It is also expected that numbers will be reduced in its loss-making consumer business after it scaled back plans for its direct-to-consumer unit Marcus. These cuts were confirmed to staff by its chief executive, David Solomon, via a year-end voice memo to staff warning of a headcount reduction in the first half of January and comes at a time when the financial institution is set to announce annual bonus payments, expected to be 40% lower on the year.

Redundancies were also announced at Twitter, as Elon Musk continued his staff cost cutting strategy focusing on the trust and safety team handling global content moderation and, in the unit, related to hate speech and harassment; these included personnel located in both the Singapore and Dublin offices. Even senior managers such as Nur Azhar Bin Ayob, the head of site integrity for the Asia-Pacific region, and Analuisa Dominguez, Twitter’s senior director of revenue policy were shown the door. Workers on teams handling policy on misinformation, global appeals and state media on the platform were also eliminated. This follows the initial November cull of 3.7k employees which saw hundreds of others resigning as well.

Elon Musk has not only alienated some Twitter employees (and users) but has also earned the ire of some two hundred Chinese Tesla car buyers, who have complained that they had overpaid for electric cars they had bought earlier. The protest was against the US. carmaker’s decision to slash prices for the second time in three months the previous Friday, making the cars between 13% – 24% cheaper than they were in September 2022. Many expect that these reductions will boost sales, (which tumbled in December, at a time of faltering demand in the world’s largest market for battery-powered cars), and support production at its Shanghai factory, which employs 20k. The protesters were left frustrated and disappointed with the abruptness of the latest price cut and Tesla’s lack of an explanation to recent buyers.

European customers will reap the benefit of Tesla reducing the price of some of its most popular electric cars by between 10% to 13%, and as high as 20% on some US models, as demand for its vehicles slow because of a difficult global economic outlook and increased competition from other carmakers. It is estimated that UK purchasers will save about US$ 6.7k on an entry-level Model 3 and US$ 8.5k on the cheapest Model Y. It was misfortune for the 16k customers who bought Tesla cars before the price cuts were announced. However, mainly because of disgruntled Tesla buyers, who were left paying the ‘old’ prices, the US EV maker has posted those customers who had ordered, but not yet received, their vehicle would be charged the new lower price. However, it seems that, within eighteen months, supply will be greater than demand as Tesla faces a turbulent time because of slowing global growth and higher interest rates, increasing competition from more established carmakers and from Chinese brands. It appears that the latest events have already seen second-hand Teslas lose up to 20% in value.

Of the 12k redundancies indicated by Amazon last week, 1.2k will be in the UK, as it plans to shut three warehouses in Hemel Hempstead, Doncaster and Gourock, in the west of Scotland. However, the online retail giant is planning to open two new “state of the art” robotic units, over the next three years, in Peddimore, West Midlands, and Stockton-on-Tees, creating 2.5 new positions. It also plans to close seven delivery stations in England, which employ dozens of workers, but will open two new ones in Havant and Aylesford.

In November 2020, Chinese authorities cancelled Ant Group’s US$ 37 billion IPO, (at the time the world’s biggest), at the last minute. Over two years later, its founder, Jack Ma, has announced that he will surrender control of his company to draw a line following the government’s crackdown and could result in an effort to resurrect a new IPO. However, this could take more time as China’s domestic A-share market requires companies to wait three years after a change in control to list, two years for Shanghai’s Nasdaq-style STAR market and one year in Hong Kong. Ma only owns a 100% stake in Ant, an affiliate of e-commerce giant Alibaba Group Holding Ltd 9988.HK but has exercised control over the company through related entities, according to Ant’s IPO prospectus filed with the exchanges in 2020. It now seems likely that Ant will be fined US$ 1.0 billion, as part of Beijing’s sweeping and unprecedented crackdown on the country’s technology titans over the past two years.  However, it does seem that Chinese authorities, recognising that the US$ 17 trillion economy has not yet fully recovered from the pandemic, may well be softening their robust approach to the sector which has lost billions of dollars in both revenue and profits.

The Chinese News Agency, Xinhua, reported that the country’s foreign exchange reserves rose to US$ 3.127 trillion at the end of December 2022 – 0.33% higher on the month. The increase was attributable to the double whammy of currency translation and asset price changes, with declines in both the U.S. dollar index fell and prices of global financial assets. It is expected that forex reserves will remain stable in the coming months because of strong fundamentals, with the Chinese economy enjoying “strong resilience, tremendous potential, and great vitality”. The central bank’s targets including work, to maintain liquidity at a reasonably ample level, maintain effective growth in total credit volume, and ensure that increases in money supply and aggregate financing are generally in step with nominal economic growth.

Having already defaulted on its debts, Sri Lanka’s central bank has urged China and India, (with loans of US$ 7 billion and US$ 1 billion), to agree a write-down of their loans, as a US$ 2.9 billion IMF bail-out payment is dependent on these two countries, but this will only be released when both countries first agree to reduce Sri Lanka’s debt. Although nudging lower, inflation is still high with food prices up 65% on the year, with the World Food Programme estimating  that eight million, of the 22.2 million population, are food insecure. The World Bank estimates that Sri Lanka’s economy shrank by 9.2% in 2022 and that it will contract by a further 4.2% this year.

The fact that Australian inflation rose again in November, would point to the RBA agreeing to a further rise next month. The latest figures from the Australian Bureau of Statistics showed that inflation rose 7.3% on the year, and 0.4% higher on the month; there were marked rises seen in housing, (up 9.6%), food/non-alcoholic beverages, (by 9.4%), groceries, travel, dining out and takeaway food. Latest data point to the fact that there are still ongoing inflationary pressures in the economy. Along with other G20 nations, Australia is reeling from rising energy prices, mainly attributable to the war in Ukraine, along with soaring petrol and diesel costs. It is estimated that, in November, operating costs, including wages, electricity, and weather affected reductions in food supplies drove prices up by 16.6% from October’s 11.8% rate. Furthermore, holiday and travel costs increased by a surprisingly high 12.8% – the second highest for this sector in almost five years. With latest inflation data still rising, allied with ongoing robust retail sales data, rates will rise following the 07 February RBA meeting; estimates are between 0.25% and 0.50% and that further increases could see the rate reach 4.2% by May.

It is more than likely that global rate hikes will continue into 2023, and further tightening will continue until at least the end of H1; this comes after last year witnessing borrowing costs rising by the most in four decades. It is interesting that the people who caused the problem in the first place, by not lifting rates earlier, continued to get all their forecasts wrong last year. A study by Bloomberg of twenty-one jurisdiction indicated that ten would be increasing rates, nine doing the opposite and two remaining on hold. Based on the findings, the consultancy has forecast inflation will peak at 6.0% in Q3 before ending on 5.8% by year end. It also considered central banks’ rates and forecast that the US Fed, ECB, BoE and Bank of Japan would end 2023 at 5.0%, 2.25%, 4.25% and -0.1%, having started the year at 4.5%, 2.0%, 3.5% and -0.1%.

The World Bank has nearly halved its 2023 global economic forecast to 1.7% from 3.0% posted last July, and that by the end of 2024, the economic output of emerging and developing economies will grow by just 1.2% and will be about 6% below levels pre-Covid levels while inflation is expected to moderate, but remain high. The usual suspects for this latest downgrade include the impact from the war in Ukraine, central banks tightening money supply, continuing high inflation levels, deteriorating financial conditions and slowing growth in the US, (0.5%), China, (4.3%) and the euro area (zero); the 2023 growth in advanced economies is expected to slump from 2022’s 2.5% to just 0.5% this year. Things could get even worse if any of the factors listed above come more into play The World Bank also noted that “the deterioration is broad-based: in virtually all regions of the world, per-capita income growth will be slower than it was during the decade before Covid-19”, and that Inflation, currency depreciation and underinvestment in people and the private sector are eroding average income levels “significantly”.

To the surprise of many, the UK economy unexpectedly grew 0.1% in November, following a 0.5% rise a month earlier. The two main drivers were a boost from the FIFA World Cup in Qatar, (with increased sales in pubs and restaurants, as fans went out to watch the games), and a marked increase in demand for services in the tech sector. However, the economy is still in dire straits, as consumer confidence and spend diminishes at a time when food and energy bills go up and people cut back, along with the many strikes not helping the situation.

Another indicator that US price pressures may have already peaked, was that annual inflation fell to its lowest level in more than a year last month, assisted by the Fed’s tightening of monetary policy; CPI dipped, (by 0.1% on the month), for the sixth straight month to post an annual 6.5% increase – its lowest level in fifteen months – and well down on the June 2022 high of 9.1%.

US Treasury Secretary, Janet Yellen, has warned Congress that the country is projected to reach its statutory debt limit, (which stands at US$ 31.4 trillion), by 19 January, and advised that she would take “certain extraordinary measures” to prevent the US from defaulting once the debt limit is reached, which could be as early as next week; the debt level represents the total funds the US is able to borrow to meet its legal obligations. The situation will result in the first major battle in the Republican-controlled House of Representatives over a potential default, which if it occurs will be the first ever.

There is no doubt that the ECB will continue to ratchet up rates, well into 2023, in its belated efforts to return inflation to its long-standing target of 2%. There is a school of thought that maintaining rates at tight levels will result in declining consumer confidence and consumption which, in turn, will drag inflation levels down. Since July 2022, rates have risen 2.5% in four successive hikes and perhaps a 0.50% rise will be seen next month.

Corruption seems to be an ongoing global problem and the EU is not immune from its impact, having seen far too many financial scandals in its history. It is almost a month since four individuals rocked the EU bureaucracy, when it was alleged that Greek MEP Eva Kaili and her partner, Francesco Giorgi, et alia were involved in the illicit lobbying allegedly conducted by Qatar. Now the horse has bolted yet again, the European Parliament has decided to review undeclared trips from lawmakers and pieces of legislation that might have been unduly influenced as a result of the alleged cash-for-favours scheme. It seems that investigators are now closely looking at a committee vote in early December that approved visa liberalisation for Qatar and Kuwait, as well as an array of paid-for visits of multiple European lawmakers to the Gulf region.  Since then, the net has widened and it is reported that two additional MEPs from the socialist group – Marc Tarabella and Andrea Cozzolino – as well as intelligence and diplomatic officials from Morocco, are being investigated. There is no doubt that corruption is alive and kicking, not only in Europe, but all over the world – and once again, and not only in the EU, many scandals will be just swept under the carpet, as politicians ensure that in any investigations, they often become both judge and jury.

Munich Re confirmed that 2022 was one of the costliest years on record for natural disasters, noting that climate change was making storms more intense and frequent. The world’s largest reinsurer estimated that losses, covered by insurance, from natural catastrophes totalled US$ 83.7 billion – almost the same level as recorded in 2021; the average insured losses, over the last five years, equate to US$ 67.7 billion, with Munich Re’s Ernst Rauch, chief climate scientist, commenting that “we can’t directly attribute any single severe weather event to climate change. But climate change has made weather extremes more likely.” Total losses, whether insured or not, from natural catastrophes were US$ 188.3 billion in 2022, compared to US$ 223.2 billion a year earlier, but near the five-year average. Three of the worst events last year were Hurricane Ian, which hit Florida, causing US$ 41.8 billion of insured damages and US$ 69.7 billion in total losses, as well as US$ 3.3 billion and US$ 5.6 billion from floods in Australia. Record monsoon rains and floods in Pakistan, that killed at least 1.7k people, caused US$ 10.5 billion in damages, most of which was not covered by insurance. No surprise to see insurance rates moving higher as it seems that the weather will not be improving with the likelihood of more climatic disasters. It is about time that governments’ promises now become reality and they need to take immediate action; what is now needed is a lot more than just a Wind Of Change!

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Missing In Action!

Missing In Action!                                                            06 January 2023

The 2,173 real estate and properties transactions totalled US$ 2.72 billion, during the week, ending 06 January 2023. The sum of transactions was 270 plots, sold for US$ 613 million, and 1,903 apartments and villas, selling for US$ 1.33 billion. The top two transactions were for land, the highest in Marsa Dubai, sold for US$ 170 million, and for a plot in Al Thanyah Fifth for US$ 21 million. Al Hebiah Fifth recorded the most transactions, with 133 sales worth US$ 105 million, followed by Jabal Ali First, with forty-nine sales transactions, worth US$ 62 million, and Al Merkadh, with twelve sales transactions, worth US$ 34 million. The top three transfers for apartments and villas were all for apartments in Island 2 – the first at US$ 32 million, the next two for US$ 31 million and US$ 20 million. The mortgaged properties for the week reached US$ 504 million, with the highest being for a building in Burj Khalifa, mortgaged for US$ 82 million, whilst 101 properties were granted between first-degree relatives worth US$ 272 million.

It was reported that the UAE and Saudi Arabia account for 83.6% of all regional property transactions, equating to US$ 107.8 billion, with Dubai and Abu Dhabi grabbing 48% of the aggregate value over the ten months to October. In that period, the region posted a 21% hike in value, whilst Dubai witnessed a massive 81% surge, attributable to several factors including solid demand and price gains witnessed by luxury residential properties, and healthy revenues in the affordable segment. Although Dubai posted a 61% hike in transaction numbers, other nations – Saudi Arabia, Kuwait and Qatar – posted a decline compared to a year earlier. Saudi did top the listing when it came to the average value per transaction – at 35.5% – with Dubai returning a 12.2% increase.

Recent research work by Realiste indicates that Dubai real estate sector transactions are set to grow by 46% this year. The Dubai-based PropTech company also noted that last year, property prices grew by between 20% – 40%, with some areas posting even bigger rises; they included Palm Jumeirah and Trade Centre First, growing by 59% and 210% respectively. The company has developed an AI-powered tool that enables investing in real estate in major global capital cities, including New York, Abu Dhabi, Dubai, Riyadh, and London, that will notify the asset owners when it is the right time to buy or sell their properties. Using analytics, the company’s research shows trends in the Dubai’s real estate market, such as the areas of the city showing the most significant increase, the average cost of properties across locations, and the most high-priced or low-priced locations. According to its AI, the most expensive areas were Trade Centre First, followed by Al Wasl Part 2, and that Dubai average prices ranged from US$ 116k in Wadi Al Safa 2 Part 1 to US$ 3.28 million in Al Safouh First Part 2. There was an average 53% growth in average prices of Dubai Hills’ residences, climbing to US$ 436k.

According to data from analytics agency Dsight, more than 16% of Russian companies and entrepreneurs relocated to the UAE in H1 2022 and, with it, the biggest inflow of private wealth this year. Russian entrepreneurs, investors, and top-level professionals have arrived in the emirate to settle, and this has boosted the local property market. There is no doubt that Dubai will remain attractive to overseas investors who are seeking to shield their assets and looking for a safe haven.

Dubai hosted 12.82 million overnight international visitors – more than 85% of the pre-Covid figures from 2019 and more than double the 6.02 million figure reported in 2021; the latest numbers are still 3.91 million shy of the total 2019 return of 16.73 million. Last month, the country launched a national tourism strategy to attract forty million guests by 2031.  With its 794 hotels, and 145.1k available rooms, average occupancy in year-to-date November 2022 was only 2.3% less than pre-pandemic levels, despite the 17 per cent increase in room inventory. The RevPAR statistic came in at almost US$ 103, compared to the US$ 75 and US$ 83 figures recorded in 2021 and 2019. Last year, it is estimated that Dubai recorded almost 23.7 million traveller arrivals in 2022 – up 89% on the previous year, with 21.8 million arriving through Dubai’s airports, and the balance via Hatta Border Crossing (1.6 million) and 243k via the seaports.

There was a 78% hike, to US$ 1.73 billion, in Dubai Duty Free 2022 sales, as DXB passenger traffic started to return to some form of normalcy; it is expected that last year’s numbers will top 64 million. Over the year, the retailer’s head count jumped 16.6% to 4.7k, as sales transactions topped 17.3 million, with 47.3 million units of merchandise being sold.

Starting on 01 January 2023, all establishments purchasing alcohol in the emirate will no longer have to pay the 30% municipality tax, and, apart from now buying their drinks for 30% less, personal liquor licences will be free for those eligible to legally purchase alcoholic beverages in Dubai. However, for those applying for a licence, a valid Emirates ID for residents or passport for tourists, is still required to apply; a person must be at least 21 to drink legally in the UAE, and alcohol can only be consumed privately or in licenced public places. There is no doubt that this will be a boon for the travel and hospitality sectors, as Dubai becomes a more affordable tourism destination.

Also starting on New Year’s Day, the country’s ‘Involuntary Loss of Employment Insurance Scheme’, covering all workers, whether in the private or public sector in the country, and including Emiratis, came into effect. This social security programme will pay anyone, who becomes unemployed, a cash sum for up to three months from the date of an employee’s job loss and will be calculated at 60% of their basic salary for a maximum payment of US$ 5,450, (AED 20k) a month. For those earning US$ 4,360, (AED 16k), or less, the annual insurance cost is just over US$ 16, (AED 60k); for those earning more, the figures are double at US$ 32, (AED 120). The insurance, with premiums subject to VAT, is compulsory, and failure to register in an unemployment insurance scheme will result in a penalty of US$ 109 (AED 400) being imposed on the employee. It appears that employers are not required to register their employees nor to actually pay the insurance for them, with the onus on individuals to register and pay for themselves.

On 04 January – and on the anniversary of his Ascension Day – HH Sheikh Mohammed bin Rashid launched the Dubai Economic Agenda ‘D33’; its targets were to double the size of the emirate’s economy, over the next decade, and to consolidate its position among the top three global cities. He also commented that, “the Dubai Economic Agenda ‘D33’ includes one hundred transformative projects, with economic targets of AED32 trillion, (US$ 8.72 trillion), over the next ten years, doubling our foreign trade to reach AED25.6 trillion, (US$ 6.98 trillion) and adding four hundred cities as key trading partners over the next decade”. He also commented that, “Dubai will rank as one of the top four global financial centres with an increase in FDI to over US$ 38.58 billion in the period and an annual US$ 120.57 billion contribution from digital transformation”.

Despite a slowing economy, as well as surging inflation, and the December UAE adjusted S&P Global PMI dipping 0.2 to 54.2, the country’s non-oil business activity is still well in positive territory and on track to expand at its fastest pace in more than a decade last year. Output growth, driven by an increase in sales and customer numbers, was positive, as new business at non-oil companies continued to rise, although at a slower pace, and demand from domestic clients improved. Output charges fell for the eighth consecutive month, with more discounts on offer, as businesses fight for an increased share of the market There was a rise in some firms’ inventory levels in their expectation of higher sales and new projects being launched. (Meanwhile December PMIs for Saudi Arabia and Egypt came in at 56.9, down from 58.5, and 1.8 higher to 47.2 – but still in negative territory).

The country’s economy has rebounded strongly in the aftermath of the pandemic, driven by higher energy prices and progressive government initiatives. Estimates for 2022 growth range from around 6.5% to 7.6%, with this year’s growth forecasts just shy of 4.0%. In the first nine months of 2022, non-oil foreign trade grew 19% to US$ 446 billion, compared to the same period in 2021. In H1, hotel guest numbers jumped 42%, from the same period before the pandemic, with revenue from tourism touching US$ 5.2 billion and guest numbers topping twelve million.

The DFM opened on Monday, 02 January 2023, 20 points (0.6%) higher on the previous week, shed 34 points (1.0%) to close on 3,302 by Friday 06 January. Emaar Properties, US$ 0.06 lower the previous week, shed US$ 0.03 to close the week on US$ 1.57. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.59, US$ 3.54, US$ 1.55, and US$ 0.41 and closed on US$ 0.62, US$ 3.57, US$ 1.53 and US$ 0.40. On 06 January, trading was at 58 million shares, with a value of US$ 28 million, compared to 88 million shares, with a value of US$ 38 million, on 30 December 2022.

By Friday, 06 January 2023 Brent, US$ 9.31 (1.2%) higher the previous three weeks, shed US$ 7.36 (8.6%) to close on US$ 78.55.  Gold, US$ 27 (1.5%) higher the previous fortnight, rose US$ 41 (2.2%) to close at 1,871, on Friday 06 January.

Huawei expects its 2022 revenue to reach over US$ 91.5 billion, in line with earlier forecasts. The Chinese tech giant confirmed that its ICT infrastructure business maintained steady growth, whilst the decline in device business has slowed; robust growth was seen in digital power and Huawei Cloud. It also indicated that future business opportunities would be found in digitalisation and decarbonisation, and that the company would continue to expand its R&D investment. Meanwhile, Samsung expects its Q4 profits to slump by 69% – its lowest level since 2014 – which made the global leader, of memory chips, smartphones and TVs, downgrade its quarterly forecast to US$ 3.4 billion. This is yet another indicator that the sector has been hit badly by the global economic slowdown and a marked decline in consumer demand.

Having delivered 405k vehicles in Q4, Tesla posted annual deliveries of 1.3 million – 40% higher than a year earlier, but quarterly down on the 405k Q4 Wall Street forecast. The outlook points to slowing demand in 2023, as the impact of a decelerating global economy and rising rates takes effect, with the EV manufacturer confirming that it had to deal with “significant Covid and supply chain related challenges throughout the year”. In the past, Tesla has always managed to deliver as many vehicles as it produced but is now facing increased competition from the traditional carmakers, such as Toyota, VW, Ford and GM. Tesla’s shares fell by 65% in 2022 – its worst year since going public in 2010.

Another tech giant facing problems is Amazon which this week announcing a lay-off of 18k jobs (about 6% of its total 300k workforce), which will mainly impact its e-commerce and human-resources units. Amazon has been impacted by the fact that soaring inflation has led to businesses and consumers to cut back spending, causing its share price halving over the past year. According to, the tech industry has lost more than 150k jobs in 2022, with the trend continuing into the new year. This week, Salesforce Inc announced a 10% staff cut from its 8k payroll.

In the aviation sector, the company with the most sales could hinge on recent deals. As of the start of December, Airbus had 825 orders compared to 576 net sales for Boeing, but the US platemaker has chipped away at the lead with a 200-jet sale to United Airlines Inc and a 40-jet deal with a lessor. It is likely that Airbus will just be in the lead when final delivery – and sales – totals for 2022 are released shortly. However, after major problems since 2019, Boeing shares have jumped 57% in Q4, adding US$ 42 billion to its market value, as the plane maker released plans to revitalise the company; Boeing’s latest market cap, at US$ 113 billion, compares to its rival’s US$ 94 billion.

Another bad week for Meta as Ireland’s Data Protection Commission fined the Facebook parent company US$ 410 million for online privacy violations and also banned it from forcing European users to agree to personalised ads based on their online activity. There were two fines – US$ 221 million for violations of the EU’s strict data privacy rules and US$ 189 million for breaches involving Instagram. These are the latest penalties imposed on the tech giant which had already been hit with US$ 947 million of fines since 2021. The Irish watchdog is Meta’s lead European data privacy regulator because Meta’s regional headquarters is in Dublin.

Although still the world’s largest company, Apple’s value, fell by about 4% at the close of Tuesday’s trading to US$125.07, resulting in its market cap falling below the US$ 2 trillion level for the first time since March 2021; the US tech entity first attained the US$ 2 trillion level in August 2020, and surpassed the US$ 3 trillion level last January. The main drivers behind the fall continue to be inflation, international supply issues and a slowing global economy, with its share value trading more than 30% lower over the past twelve months.

Another one of the big US mega tech companies which has also seen its market cap tumble, is Tesla. With its share price tanking more than 12% in Tuesday’s trading to US$ 108.10, its current market cap of US$ 338.7 billion is a marked downturn in fortunes from its US$ 1 trillion mark reached in October 2021; over the past twelve months, its share value has sunk by around 72%., attributable to many factors, including concerns about EV demand and the impact of its chief executive Elon Musk’s acquisition of Twitter.

One of India’s best known business tycoons has been arrested, almost four years after investigations began – Venugopal Dhoot is facing a case of criminal conspiracy and fraud. It seems that India’s federal investigation agency is beginning to crack down on white collar crime and has seen the arrest of former ICICI Bank chief, Chanda Kochar, and her husband for an alleged fraud. The former bank’s supremo was alleged to have been involved in granting Dhoot’s companies high value loans in 2009, in return for investment in her husband’s renewables business. With the tycoon initially denying any of the claims against him, it seems that he has offered to give evidence against Kochhar, and if that happens it will be inevitable to bring other senior ICICI bankers into the limelight and could unravel a web of intricate fraud.

With higher energy prices last year, it is expected that Gulf sovereign wealth funds, awash with more cash, will play an increased role in the global markets in 2023. It is reported that five of the top ten global SWFs are to be found in the Gulf region, with Singapore’s GIC leading the pack of state-owned investors, having  US$ 40.3 billion invested in 2022 – up 17% on the year. ADIA, at second place, Mubadala and ADQ were also in the top ten. Last year, they more than doubled their investments in western economies, including the US and Europe, to US$ 51.6 billion in 2022, from US$ 21.8 billion in 2021. On the global stage, state-owned funds enacted fewer deals but with greater value – 747 deals, worth US$ 261.1 billion, compared to 890, worth US$ 229.9 billion; this year will see both figures move inevitably higher. The value of assets managed by SWF dipped US$ 0.5 trillion to $10.6 trillion in 2022, while those managed by public pension funds declined US$ 1.3 trillion to US$ 20.8 trillion. Like other investment vehicles, SWF will face all the global economic problems and disruptions – a looming recession, a cost-of-living crisis, record high inflation levels, a strong greenback and growing inequality,

President Tayyip Erdogan has announced that Turkey will decrease the price of natural gas between 13% to 25% for industrial users compared to November 2022. Natural gas prices for electricity production were cut by 12.73%, with electricity prices declining 16%.

According to CoreLogic, Australia’s Home Value Index fell 5.3% last year – its first decline since 2008 – with the largest being 12.1% and 8.1% noted in Sydney and Melbourne; the main driver was the surge in interest rates. With national values dipping 1.1% last month, home values could fall further in the early months of 2023 before stabilising after interest rates peak by the end of H1; rates have jumped 3.0% since last May to 3.1%. .Australia’s US$ 6.4 trillion housing market has declined 8% since its April 2022 peak, after surging 28.6% post-Covid. The RBA has posted that some 30% of Australian borrowers on fixed-rate mortgages will see repayments climb by more than 40% when their loans roll over in 2023. However, the consultancy noted that despite the downturn across many areas of the country, “housing values generally remain well above pre-Covid levels.”

Last month, US employers added a further 223k position to the country’s jobs market, pushing the unemployment rate 0.1% lower to 3.5%. These figures continue to show the resilience of the labour sector, despite soaring prices, with some forecasting that this will reduce the possibility of a severe economic downturn in H1. It must be noted that with the tech giants apparently reducing their payrolls, with double-digit job cuts, this could affect the labour market growth numbers, as consumer spending slumps and financial costs rise. The most recent report showed prices 7.1% higher on the year from a year earlier. It is readily apparent that the country’s economy has been slowing since 2021 and that, despite the economy still creating jobs, employers seem to be planning for a downturn, which will severely hit the market. The Fed is in a quandary – if it raises rates again, to rein in inflation, which is highly probable, this would result in higher costs for both businesses and consumers; this, in turn, will see a further slowdown in the economy and further job cuts.

Kristalina Georgieva has posted that this year will be “tougher” than that of 2022, as the economies of US, EU and China slow and, more worryingly, that over 33% of global economies will be in recession. The IMF supremo also indicated that the main drivers continue to be the war in Ukraine, rising prices, higher interest rates and the renewed spread of Covid in China, and noted that “even countries that are not in recession, it would feel like recession for hundreds of millions of people.”

Latest figures point to a slowing of China’s economy, with the official PMI data showing that its factory activity contracted for a third consecutive month in December – and at the fastest pace in three years – with coronavirus infections spreading in the country’s factories. Furthermore, home prices in one hundred cities fell for the sixth month in a row. Even President Xi Jinping called for more effort and unity as China enters what he called a “new phase”. The economy will also be impacted by the fact that demand for its products will slow, as other global economies cut down on their spending, as well as the fact that rising borrowing costs will ensure that investment is impacted. The knock-on effect is that lack of growth will see investors pulling money out of China, which in turn could see the see its currency weakening. A weak currency makes exports cheaper (but there are less exports because of reduced global demand) and imports dearer adding to China’s potential economic woes.

With the latest December round of rate rises taking effect, UK mortgage approvals fell to their lowest level in two years at 46k, and almost 12k lower last month; the September mini budget, hatched by the comedy duo, Liz Truss and Kwasi Kwarteng, was also a main driver behind the fall in the mortgage sector.  Things will also get worse this year and with mortgage approvals drying up, the knock-on effect will have a negative effect on house prices; latest forecasts indicate that they will dip by as much as 10% in 2023. These figures from the BoE also show that people were also borrowing more on credit cards, as cost of living pressures continue to weigh on household budgets, and that people were saving more for the proverbial “rainy day”. It is estimated that, in November, households deposited US$ 6.87 billion, (GBP 5.7 billion) – an indicator that because of the weakening consumer confidence index, households are spending less, with credit card debt rising by US$ 1.44 billion, (GBP 1.2 billion).

There is no doubt that the UK economy is in for troubled times in 2023, with both the BoE and the Office for Budget Responsibility forecasting a continuing recession – the former’s outlook is for a longer recession, if consumers increase their precautionary spending, and the latter a short sharp dip, as consumers dip into their savings. Any recession will see a slowdown in consumer spending, and this will present an economic headache, bearing in mind that UK Private Consumption accounts for over 63% of its GDP. After two years of decline, 2021 witnessed a 16.9% hike in ‘household final consumption expenditure’ to US$ 2,369.1 billion, (GBP 1,959.1 billion). Despite a seemingly strong labour market, even though actual wages are heading lower, the government’s guarantee energy prices, (probably costing less than initially forecast, and the possibility of it being extended in April), along with petrol pump prices edging lower would point to a soft landing. However, the canary in the mine is the ongoing industrial action which seems to be getting more serious by the day, with every man and his dog out on strike. If this continues ad infinitum, then the UK is heading for both a deeper recession and increased social unrest.

Lady Michelle Mone and her companies are being investigated by the National Crime Agency, investigating PPE Medpro a company that received US$ 242 million of government contracts, weeks after the Conservative peeress had referred it to ministers at the onset of Covid-19. It seems that the good lady is not the only government-related person to have had her “nose in the trough”. Some disturbing data has been revealed that could possibly implicate certain politicians who have done likewise, the most disturbing being that US$ 14.5 billion spent on PPE had been wasted, including US$ 4.9 billion, not being used because it did not meet NHS standards, and US$ 6.0 billion being written down to reflect subsequent price falls. Yet another report, by the National Audit Office confirmed that of the US$ 20.9 billion, spent between March and July 2020, a massive US$ 12.7 billion was awarded without any competition and US$ 8.1 billion to pre-approved suppliers (although they were not necessarily pre-approved for the products they were selling), Strangely, only US$ 0.24 billion was awarded using the established competitive process. To some, it does seem that during this period, some. Within the upper echelons of the ruling party, some were given ‘tickets to board the gravy train’; many of the ‘connected’ companies, many without any prior experience, and some had been newly established at the time, were given contracts, without due process. To date, just like dealing with the country’s current civil unrest, by not negotiating with many of the striking sectors, Rishi Sunak and his cohorts appear to be Missing In Action!

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Shake It Off!

Shake It Off!                                                                                   30 December 2022

The 2,790 real estate and properties transactions totalled US$ 2.62 billion, during the week, ending 30 December 2022 and the year. The sum of transactions was 179 plots, sold for US$ 379 million, and 2,071 apartments and villas, selling for US$ 1.54 billion. The top three transactions were all for land, the highest in Marsa Dubai, sold for US$ 63 million, followed by sales for US$ 48 million, in Jabal Ali Industrial Area 1, and Palm Jumeirah for US$ 26 million. Al Hebiah Fifth recorded the most transactions, with ninety-five sales worth US$ 65 million, followed by Jabal Ali First, with twenty-four sales transactions, worth US$ 22 million, and Al Yufrah 2, with ten sales transactions, worth US$ 3 million. The top three transfers for apartments and villas were all for apartments, the first in Trade Centre at US$ 92 million, the next two both in Island 2 for US$ 36 million and US$ 35 million. The mortgaged properties for the week reached US$ 545 million, with the highest being for land in Jumeirah First, mortgaged for US$ 139 million, whilst ninety-four properties were granted between first-degree relatives worth US$ 147 million.

According to Knight Frank, Dubai’s prime property sector will end the year, with prices 50% higher, attributable to the fact that there is not enough supply in the market to meet current demand – with more of the same expected next year. There is every chance that Dubai’s real estate market will reach over a record 98k transactions by tomorrow – and this despite the global economic turbulence, including higher mortgage rates and lower consumer spending, impacting most other countries. By the end of November, Property Finder noted that YTD, there had been 88k sales transactions – up 50% compared to the same period last year and 38% higher than the market peak of 2013. Knight Frank also indicated that the high influx of high-net-worth individuals has pushed the luxury residences’ value higher, and that the emirate is forecast to have the best prime price growth in the world in 2023, ahead of the likes of Miami and Paris. Interestingly, it “believes that the luxury supply chain in 2023 is going to be limited to approximately 300 to 400 units” and that “the demand for this price point will remain quite strong.”

Meanwhile, Betterhomes posted that “supply in the secondary market will remain under stress, with handovers lagging population growth. The supply and demand equilibrium is likely to rebalance in 2024, as the most recent wave of new launches comes to fruition.” This being the case, there is no doubt that the local property market will continue to see price increases for at least H1, but there will be a time this year when Dubai prices will flatten and may even dip as the global economy contracts; No Man Is An Island. However, long-term, there is only one way for the sector to go, bearing in mind that, over the next decade, the population could easily rise by 50% to 5.3 million, along with an increasing number of foreign investors pushing demand higher. Asteco posted there were high rent increases recorded in Q3, with the likes of Downtown apartment rents, along with villas in Arabian Ranches and The Springs, up 24%, 27% and 24% respectively.

Danube Properties confirmed that its latest US$ 150 million project Elitz has been sold out at the launch. The project, located in Jumeirah Village Circle, is to be built on a 37k sq ft site, with a built-up area of 695k sq ft. Slated for completion in 2025, the twin-tower building will house 203 1 B/R, sixty-five 2 B/R, thirteen 3 B/R and four duplexes. To date, the Dubai-based private developer has delivered 4.6k units, with a combined sale value of US$ 1.0 billion, almost more than half of its 8.8k portfolio.

The Ministry of Energy usually adjusts fuel prices in the UAE by the first day of every month, but has made an exception this month. According to the government, the UAE liberalised fuel prices help to rationalise consumption and encourage the use of public transport in the long run and incentivise the use of alternatives. The UAE Fuel Price Committee marginally decreased December retail petrol prices:

  • Super 98: US$ 0.757 – down by 15.76% on the month and up 4.85% YTD from US$ 0.722  
  • Special 95: US$ 0.727 -– down by 16.04% on the month and up 5.51% YTD from US$ 0.689
  • Diesel: US$ 0.896– down 12.00% on the month and up 28.55% YTD from US$ 0.697
  • E-plus 91: US$ 0.706 – down by 16.80.% on the month

DubaiNow smart application has surpassed the 1-million users’ milestone, facilitating over twenty million transactions across thirty different government and private entities. Over that time, more than twenty million transactions, worth over US$ 2.72 billion, (AED 10 billion), have been completed, including four million transactions worth US$ 545 million this year. Dubai’s Crown Prince His Highness Sheikh Hamdan bin Mohammed noted that “it confirms the success of the Dubai government in providing smart, easy and fast services to all segments of society”.

Dubai Aerospace Enterprise has reportedly signed two new deals for unsecured term financing, worth US$ 800 million, with a weighted average maturity of 5.5 years. The company, one of the biggest global plane lessors, noted that “the signing of these financing facilities underscores DAE’s commitment to maintaining exceptional liquidity and a strong balance sheet”. It had posted a nine-month deficit of US$ 577 million attributable to “loss of control” over planes it previously leased to airlines based in Russia, as it incurred a loss of US$ 335 million, compared with a profit attributable to equity holders of US$ 91 million a year earlier; however, it had earned US$ 203 million before net exceptional items, with available liquidity almost flat at US$ 2.8 billion.

Following a general assembly meeting earlier in the week, Emaar Properties has increased its share capital by 8% to US$ 2.4 billion, (AED 8.83 billion), and also approved the issuance of a mandatory bond convertible into 659 million new shares in the company. The DFM confirmed that last Friday was the start date of trading for Dubai’s largest listed developer’s new shares. Latest figures show that Emaar’s Q3 profit 46% higher at US$ 420 million, driven by new project launches and strong demand.

Figures indicate that the net investments of non-Arab investors in the DFM and the Abu Dhabi Securities Exchange amounted to almost US$ 8.0 billion in 2022. During the year, non-Arab investors’ purchases of local shares amounted to US$ 37.4 billion, while the sales hit around US$ 29.4 billion which equals to net investments worth around US$ 8.0 billion.

The DFM opened on Monday, 26 December, 13 points (0.4%) lower on the previous week, gained 20 points (0.06%) to close on 3,336 by Friday 30 December. Emaar Properties, US$ 0.02 higher the previous week, shed US$ 0.02 to close the week on US$ 1.60. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.63, US$ 3.60, US$ 1.55, and US$ 0.41 and closed on US$ 0.59, US$ 3.54, US$ 1.55 and US$ 0.41. On 30 December, trading was at 66 million shares, with a value of US$ 18 million, compared to 88 million shares, with a value of US$ 38 million, on 23 December 2022.

For the month of December, the bourse had opened on 3,332 and, having closed the month on 3336 was 4 points (0.1%) higher. Emaar traded US$ 0.06 lower from its 01 November 2022 opening figure of US$ 1.66, to close the month at US$ 1.60. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the month on US$ 0.68, US$ 3.50, US$ 1.60 and US$ 0.47 and closed on 30 December on US$ 0.59, US$ 3.54, US$ 1.55 and US$ 0.41 respectively. The bourse had opened the year on 3,196 and, having closed December on 3336, was 128 points (4.3%) higher.  Emaar traded US$ 0.27 higher from its 01 January 2022 opening figure of US$ 1.33, to close at US$ 1.60. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the year on US$ 0.00, US$ 3.69, US$ 1.47 and US$ 0.72 and closed on 30 November on US$ 0.59, US$ 3.54, US$ 1.55 and US$ 0.41 respectively.

By Friday, 30 December 2022, Brent, US$ 7.37 (9.6%) higher the previous fortnight, gained a further US$ 1.94 (2.3%) to close on US$ 85.91.  Gold, US$ 3 (0.2%) higher the previous week, rose US$ 24 (1.4%) to close at 1,830, on Friday 30 December.

Brent started the year on US$ 77.68 and gained US$ 8.23 (5.9%), to close 30 December on US$ 85.91. Meanwhile, the yellow metal opened January trading at US$ 1,831 and shed just US$ 1 during 2022, to close on US$ 1,830. For the month, Brent opened at US$ 86.77 and closed on 30 December, US$ 1.14 lower (1.0%) at US$ 85.91. Meanwhile, gold opened December on US$ 1,793 and gained US$ 37 (2.1%) to close at US$ 1,830 on 30 December.

With announcements that China would end its quarantine requirements for inbound travellers starting on 08 January, amid concerns that US winter storms may impact on energy production, oil prices continued to head north over the last week of 2022. Concerns over a possible 7% production cut by Russia also contributed to oil price gains.

With the aim of enticing the EU to scrap its new windfall tax on energy companies, Exxon Mobil is planning to sue, arguing that it has exceeded its legal authority by imposing the levy. The US oil giant is claiming that the windfall profits tax is “counterproductive”, discourages investments and undermines investor confidence. The company also warned that it would factor in the tax as it considers future multibillion-euro investments in Europe’s energy supply and transition, which could see future investment markedly lower; over the past decade, it has invested over US$ 3 billion in the continent. It also claimed that these taxes could cost the sector at least US$ 2.0 billion by the end of next year. Chevron is yet another company weighing up future investment in the EU.

After passing through the Senate a day earlier, last Friday, the US House of Representatives approved a US$ 1.7 trillion spending bill which will fund the US government through the next fiscal year up to 30 September – and averted a partial government shutdown. The biggest beneficiaries will see US$ 772 billion for domestic programmes, US$ 858 billion, for defence, and about US$ 38 billion for regions recovering from natural disasters.

Sad news for global bankers are reports that end of year bonuses may be up to 50% lower, than those paid out in 2021, and that there will be more lay-offs in the coming months; last year saw them being awarded their biggest awards since 2006, as the economy recovered from the pandemic.  This comes on the back of a year that has seen a global slowdown in the economy, a marked reduction in the pace of mergers and acquisitions, (down 37% to US$ 3.6 trillion), continuing stock market volatility, (with a US$ 517 billion, 66%, slump in global equity underwriting), and debt financing markets collapsing.

Both Apple, (at its lowest since June 2021) and Tesla, (down 73% from its November 2021 high) have seen their stock values sink, driven by concerned delays at their Chinese production lines. After months of struggling with production because of draconian Covid restrictions and ongoing lockdowns, they now face a labour shortage, as a new Covid wave hits the country. It also seems that the labour problem will not go away, and it will be at least the end of February before production is ramped up, as most migrant workers will go back to their home villages for the Lunar New Year at the end of January. To add to their financial woes, like other companies, they will face problems arising from additional interest rate hikes, a global economic slowdown, and the ongoing war in Ukraine.

 On Wednesday, Elon Musk sent an email to Tesla staff telling them that  he believes that long term, Tesla will be the most valuable company on earth and urged all employees to “please go all out for the next few days and volunteer to help deliver if at all possible. It will make a real difference!” This announcement came after the automaker offered discounts on its vehicles in the United States and China, as worries mount that demand will decline because of the global economic slowdown and worrying Chinese Covid figures. Latest data expect that Tesla Q4 deliveries will top 442k. Morgan Stanley analysts cut their price target on the stock to US$ 250 from US$ 330, saying the last two years of demand exceeding supply will be “substantially inverted to supply exceeding demand” in 2023. Time will tell whether Elon Musk or Morgan Stanley, is right.

Having been convicted in May of masterminding a stock scam that wiped US$ 8.7 billion off Singapore’s exchange, John Son Chee Wen and his girlfriend, Quah Su-Ling, have been sentenced to jail for thirty-six years and twenty years respectively. It seems that the Malaysian and his Singaporean accomplice had used their knowledge of financial markets to inflate share prices, by setting up more than one hundred and eighty trading accounts to inflate the share prices of three companies – Blumont Group, Asiasons Capital and LionGold Corp – and borrowed large sums to manipulate stock prices. High Court judge, Hoo Sheau Peng, called it a “scheme of substantial scale, complexity and sophistication”, and that “immense harm” was caused by the stock market crash in 2013. Shares were used as collateral, with several banks, including Goldman Sachs, to extend US$ 126 million of credit lines to finance their ruse which was to create demand for penny stocks, reportedly managing to push up some prices by around 800% in 2013.

Christmas came late for Spaniards, as the government, on Tuesday, announced a US$ 10.7 billion package of measures to ease the pain of inflation – its third such measure this year, bringing total aid to US$ 47 billion. This includes a one off US$ 213 bonus to 4.2 million households, with annual incomes up to US$ 28.7k, and an extension of tax cuts for energy bills into H1 2023. The Sanchez government has also reached an agreement with the EU to place a limit on gas prices for electricity production, which has been the major driver behind Spain having the lowest inflation rate – at 6.7% – in the 27-country bloc. The country will also cut VAT on essential foods such as bread, cheese, milk, fruit and vegetables and cereals to 0% from 4%, and there have been twelve-month extensions on subsidies for train travel for commuters and limits on rental increases, whilst last month saw electricity prices 22.4% lower than a year earlier. Meanwhile, food prices have climbed 15% over the past twelve months. To put the icing on the Spanish ‘pastel’, growth forecast for 2022 is expected to come in at over 5%.

Moody’s Investors Service downgraded Russia’s ratings from B3 to Ca, deeper into “junk”, or non-investment grade territory, with a negative outlook, it expects that its GDP will contract by 7% this year due to mounting pressure on its finances. The move was triggered by the Central Bank of Russia’s capital control measures put in place following international sanctions. The ratings agency indicated that “the downgrade to Ca is hence driven by severe concerns around Russia’s willingness and ability to pay its debt obligations,” with its control measures restricting cross border payments including debt service on government bonds. Key interest rates have more than doubled to 20% to try to shield the US$ 1.5 trillion economy and a currency that has tanked 61% to 121 roubles to the greenback fell to a record low. In a similar vein, S&P Global Ratings has downgraded the country eight notches to CCC –  a week after it had already cut the rate to BB+. According to Moody’s, the world’s second largest energy exporter faces the likelihood of “sustained economic disruption and increased susceptibility to shocks” next year. There is no doubt that there is worse to come and that continuing high inflation, allied with a depreciating rouble, will see much lower living standards and possible social unrest.

%age31 Dec31 Dec31 Dec31 Dec31 Dec31 Dec31 Dec31 Dec31 Dec
Iron OreUS$lb13.68%121.3106.7155.791.5371.371.28754773
Oil -BrentUS$Bl10.45%85.9177.7851.866.6753.866.6256.8236.457.33
FTSE 1000.66%7,4527,4036,4817,5426,7217,6887,1426,2426,548
S&P 500-19.43%3,8404,7663,7563,2312,5072,6742,2382,0442,091
ASX 200-10.26%7,0397,8446,5876,8025,6526,1715,6655,3455,415

The above table covers certain economic indicators, with two sectors standing out. Compared to all the other currencies covered in the table, the US$ dollar reigned supreme in 2022, as it did a year earlier, During the year, Sterling, the euro and the Ozzie dollar all traded lower closing 2022 down 6.20%, 10.57% and 5.63% respectively. Two others – gold and silver – did little to encourage investors, with the former nudging US$ 1 higher and the other up 3.51% on the year; it is unlikely that they will fare much better going into 2023. Notwithstanding iron ore, that has had three prior stellar years, being 13.68% higher on the year, other commodities performed badly with copper, cotton, and coffee all trading lower in 2022, down by 14.35%, 25.97% and 23.26%; this after all three had mega 2021 results, then up by 26.70%, 44.20%, and 76.80%. If the impact of Covid continues to dissipate in 2023, some sort of peace agreement is arranged between Russia and the Ukraine and the central banks finally get a grip on inflation, then most commodities are in for a good recovery year. If nothing changes on those three fronts, then batten down the hatches.

It is estimated that global stocks and bonds shed more than US$ 30 trillion in a year, that many had predicted to be positive, was beset by many problems including raising interest rates, soaring inflation and, to top it all, the war in Ukraine. 2022 proved to be a disappointing year for most of the global stock markets, with all three US bourses having their worst year since 2008, and all posting annual falls – the Dow, the S&P and the Tech-heavy Nasdaq down by 8.8%, 19.4% and 33.1%. As occurred in 2021, when it rose by 28.35%, one of the best performing markets in 2022 was our own DFM – up 4.38%.  Last year, Australia’s ASX gained more than 19%, but hit the buffers in 2022, losing 10.26%. It was a brutal year for Asian markets either showed less impressive gains, or losses in the case of Japan’s Nikkei 9.37% shy, Hong Kong’s Hang Seng index, down 15.46%, as well as the Shanghai Composite losing 14.24% and New Zealand’s NZX, 1.2% lower.

No question about the 2022 currency of choice, as the US dollar proved that it was still the global leader in times of economic volatility, surpassing the likes of the yen, sterling, Ozzie dollar and the Loonie (CAD), with the greenback 14%, 12%, 7%, 4% and 4% higher during the year. Whether the US currency remains paramount in 2023 is unlikely and there is little chance that the market will see the Federal Reserve push up rates by another 4% next year – at the beginning of 2022, the interest rate was at 0.25%, at the end 4.25% and probably will peak at around 5.0% during 2023.

A triple whammy of the Ukraine war, soaring, energy prices soar and slowing growth will result in a tough 2023 for the euro which at one stage was trading at 0.97 to the US dollar, after starting the year on 1.37. Although it had recovered somewhat to US$ 1.06 by the end of 2022, there is every sign that it could struggle to keep above parity by the end of next year, especially if the ECB remains bearish and not lift rates as quickly as it should. However, Economics 101 teaches that it will recover but 2023 may not be its year.

When it comes to cryptocurrency, anything can happen and volatility will remain the name of the game. Bitcoin has indeed lost its shine in 2022, as its price nosedived 64.89% to US$ 16.9k, with investors seemingly more concerned about the identity of the next crypto exchange to self-implode. Bitcoin has crashed since hitting its US$ 68,991 peak in November 2021, plunging the sector into chaos and ongoing crisis. The general view is that there is still room for further declines but there will come a price – some time in 2023 – which will encourage investors to return to the sector. There would be no surprise to see the price climb to above US$ 15k when this happens.

The economic forecast for the UK is more than gloomy, with the distinct possibility of a short – but damaging – recession, with some analysts forecasting that it will take a further three years just to return to pre-pandemic levels. Many will recall that George Osborne was appointed Chancellor of the Exchequer in 2010, following in the steps of Labour’s Alistair Downing who left a huge public debt, attributable to the 2008 GFC. He introduced an era of austerity policies aimed at reducing the budget deficit and launched the Northern Powerhouse initiative, (which has not been a startling success). “Dodgy Dave’s” crony was dismissed by Theresa May following the 2016 Brexit referendum. In 2010, the national debt equated to 74.6% of GDP, 86.8% in 2016 and 101.9% in June 2022, so it is evident that the Conservative austerity programme has been an out and out failure and the country is a lot worse off now than it was in 2010. The UK economy cannot afford another ‘lost decade’ of growth.

With inflation set to remain high and business investment largely on hold, the UK economy is forecast to contract by at least 1.0% in 2023. There is no doubt that the country has been badly impacted by the surge in natural gas prices, (as have the rest of Europe), slowing global economic growth, a patchy labour market recovery and continuing low productivity and weak investment – a sure indicator that the UK is in  a period of stagflation. Unemployment is expected to jump to 5.0%, by Q1 2024, from its 3.6% level, whilst inflation hit a forty-one year high of 11.1% in October. Its reduction will be slow, with some expecting it still to be at over 6.0% by the end of 2023, before halving to 2.8% in 2024 – still above the BoE 2.0% target. The most damaging forecast is that from the CBI that business investment at the end of 2024 will be 9% below its pre-pandemic level, and output per worker 2% lower. Unfortunately, the UK is on the way to be Europe’s weakest performing economy, bar Russia next year, and become the poor man of the G20 – a position that could take years to Shake It Off!

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Lost Christmas!

Lost Christmas!                                                                             23 December 2022

The 2,926 real estate and properties transactions totalled US$ 2.48 billion, during the week, ending 23 December 2022. The sum of transactions was 159 plots, sold for US$ 239 million, and 2,233 apartments and villas, selling for US$ 1.48 billion. The top two transactions were for land in Business Bay, sold for US$ 27 million, followed by land that was sold for US$ 26 million in Al Safouh First. Al Hebiah Fifth recorded the most transactions, with sixty-six sales worth US$ 48 million, followed by Al Yufrah 2, with twenty-one sales transactions, worth US$ 8 million, and Jabal Ali First, with twelve sales transactions, worth US$ 10 million. The top three transfers for apartments and villas were all for apartments, the first in  Jumeirah First at US$ 86 million,  the next in Business Bay for US$ 50 million and the third on Palm Jumeirah for  US$ 23 million. The mortgaged properties for the week reached US$ 722 million, with the highest being for land on Palm Jumeirah, mortgaged for US$ 216 million, whilst seventy-nine properties were granted between first-degree relatives worth US$ 47 million.

In a move to boost sales, Deyaar is planning to launch three new projects, valued at US$ 82 million, located in Al Furjan, by offering “flexible payment plans of up to five years, and a full exemption from real estate registration fees”. The projects will encompass some four hundred residential units and hotel apartments. No further details were made available but what is known is the first project will be Amalia Residences, and the other two will be announced next year. The developer, majority owned by Dubai Islamic Bank, is taking advantage of Dubai’s prime residential market’s current position of being set for the world’s strongest growth in 2023. In November, the emirate’s property sector recorded a 58.5% monthly hike of over 10.9k transactions, (the highest since November 2011), and a 70.8% surge in value to US$ 8.31 billion.

To alleviate any future occupancy problems and satisfy tenants, Tecom is to build an office project at Dubai Internet City amid higher demand for commercial property in Dubai. The operator of business districts, that are home to more than 7.8k companies, has broken ground on Innovation Hub 2, an investment valued at US$ 120 million. The project, slated for completion by 2024, will have two high-end office buildings, four boutique offices, retail spaces and more than eight hundred parking spaces, encompassing 355k sq ft of gross leasable area. The second phase is being constructed following the success of the first phase of the project, which is nearing total capacity and is home to global technology companies such as Google, Hewlett-Packard, Gartner and China Telecom.

According to its CEO, Ghaith al Ghaith, flydubai expects double digit growth next year on the back of international travel demand returning to pre-pandemic levels, as Dubai’s budget airline is now 80% up on pre 2020 levels. in relation to the number of aircraft, (71 Boeing 737 Max aircraft), destinations, (114) and employees (4.65k). There are several drivers behind these impressive returns including the UAE government’s management of the pandemic, the impact of hosting Expo 2020 Dubai, the regional spill over from the FIFA World Cup in Qatar, and new visa schemes introduced by the government. The carrier expects to post a 2022 profit, following a US$ 229 million profit a year earlier and a US$ 194 million loss in 2020. This year, it added a further twenty new Boeing 737 Max jets and hired  1.3k new staff, whilst in 2023, it is looking at taking delivery of seventeen new 737 Max aircraft and adding eight new routes to its network – Cagliari, Corfu, Gan (Maldives), Krabi, Pattaya, Milan, Bergamo (Italy) and St Petersburg. The airline supremo commented that pent-up demand for travel will weather higher inflation rates that are biting into consumer spending, and that “I can guarantee that until the summer for sure demand will be very strong, and I think the rest of the year will be very strong.”

Flydubai picked another winner when it became the regional partner for the Argentine Football Association and carried the world champions from Abu Dhabi to Doha after they concluded their training on 18 November. The 737, carrying the team, was decked out with a special livery but the carrier has gone one better following their win against France to pick up the World Cup. The two Boeing 737 MAX 8s show the “Campeón” decal and the three-starred AFA logo and added to it the celebratory liveries, the World Cup trophy and the Argentina national flag over the winning team including Lionel Messi and other players. Since the tournament started, flydubai has carried more than 170k passengers to and from Qatar.

Consultancy OAG confirmed Dubai International as the busiest international airport in the world, based on seat capacity and international flight frequency, with a December total of 4.6 million seats – 8% higher on the month. It was over one million more than second-placed Heathrow, followed by Paris Charles de Gaulle, Istanbul and Singapore Changi. When it comes to being the busiest airport in the world, which takes in domestic travel as well, Dubai is ranked second behind Atlanta’s Hartfield-Jackson, with 4.7 million seats, and ahead of Tokyo Haneda, LHR and Dallas Fort Worth. In Q3, DIA handled 18.5 million passengers – more than double the figure of a year earlier – and the first time that the quarterly figure was higher than pre-pandemic levels.

DP World and one of the world’s largest pension funds, Hassana Investment Company, have agreed to a US$ 2.4 billion investment in three of DP World’s flagship UAE assets. This sale of a 10.2% stake in Jebel Ali Port, Jebel Ali Free Zone and National Industries Park, to the investment manager for the General Organisation for Social Insurance, values the three assets in the region of US$ 23.0 billion. Last year, these assets generated revenue of US$ 1.9 billion, comprising over 9k companies and serving more than 3.5 billion people globally. This latest deal will not impact day-to-day operations, customers, service providers and employees, with the assets remaining fully consolidated businesses within the DP World Group.

With its main target being to reduce the US$ 1.7 trillion global trade finance gap, DP World Trade Finance, first launched in July 2021, offers businesses a simple way to secure the capital they need to trade in global markets. The DP World subsidiary has posted that it had already received US$ 600 million in credit limit submissions by facilitating a streamlined connection between SMEs and financial institutions on its trade finance platform. To date, it has registered over 56k global clients from more than fifty countries to provide them with affordable access to trade finance.

The country’s second largest private steel manufacturer posted that it would build a US$ 41 million colour-coated steel plant which will be able to produce an annual 100k metric tonnes of galvanised steel coils, strips and sheets. Located in Jafza South, it is the only private steel manufacturer, with four distinct product verticals, and exports products to twenty-six countries, with assets estimated to be valued at US$ 681 million. This latest expansion will increase revenues by up to 15%, with the company aiming to ramp up its manufacturing capacity to up to three million tonnes by 2030.

A bullish Central Bank of the United Arab Emirates has upped their 2022 country growth forecast from its earlier review of 6.5% to 7.6%, driven by strong performances in some of the non-oil sectors, including tourism, hospitality, real estate and manufacturing; the non-oil economy is expected to post a 6.1% rise, with the oil GDP expectedly to grow by a healthy 11.0% this year. Other factors in play were the removal of most COVID-19-related restrictions, a marked recovery in the global travel and tourism sector along with a major boost in the real estate and construction sectors. Next year, the global slowdown will see the real GDP growth at 3.9%, with the non-oil GDP slightly higher at 4.2%.

Pursuant to the merger of Sukoon International Holding Company CJSC with Cambridge Medical & Rehabilitation Centre, the largest pan-GCC post-acute care platform has been created. In a non-cash share swap, Sukoon shareholders will receive 15% of Amanat’s shares in CMRC, in return for Amanat receiving additional shares in Sukoon.  Amanat has confirmed that the new entity will operate four hundred beds in the UAE and KSA, across four cities (Abu Dhabi, Al-Ain, Dhahran, and Jeddah) with a three hundred-bed expansion underway.

As from the close of business today, the DFM has approved foreign ownership of shares in the National Central Cooling Company being raised from 49% to 100% and, interestingly, the increase of the Individual Ownership Limit has been lifted from 20% to 100%. Following the details of the new ownership arrangement, shares in Tabreed traded 10.4% higher at US$ 0.858, (AED 3.15). Earlier in the year, it posted H1 figures showing that profit was 3.0% higher at US$ 65 million.

The DFM opened on Monday, 19 December, 24 points (0.6%) higher on the previous three weeks, shed 13 points (0.44%) to close on 3,316 by Friday 23 December. Emaar Properties, US$ 0.07 lower the previous week, gained US$ 0.02 to close the week on US$ 1.61. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 3.65, US$ 1.53, and US$ 0.42 and closed on US$ 0.63, US$ 3.60, US$ 1.55 and US$ 0.41. On 23 December, trading was at 88 million shares, with a value of US$ 38 million, compared to 380 million shares, with a value of US$ 328 million, on 16 December 2022.

By Friday, 23 December 2022, Brent, US$ 2.64 (3.3%) higher the previous week, gained a further US$ 4.73 (6.0%) to close on US$ 83.97.  Gold, US$ 8 (0.5%) lower the previous fortnight, nudged US$ 3 (0.2%) higher, to close at 1,806, on Friday 23 December.

Every day this week, oil prices have edged higher, driven by stockpiles declining more than expected, with Opec+ remaining committed to keep supplies tight. It closed the week on US$ 83.53, during which US crude stocks fell by 5.9 million barrels – three times more than the market had expected – with a fall usually indicating stronger demand. This is backed up by the fact that crude oil in the Strategic Petroleum Reserve dipped 3.7 million barrels from the week before to 378.6 million barrels – its lowest level in thirty-nine years. Furthermore, jet fuel demand is at its highest since 2017, as air travel returns to almost pre-pandemic levels. Last week, the International Energy Agency lifted its global oil demand growth estimate for this year and the next on rising crude consumption in India, China and the Middle East, and expects demand to grow by 1.7 million bpd. The outlook is bullish with one caveat – that China’s reopening remains on course.

Having been accused by US regulators of violating child privacy laws and tricking users into making purchases, Fortnite has agreed to pay US$ 520 million to resolve claims. The award was split between a record US$ 275 million, paid to resolve the claims it collected child and teen data without parental consent, and another record of US$ 245 million to be used for refunds to customers, to settle a separate complaint about deceptive billing practices. The Federal Trade Commission claimed that the maker of popular video game had duped players with “deceptive interfaces” that could trigger purchases while the game is still loaded; it also accused it of using “privacy-invasive” default settings. The battle royale game was launched in 2017 and was an instant success, with more than 400 million global players.

There are reports that Elon Musk is reaching out to raise new funding from investors by offering Twitter shares for US$ 54.20 – the same price that he had paid for the company to go private in October. The struggling social media platform is seeing advertisers departing, worried by the antics of the new owner, including his approach to policing tweets, along with the slowing global economy. With revenues tanking, there is concern on its ability to pay interest on the US$ 13 billion debt that was taken to buy the social media company. (Musk has already increased his cash balance by selling Tesla shares for nearly US$ 40 billion already this year, whilst last week it posted its worst weekly loss since March 2020. Later in the week, he vowed that he would not sell any more Tesla shares for at least two years). In a Twitter poll, 57.5% of voters, which numbered 17.5 million, wanted Elon Musk to step down as chief executive of the social media platform, in a backlash against the billionaire less than two months after he took over. To his credit, Elon Musk has said he will resign as Twitter’s chief executive officer when he finds someone “foolish enough to take the job”.

With bitcoin prices declining to under US$ 17k, and surging energy prices pushing up mining costs, allied to a US$ 7 million unpaid debt from US crypto lender Celsius Network, one of its biggest customers, Core Scientific Inc has filed for Chapter 11 bankruptcy protection. The company – one of the biggest publicly traded cryptocurrency mining companies in the country and owning several bitcoin mining rigs – posted a US$ 435 million loss in Q3, and had a meagre US$ 4 million in cash reserves. The company has confirmed that it will not liquidate and is banking on a creditors’ restructure which, if it goes through, will see them owning 97% of the crypto miner. The company went public last year and was valued then at US$ 4.3 billion but this year the company’s shares have lost a mega 98% in value and now has a market value of US$ 78 million. It is not the only player in the industry to suffer such huge losses, with the likes of Riot Blockchain, Marathon Digital and Hut 8 Mining Corp, all shedding more than 80% this year.

It appears that two top FTX associates have pleaded guilty to criminal charges “in connection with their roles in the frauds that contributed to FTX’s collapse”; both are cooperating with the New York court. Meanwhile, FTX’s founder, Sam Bankman-Fried, who was arrested in the Bahamas last week, consented to being extradited back to the US to face several criminal charges, and appeared in the federal court in Manhattan yesterday. A US judge said the thirty-year-old former billionaire could be released to his parents on a US$ 250 million bond, as he awaits a trial on charges that he defrauded customers and investors of the collapsed cryptocurrency exchange. Describing the case as “one of the biggest financial frauds in US history”, federal prosecutors in New York have accused Mr Bankman-Fried of unlawfully using customer deposits made at FTX to fund his other crypto firm, Alameda Research, to buy property and to make millions of dollars in political donations, including US$ 40 million to US Democratic leaders, and US$ 5 million to the White House!

The US watchdog, the Securities and Exchange Commission, has also announced separate lawsuits against the two, Caroline Ellison and Gary Wang, alleging they participated in a scheme lasting several years to defraud FTX investors, and that between 2019 and 2022, Ms Ellison — at the direction of Mr Bankman-Fried — manipulated the price of FTX’s native token FTT by purchasing large quantities in the open market. It was also alleged that both knew, or should have known, Mr Bankman-Fried was falsely touting FTX as a safe cryptocurrency trading platform, while at the same time improperly transferring customer funds from FTX to Alameda. She was also accused of directing Alameda to use billions of dollars of FTX funds, including customer funds, for trades on other cryptocurrency exchanges and to pay for high-risk investments. Wang was accused that he “created features in the code underlying the FTX trading platform that allowed Alameda to maintain an essentially unlimited line of credit on FTX”.

Subject to the approval of a federal judge in San Francisco, it appears that Facebook owner Meta has settled a long running legal action over a data breach linked to UK political consultancy Cambridge Analytica, with a US$ 725 million payment. The case involved Facebook allowing third parties, including the UK firm, to access Facebook users’ personal data. and was brought by a class size “in the range of 250-280 million”, representing all US Facebook users during the “class period” running from May 2007 to December 2022. Although not admitting to any wrongdoing, the tech giant said settling was “in the best interest of our community and shareholders”. This case only involves US users and there could be further action taken by the UK Competition Appeal Authority early next year; Facebook estimates that the data of up to 87 million users was improperly shared with the now closed consultancy that had worked for Donald Trump’s successful presidential campaign in 2016.

TSB has been fined US$ 59 million by the Financial Conduct Authority for a 2018 IT meltdown that wreaked havoc and left its customers unable to access online accounts for several weeks. The regulator did note that the bank had already paid US$ 40 million in compensation to its customers, and that the failings were “widespread and serious” and led to “significant disruption”. The bank was trying to move data, totalling 1.3 billion customer records, from an old system run by its former parent bank, Lloyds, to a new computer system and anything that could go wrong did go wrong, with all areas of the bank’s services being affected, including branch, telephone and online banking; it took eight months to fully resolve all the problems and “a significant proportion of its 5.2 million customers were affected by the initial issues”. In February 2019, TSB said that the disastrous IT upgrade had cost it US$ 400 million, and about 80k customers had switched their account away from the bank.

Justin Bieber has joined a growing band of singers, including Rihanna, (against Topshop), and Ariana Grande, (against Forever 21), to take action against companies using their images to promote their products. The Canadian entertainer has branded a collection of T-shirts, jumpers, tote bags and phone accessories as “trash”, saying that he had not been approved by it. Subsequently, the retail chain has removed all items but indicated that it had followed all proper procedures, “but out of respect for the collaboration and Justin Bieber, we have removed the garments from our stores and online.” Earlier, Bieber had commented that “the H&M Merch they made out of me is trash and I didn’t approve it. Don’t buy it.”

1.2k Rolls Royce workers at its Sussex plant, received an early Christmas present having been awarded a 17.6% pay award, comprising a 10.0% pay increase and a  one-off bonus of US$ 2.4k. With this award, the luxury carmaker averted the real possibility of industrial action, after the Unite union claimed that Rolls workers, at the Goodwood factory, had been “repeatedly denied… a proper pay rise”. Rolls-Royce, which is owned by Germany’s BMW, said it was “pleased” Unite had recommended the agreement to its members.

The car industry is one of many sectors, both public and private, that is facing strikes to keep up with the surging cost of living, as November prices increased by 10.7% – the fastest rate in forty years. Latest figures also indicate that the gap between wage growth in the public and private sectors remains close to a record high; in the quarter ending October, the private sector witnessed an average pay rise of 6.9%, whilst it was only at 2.7% for public sector employees.

David Jones, an iconic 184-year-old Australian retail chain, has been sold to Anchorage Capital Partners for US$ 67 million (AUD 100 million), eight years after the South African company Woolworths Holdings Limited bought it for US$ 1.41 billion, (AUD 2.1 billion). This could be a portend for other department stores losing value as they will face more problems as interest rates move further north, retail spending is set to drop off next year and shopping habits change. In 2014, the acquisition was meant to be a major part of the company’s target to turn WHL into a leading force in the southern hemisphere. Within four years, Woolworth was writing off US$ 670 million in the value of the Australian entity in 2018. WHL has sold off assets in recent years to prop up DJs, including three of its four CBD properties. However, this deal does not include Melbourne’s Bourke Street building, which is estimated to be worth around US$ 134 million; this will be leased back by the new owners. David Jones, with forty-three stores in Australia and New Zealand, employing 7.5k, has not ruled out store closures or job losses. Woolworths Holdings will retain ownership of Country Road Group, which also includes brands Witchery, Trenery, Mimco and Politix. 

In Australia, the National Retail Association has reported an almost 4% jump in, year on year, retail spending across the country, whilst there has been a 15% hike in the number of families needing support this Christmas. It also found that shoppers’ purchases have been smaller, and more often, compared to last year. This rise comes despite the skyrocketing cost of living pressures, and the NRA is forecasting that more than US$ 14.4 billion (AUD 21.5 billion) will be spent nationwide in the ten days leading up to Christmas.

The IMF has approved a forty-six-month US$ 3 billion support package for Egypt, as it, likes many other countries, struggles with a faltering economy, attributable to the fallout from the Ukraine war and the pandemic. This approval will also speed up a further US$ 14 billion loan from the same world body. The IMF has ensured that any further financing will see the country introduce a flexible exchange rate and an enhanced social safety regime, and it also includes a programme of structural reforms that will “reduce the state footprint and level the playing field between the public and private sector”. The main driver behind Egypt’s current economic woes has been the war in Ukraine, which had seen investors pull US$ 20 billion out of the country’s debt market, resulting in its currency being devalued twice since March and losing 36% in value; on the black market, the greenback is trading at 33 pounds, in comparison to the official 24.7 rate. Last month, inflation was floating at almost 19% – its highest rate in five years. In the short-term, the currency may drop even lower, impacting on a further rise in domestic prices.

The Central Bank of Egypt surprised the market with a 300 bp rate hike that saw the overnight deposit rate, overnight lending rate, the rate of the main operation and the discount rate rising to 16.25%, 17.25%, and 16.75% and 16.75% respectively. This is the fourth hike rate since the start of the war in February, which was the trigger that saw Egyptian inflation soaring to 21.5% in November – up from 19.5% a month earlier.

Mainly attributable to stronger consumer spending and non-residential fixed investment than earlier estimated, the US economy posted a 3.2% expansion in Q3, after two quarters of contraction that had worsened recession fears. However, growth was partly offset by declines in residential fixed investment and private inventory investment, whilst consumer spending saw a hike in services in contrast to a fall in goods such as cars/auto parts and food/beverage. Personal consumption expenditure, at 2.3%, was higher than the initial 1.7% estimate, but it is obvious that this upward trend cannot continue indefinitely as there is evidence that many households are dipping into their savings to support their spending habits. That being the case, along with almost certain rate hikes into 2023, to dampen inflation, this will ensure that next year will see much slower growth.

With many companies passing on their rising expenses to consumers, prices in Japan have risen to their highest level in forty-one years. Surging energy costs have resulted in items such as processed food, smartphones, electricity and air conditioners climbing; official figures see core November consumer prices, which strips out volatile items like fresh food, increase 3.7% on the year. Unlike many other developed nations, Japan is the only major central bank to have negative interest rates but with inflation soaring, the Bank of Japan is under increasing pressure to start lifting interest rates out of ultra-low negative territory, more so because the global economic outlook for H1 is for worse to come. On Tuesday, the BoJ allowed long term interest rates to rise (by widening the allowable band for long-term yields to 50 bp either side of that, from 25 previously); this could be an indicator that the central bank may be considering tightening monetary policy.

With this year being the busiest Christmas for UK airports since 2019, what happens? 1k Border Force workers, many of whom check people’s passports as they arrive in the country, will strike from today to 26 December, and 28 to 31 December. The end result is that havoc will reign supreme, as hundreds of thousands of travellers will face disruption. LHR, the country’s biggest airport expects 579 inward flights today, with 10k arriving by 7.00am; it seems that 1.3k flights have landed at the six affected airports today, that could carry more than 250k passengers, with an estimated 8.9k flights arriving over the “strike days”, impacting nearly 1.8 million people. More havoc will face passengers who have fought their way through the airport melee, with national rail strikes recommencing on Christmas Eve. (The PCS union head, Mark Serwotka, said that the strikes could go on for months, unless the Sunak government enters talks over pay – and had a “mandate” for walkouts until May).

Zoopla has forecast that UK house prices and transactions are expected to fall next year and that there has been an easing in the trend of moving to rural and coastal areas, being replaced by moves to more affordable towns. One of the main drivers behind this seems to be higher mortgage rates, reducing the demand for larger, more remote homes which in turn will reduce house prices; the likes of Halifax and Nationwide are looking at 2023 reductions of 8% and 5% respectively. Zoopla indicated that price falls will be less pronounced in more “affordable” urban areas, and among flats. It is obvious that the days of government support through stamp duty holidays, and the historically low mortgage rates, seen in recent times, have long gone. The industry is hoping that 2023 will experience a soft landing, with stability and modest price decreases rather than volatility and bigger price reductions.

According to a survey by the Charities Aid Foundation, charities are facing “lacklustre” festive donations, with fewer people being able to contribute to causes than was the case pre-Covid. There is no doubt that the current state of the global economy – with surging inflation and the rising cost of living – has badly impacted the coffers of the thousands of UK charities. They are being hit by the double whammy of much reduced contributions, allied with rising operating costs. CAF noted that people had fewer opportunities to donate during the pandemic and the number of people donating had failed to pick up this year, and that was likely to be the result of the pressure of the rising cost of living. It added that a third of charities had seen demand for their services increase significantly compared to last year.

The Office for National Statistics confirmed that the UK economy shrank by 0.3% – more than the 0.2% initial Q3 forecast, as business investment deteriorated faster than expected; at the same time, the ONS adjusted Q2 and Q1 figures from 0.2% to 0.1% and 0.7% to 0.6%. Its latest prediction for 2023 sees a 1.4% contraction before some sort of growth returns in the following year. With a further contraction expected in Q4, the country is expected to fall into a recession driven by surging inflation, at its highest level in forty years, impacting growth by year end. A look at some sectors explains why the outlook is so dismal – declining household incomes in real terms, household spending falling for the first time since Q2 2021, following the final Covid lockdown, and a slowing economy, (with sectors such as electricity generation and manufacturing performing a lot worse than expected). The ONS noted that the GDP is 0.8% below where it was before the pandemic struck. The fall-out from this recession will leave the government with less money, to spend on public services, as tax receipts will head south, with companies making less money, (and profit), rising unemployment, (from 3.7% to 4.9%), tanking house prices, (not helped by rising mortgage rates), soaring interest rates, currently at their highest level in fourteen years, falling consumer spending, and businesses spending less on investment and capital expenditure. Not a pretty picture and for many this year it could be a Lost Christmas!

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Three Blind Mice!

Three Blind Mice!                                                                   16 December 2022

The 2,882 real estate and properties transactions totalled US$ 2.51 billion, during the week, ending 16 December 2022. The sum of transactions was 199 plots, sold for US$ 362 million, and 2,011 apartments and villas, selling for US$ 1.26 billion. The top two transactions were for land in Palm Jumeirah, sold for US$ 13 million, followed by land that was sold for US$ 11 million in Me’Aisem First Al Hebiah Fifth recorded the most transactions, with ninety-two sales worth US$ 67 million, followed by Jabal Ali First, with twenty-one sales transactions, worth US$ 40 million, and Al Hebiah Fourth, with sixteen sales transactions, worth US$ 79 million. The top three transfers for apartments and villas were all for apartments in Palm Jumeirah at US$ 22 million, US$ 17 million and US$ 272 million. The mortgaged properties for the week reached US$ 545 million, with the highest being for land in Al Qusais Industrial First, mortgaged for US$ 189 million, whilst 157 properties were granted between first-degree relatives worth US$ 136 million.

Property Finder indicated that Dubai property sales transactions – at 10,941 – reached their highest for the month of November since 2011, and 51.1% higher, compared to the same month last year; at US$ 8.3 billion, the monthly value was up 70.8% on the year. The consultancy noted that, “we see positive sentiments for investment opportunities, following various governmental reforms and initiatives, making Dubai’s properties one of the most preferred investment assets for the long term.” The volume of off-plan properties recorded a significant increase of 62.8%, year-on-year, with 5,116 transactions. More significantly, there has been a massive 88.9% Q3 hike in luxury properties on the year, as October prices climbed a further 1.8%, with a similar rise expected for November.

Zoom Property also noted that average property prices in Dubai have reached US$ 292 per sq ft, as YTD price rises have risen by 13.0% and 8.5% for villas and apartments. The marked influx of HNWIs and foreign investors has seen a Q3 88.9% increase in the luxury property sector, compared to the same period a year earlier. This rise is well ahead of its closest international ‘rivals’, Miami and Tokyo, at 30.8% and 17.0%. Some analysts see no immediate end to this trend going into 2023.

Jumeirah and Palm Jumeirah were the two most popular areas for villas with price increases of 3.5% and 3.0%, followed by District One, MBR City, Dubai Hills, and The Meadows. The three most popular locations for apartments continue to be Jumeirah, Downtown Dubai, and Palm Jumeirah, with. price increases of 3.3%, 2.5%, and 2.0%, followed by the likes of DIFC, MBR City, Dubai Hills, and Business Bay. For the future, Zoom is forecasting that Dubai’s prime areas will continue to attract HNWIs and millionaires, and prices are expected to sustain an upward trend in 2023, perhaps topping 15%, whilst the mainstream residential market may see around a 7% price hike.

Knight Frank also reported big price hikes in Dubai’s prime property market which it expects will surpass 50% for 2022 – with a more moderate 13.5% hike expected in 2023. It also noted that Palm Jumeirah villas had risen by 2.6% last month and had seen 4%+ rises in four of the last seven months and boasting the most expensive per sq ft in the city at US$ 1.03k, after a 2.6% monthly rise in November. Over the past twelve months to November, Dubai average prices in Dubai increased by 9.5%, with apartment prices up 9.0% and villas 12.7%., with apartment prices at US$ 316 per sq ft and average villa prices standing at US$ 374 per sq ft – but still 22.0% and 4.9% lower than the peaks of 2014. Average asking prices for rentals rose 27.3% on the year – split 27.6% and 25.4% for apartments and villas. No surprise to see the highest prices were seen in Palm Jumeirah with rents of US$ 66.3k for apartments and US$ 267.6k for villas.

Iman Developers has launched of its latest project, valued at US$ 53 million, ‘The Grove’ in Dubai Hills – the developer’s eighth project in its residential development portfolio.  The nine-storey development, comprising 121 units, ranging from studio, (covering up to 477 sq ft), to 3 B/R units, (up to 2.6k sq ft), with “every square foot to be a luxurious experience.” It will also boast a contemporary lobby, with double-height ceilings, and will also include the usual accoutrements, such as a 25 mt recreational pool, a rooftop adults’ pool with a jacuzzi, club lounge and games area, as well as rooftop barbeque facilities.

This week, HH Sheikh Mohammed bin Rashid released details of developing a ’20 minute city’, as part phase two of the government’s 2040 Urban Master Plan. Announcing plans to allow residents access to 80% of their daily needs and destinations within twenty minutes on foot or by bicycle, the Dubai Ruler noted that “today, we have a clear vision for the development of Dubai’s urban infrastructure and housing sector until 2040,” and adding that “our goal is for Dubai to be an eco- and pedestrian-friendly city, and a city with a high yield from urban agriculture.”

Merex Investment has announced a major redevelopment plan for La Mer which has been closed for further construction work and set to reopen late next year; the location will be rebranded as J1 Beach, with the addition of three new beachfront experiences – Gigi Rigolatto, Bâoli and Sirene Beach by Gaia – and ten upscale restaurants. Connectivity will be further enhanced with the introduction of “valet services, parking, golf cart shuttle services, green pathways and the framed waterfront reception”, with visitors having the option of arriving by land or sea.

Compared to the same period last year, Dubai hosted a 134% increase in overnight visitors, to 11.4 million, in the first ten months of the year; however, the figure is still 15% lower than the same period in pre-Covid 2019. YTD, the top five source countries are India, Oman, Saudi Arabia, UK and Russia with numbers of 1.4 million, 1.1 million, 993k, 832k and 548k. Region-wise, the largest source of visitors was GCC, Western Europe, South Asia and Mena with 22%, 20%, 17% and 12%. Interestingly, the Israel market expanded 239% YTD to reach 171k, placing it in fourteenth place.

The knock-on impact can be seen in the increase in occupancy levels by 7.8% to 71.5% – but still below the pre-Covid 73.8% level; October 2022 levels were only 2.4% less than pre-pandemic levels despite the 18% increase in room inventory. Revenue per Available Room topped US$ 92 in 2023, above the levels of last year and pre-Covid of US$ 66 and US$ 80. Many expect that the tourism sector will be boosted, in the last two months of the year, because of the Qatar World Cup but surprisingly the November PMI survey for Dubai, the travel and tourism sector index fell to 53.2, the lowest reading since January. Perhaps the sector, (and the economy), is beginning to feel the cold winter winds of tighter monetary policy and slower global growth weigh on the local economy

Today, Dubai Harbour welcomed the arrival of the ‘Costa Toscana’ for the first time since its March 2022 launch. The liner will be used throughout the 2022/23 season for seventeen different cruises – ranging from three to seven days – around the Arabian Gulf, with Dubai as its base. There is no doubt that Costa Cruises is consolidating its presence in the region and enhances Dubai’s reputation as a global cruising hub.

Emirates has announced that it expects to return to full capacity by the end of 2023, as demand for air travel continues to head north; currently, it is at 80% capacity, with its network returning to 95% of its pre-Covid position. The carrier currently operates eighty-five of its 116 A-380s and is using this hiatus to carry out maintenance and retrofitting work, (at a cost of US$ 2 billion), before the industry returns to normality after international borders have reopened and Covid-19-related restrictions eased. The airline is aiming to hire an additional four hundred pilots and up to 6k cabin crew by the end of H1 2023, recruiting to the maximum capacity of its training facilities, which would see its payroll expanded to 4.9k pilots and 23k cabin staff.

Dubai has retained its second position in Euromonitor’s Top City Destinations Index 2022, just behind Paris. The ranking considers several factors, including the location’s economic and business activity, with thriving tourism infrastructure and performance that show great potential for investment and operation amid increased digitalisation, technological advancement and sustainability developments. With the further exception of New York, the other ten positions are dominated by European contenders.

Sharaf Retail announced that it plans to expand its global footprint and announced that it would inaugurate twenty-three new stores in 2023, across the Middle East and Far East. This will include three new openings of its flagship brands — Forever 21, Cotton On and BODY – at Silicon Central Mall, encompassing 23.2k sq ft. Over the past twelve months, the UAE retailer, which specialises in retail development and brand building, has opened fourteen stores across Malaysia, Indonesia, UAE, Bahrain and Oman.

November’s S&P Global PMI shows that the Dubai economy remains “robust”, with output levels continuing to head north, although the seasonally adjusted index dipped 1.1 to 54.9 – a level still in positive territory, with 50 being the mark that differentiates between expansion and contraction. An increase in new business volumes, progress on current contracts and the impact of the Qatar FIFA World Cup were the main factors behind business activity moving higher. Although at a slower pace, headcounts increased in November, with the rate of jobs growth still at near three-year highs. In order to attract new business, companies reduced their output prices for the fourth consecutive month, with business confidence towards future output positive due to stronger expectations in the wholesale and retail category. It will be interesting to see December results as interest rates go higher at a time when inflationary pressures appear to be easing.

Agri Hub by URB is a new agritourism project in Dubai’s desert that is expected to become the biggest in the world of its type, creating 10k jobs. The company noted that the project will promote a new experience, with food security, entertainment and adventure, and that “Dubai’s rural and agricultural rich communities are best positioned to become a global benchmark for agritourism.” The development will allow farmers to directly sell their produce to consumers. Some of the project’s environmental features include 100% renewable energy, 100% water recycling, bio-saline agriculture, green transit systems and on-site zero waste management. Its exact location is yet to be decided but it is expected to start construction in 2025, with completion slated for 2030. In September, it posted plans for the Dubai Urban Tech District, to be located on the Creek side of Al Jaddaf district and will create 4k jobs in green urban technology, education and training.

Sheikh Hamdan bin Mohammed confirmed that Dubai’s September GDP expanded 4.6%, year on year, to US$ 83.8 billion. The Crown Prince pointed to several factors for this marked improvement, including the efforts of various government and private entities, and the emirate’s responsive and efficient economic framework, along with its ability to track and anticipate demand trends in both the short and long terms. He also noted that the government’s strong partnership with the private sector, both locally and internationally, was a key enabler, along with “Dubai’s economy is founded on strong principles of income diversification by developing strategic sectors, promoting future-focused economic activities, implementing prudent fiscal policies, and constantly upgrading regulatory and legal frameworks to encourage investment and support business”.

Some sectors posted spectacular growth levels in the first nine months of the year, most notable being wholesale/retail trade accounting for 24.1%, equating to US$ 20 billion of Dubai’s GDP – the top contributor to the emirate’s economy – and the hospitality/F&B services, with a year-on-year 28% increase. In tandem, transport/storage accounted for 2.5% of the 4.6% growth in Dubai’s GDP and contributed to 11.6% of Dubai’s economy. The fact that the sector’s contribution to the overall GDP stood at just 11.6%, during the period, underscores the dynamism of Dubai’s economy. Meanwhile, the emirate’s real estate activity posted a 2.5% increase in the period, accounting for a 9.1% share of the emirate’s GDP and contributed 5% to the overall GDP growth, as real estate sales were up 76%, on the year. Financial/insurance activities, at US$ 8.94 billion, grew by 1.2%, and accounted for a 10.7% share of Dubai’s GDP and a 3% share of GDP growth during the nine months.

The Central Bank has announced that all September Money Supply aggregates had increased, month on month:

  • M1 – 0.5% to US$197.0 billion, due to US$ 191 million rise in Currency in Circulation Outside Banks and US$ 790 million growth in Monetary Deposits
  • M2 – 1.1%, to US$ 448.4 billion, due to an expanded M1 and a US$ 3.90 billion hike in QuasiMonetary Deposits
  • M3 – 1.6% to US$ 558.1 billion, due to an augmented M2 and US$ 3.84 billion increase in Government Deposits

Because of a 30.9% decrease in Banks & OFCs’ Current Accounts & Overnight Deposits of Banks at CBUAE, offset somewhat by increases in Currency Issued and Reserve Account by 1.7% and 29.5%, and Certificates of Deposit & Monetary Bills remaining constant, the Monetary Base contracted by 1.9% falling from US$ 127.1 billion. Gross Banks’ Assets, including bankers’ acceptances, rose by 1.7%, to US$ 960.1 billion by the end of September, with Gross Credit 1.2% higher at US$ 510.4 billion due to a 1.0% rise in Domestic Credit and 3.2% in Foreign Credit. There was a year-on-year increase of 1.4% in loans and a 4.9% rise in deposits on the back of a 1.1% decrease in interest rates on loans and a 15% decrease in interest rates. The value of September gold reserves of the Central Bank of the UAE increased by 13.0% to US$ 3.47 billion. All its gold reserves were sold before 2015, but it began to re-constitute its gold reserves during the same year, and the balance is still relatively low to its total assets

Following the Federal Reserve raising rates by 0.5%, the Central Bank of the UAE raised its Base Rate applicable to the Overnight Deposit Facility by 50 bp– from 3.9% to 4.4%, effective from Thursday, 15 December 2022.

According to Thani Al Zeyoudi, the UAE Minister of State for Foreign Trade, the country and Israel have ratified their comprehensive economic partnership agreement, first signed in May. The CEPA will remove or reduce tariffs on 96% of goods traded between the nations and will inevitably boost bilateral non-oil trade that has already risen to US$ 2 billion – up 114% in the nine months to September.

The DFM opened on Monday, 12 December, 20 points (0.6%) higher on the previous fortnight, nudged up 4 points to close on 3,329 by Friday 16 December. Emaar Properties, up US$ 0.06 the previous fortnight, shed US$ 0.07 to close the week on US$ 1.59. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.64, US$ 3.56, US$ 1.53, and US$ 0.43 and closed on US$ 0.65, US$ 3.60, US$ 1.55 and US$ 0.41. On 16 December, trading was at 380 million shares, with a value of US$ 328 million, compared to 92 million shares, with a value of US$ 52 million, on 09 December 2022.

By Friday, 16 December 2022, Brent, US$ 26.59 (25.8%) lower the previous five weeks, regained US$ 2.64 (3.3%) to close on US$ 79.24.  Gold, US$ 2 (0.1%) lower the previous week, shed US$ 6 (0.3%), to close at 1,803, on Friday 16 December. Oil prices rallied earlier this week amid reports that China, the world’s biggest importer of crude, had eased its zero-Covid restrictions., but dipped again as the world’s major economies saw interest rates being notched higher by their respective central banks. The sector continues to be impacted by the “stop-start” reopening of China’s economy, as well as ongoing uncertainty regarding future global demand.

Binance, the world’s biggest crypto exchange, reported that the business had seen US$ 1.9 billion in withdrawals last Monday – its largest movement out since June – as the company “temporarily paused” withdrawals of the USDC stablecoin. This accounted for most of the US$ 2.2 billion in Ethereum-based withdrawals during the previous seven days. Last week, Binance issued a so-called proof-of-reserves report, showing its holdings of bitcoin exceeded customer deposits on a single day in November. The company also reaffirmed that, “User assets at Binance are all backed 1:1 and Binance’s capital structure is debt free.” In September, the exchange reported that it would automatically convert user balances and new deposits of USD Coin, and two other stablecoins, into its own stablecoin, Binance USD.

Twitter has undergone seismic changes since its new owner took over the reins in October, including the introduction of an edit button, whilst blue-tick subscribers will also see fewer ads have their tweets amplified above others, and be able to post and view longer, better quality videos. This comes after the platform had a chaotic initial launch in November, when people started impersonating big brands and celebrities and paying for the blue-tick badge in order to make them look authentic. At the time, Elon Musk noted that the firm was losing US$ four million every day and retrenched half of its workforce; he also initiated bedrooms at Twitter HQ in San Francisco for the remaining staff working long hours, and begun re-instating controversial banned accounts, including former US president Donald Trump. He has also decided to delete accounts which have been inactive for a certain some time.

The temporary suspension of its Shanghai factory is yet another factor that has sent Tesla’s shares lower – and even dipped its market value below US$ 500 billion earlier in the week. It later recovered somewhat to close the week on US$ 150.23, (having started the week on US$ 175.75). Since the end of September, the EV maker has seen its share value tank by over 40%, compared to an average 12% rise in the S&P 500 Index. The fact that its founder Elon Musk seems to be preoccupied with his new ‘baby’, Twitter, along with concerns over universal EV demand, are worrying investors. However, Tesla is not the only member of the NYSE FANG+ to be impacted by a raft of drivers, including soaring inflation, an almost certain recession, an aggressive Federal Reserve pushing rates higher by the month, and general geopolitical turmoil, (but particularly the Ukraine war) make stable investments look more attractive. Such stocks, which have high PE ratios, with ‘hopes’ relying on future success, have seen share values decline by an average 20%. They have fared worse with the likes of Rivian Automotive and Lucid Group tanking by 76% and 79% YTD.

On the first three days of the week, it is reported that Elon Musk divested a further twenty-two million Tesla shares, worth US$ 3.58 billion; this follows the 19.5 million shares, worth US$ 3.95 billion, he sold last month – so far this year, his sale of Tesla shares has netted him almost US$ 40 billion.

There are reports that Air India is expected to place mega orders for as many as four hundred narrow-body jets and one hundred or more wide-bodies, including dozens of Airbus A350s and Boeing 787s and 777s; the deal will be worth tens of billions of dollars and the announcement may come as early as the end of December. This could also become the biggest single order in aviation history surpassing four hundred and sixty Airbus and Boeing jets from American Airlines over a decade ago. The potential order comes days after Tata announced the merger of Air India with Vistara, a JV with Singapore Airlines, to create a fleet of two hundred and eighteen aircraft, making it India’s largest international carrier and second largest in the domestic market after leader IndiGo.

IATA reported that international airlines are owed US$ 2 billion, (25% higher over the past six months), from the governments of more than twenty-seven countries and territories. Accounting for over 63% of this total are five countries – Nigeria, Pakistan, Bangladesh, Lebanon and Algeria with debts of US$ 551 million, US$ 225 million, US$ 208 million, US$ 144 million and US$ 140 million, respectively. These blocked remittances have troubled the sector for years, with the situation further exacerbated by the pandemic, and are a driver behind the expected US$ 6.9 billion 2022 deficit, following a US$ 9.7 billion 2021 loss.

Goldman Sachs is planning further job cuts – that could be as high as 8% of its current 49k workforce – as it grapples with a sharp downturn in business. The investment bank, in line with its peers, has seen a dramatic downturn, with revenues slumping on the back of economic uncertainty and a market downturn putting the skids on mergers and stock listings. Overall revenues fell 20% in the first nine months of the year, as margins slumped even further; there is no immediate improvement on the immediate horizon.

In Australia, Star Entertainment Group has been fined US$ 68 million (AUD 100 million) following “major failings” at its two Queensland casinos, as well as having a special manager, Nicholas Weeks, appointed to oversee its operations. The state’s Attorney General, Shannon Fentiman, warned Star that it “has twelve months to get their house in order”, or else have its Queensland casino licences temporarily suspended. The company’s casino licences – for Treasury Brisbane and The Star Gold Coast — will also be suspended for ninety days, however that action has been deferred until 01 December 2023. Star is also a key backer of the US$ 2.4 billion Queen’s Wharf casino development, which is still under construction. It was found that Star had “actively encouraged” patrons – who were banned interstate — to gamble at its Queensland casinos, demonstrating a “lively disregard” for the law, and that it was also “less than forthcoming” with its banker about the use of China UnionPay and there were “serious deficiencies” in its anti-money laundering/counter-terrorism financing program. In October, the NSW Independent Casino Commission imposed a US$ 67 million fine on Star and handed the casino’s licence to a special manager for similar offences.

An extraordinary “conference of presidents” met on Tuesday and decided to cancel the term in office as one of the EU parliament’s vice-presidents. of the MEP Eva Kaili, who is embroiled in a corruption probe allegedly involving Qatar. Along with the Greek politician, who has already been stripped of her responsibilities as one of the parliament’s vice-presidents, three others have been charged of receiving cash or gifts to influence decision making. It is reported that the Belgian police made fresh raids including one on a European parliamentary office and that IT resources of ten parliamentary staffs had been “frozen” to prevent the “disappearance of data necessary for the investigation”. Not surprisingly, the bloc’s top politicians have strongly condemned the corruption scandal that is shaking the EU legislative body. It will be no surprise that this will not be the only case that will tarnish the bloc’s reputation.

Noting that it would continue to keep rates high, the Federal Reserve, as expected, moved them 50 bp higher – the seventh interest rate rise this year. Rates were at near zero last March and after this hike, rates are now in the range of 4.25%-4.50%, as the central bank continues its fight to curb soaring inflation; it confirmed that the Federal Open Market Committee “expects that continued increases in the target range will be appropriate to attain a monetary policy stance that is sufficiently restrictive to return inflation to 2% over time.” Readers will note that this time last year, Jerome Powell had incorrectly predicted that the high level of inflation was ’transitory’ and the Fed went MIA for almost six months, as inflation eroded public confidence, with the economic news worsening every month. There are two factors in play that have hindered the Fed in its belated efforts to combat inflation – the resilience of the US jobs market, and wage growth, along with Russia’s war in Ukraine.

The ECB, the central bank for the nineteen-country euro zone, raised its interest rates by a further 50 bp to 2.0% – its fourth consecutive rise – and also posted plans on to cut back on QE in a bid to counter runaway inflation. Just like the Fed, it had misread the impact and how high inflation would surge to 10.6%, well above its 2.0% target; it is now likely that it will not return to the bank’s target until 2025. For the past decade, the bank had followed its policy of easy money, but it now expects to stop replacing maturing bonds from its US$ 5.3 trillion, (Eur 5 trillion euro) portfolio, finally putting an end to asset purchases that have seen the ECB become many governments’ biggest creditor. We are now entering an era of QT (quantitative tightening) taking over from QE (quantitative easing).

With a 50 bp rise, the benchmark rate rose to 3.5% – the ninth consecutive hike over the past twelve months, and the highest rate in fourteen years. The obvious outcome to most is that mortgage and loan rates will move higher, with more rises on the 2023 horizon to at least 4.5%.  It is estimated that up to four million households, (with about 33% of households having a mortgage), will face higher mortgage repayments next year. Compared with pre-December 2021, average tracker mortgage customers will be paying about US$ 406 more a month, and variable mortgage holders about US$ 256 more. Having done little to reduce inflation, when it started moving higher over the past twelve months, indicating that it was transitory, the BoE is still in trouble of its own making; with inflation rates currently at 10.7%, it has a lot to do to return that level to its own 2.0% target. Maybe the three governors of these central banks should be in pantomime, as principals in this year’s production of Three Blind Mice!

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Up, Up And Away!

Up, Up and Away!                                                             09 December 2022

The 3,186 real estate and properties transactions totalled US$ 2.48 billion, during the week, ending 09 December 2022. The sum of transactions was 419 plots, sold for US$ 610 million, and 2,233 apartments and villas, selling for US$ 1.26 billion. The top three transactions were for land in Marsa Dubai, sold for US$ 72 million, followed by land that was sold for US$ 17 million in World Islands, and land sold for US$ 10 million in Palm Deira. Al Hebiah Fifth recorded the most transactions, with 200 sales worth US$ 169 million, followed by Jabal Ali First, with seventy-nine sales transactions, worth US$ 70 million, and Al Yufrah 2, with twenty-five sales transactions, worth US$ 9 million. The top three transfers for apartments and villas were all for apartments in Jumeirah Second at US$ 15 million, US$ 14 million and US$ 10 million. The mortgaged properties for the week reached US$ 477 million, with the highest being for land in Me’Aisem, mortgaged for US$ 98 million, whilst 129 properties were granted between first-degree relatives worth US$ 136 million.

Damac Properties has revealed a branded development by Italian fashion house Cavalli, located along the Dubai Canal. Cavalli Couture will be a 14-storey tower, comprising seventy residential units ranging from three, four and five-bedroom duplex sky villas and duplex penthouses. Each unit will have its own infinity pool and terrace garden overlooking Dubai Canal, with their interiors inspired by the Amazon jungle. Penthouses will have access to private sky gardens and a party terrace with infinity pools. This latest development will only further enhance Dubai’s number one global position for branded residences.

Union Properties has launched its latest project – called Takaya, and at a cost of US$ 435 million – with 788 units across three towers, including thirty-nine townhouses, five villas, 744 apartments and 55k sq ft of retail space. The townhouses, villas and apartments will be linked to a 450 mt podium level sky garden. The project, currently undergoing regulatory approvals, is expected to commence construction in Q3 2023, with a slated completion date of Q4 2025.

HH Sheikh Mohammed bin Rashid has approved both the emirate’s 2023 and its three-year budgets. The former indicates a US$ 409 million (AED 1.5 billion) surplus, with revenue of US$ 18.8 billion, (AED 69.0 billion), and expenditure at US$ 18.4 billion (AED 67.5 billion).  Expenditure for the 2023-2025 budget was set at US$ 55.9 billion (AED 205 billion). As part of efforts to transform Dubai into one of the world’s best cities to live, work and visit, the Dubai government has allocated 20% of total expenditures to the security, justice and safety sector. The budget shows that the government continues to focus on social services and the development of the health, education and culture sectors. It also focuses both on the housing sector, via Dubai’s Housing Programme, as part of a plan for the next twenty years, and the development of the social benefits fund to support families, people of determination and those with limited income.

The revenue forecast is 20% higher on the year, as Dubai recovers well from the impact of the pandemic and the fact that tourism, travel and the economy are well ahead of expected forecasts. It is interesting to note that oil revenues represent only about 5% of the total expected revenues for the year 2023, which confirms the financial sustainability of the emirate. Dubai Crown Prince, Sheikh Hamdan bin Mohammed, commented that the budget reflects Dubai’s commitment to meet the city’s future aspirations and that the Government aims to ensure availability of best services for everyone.

On Tuesday, HH Sheikh Mohammed bin Rashid Al Maktoum toured the 43rd edition of the Big 5, the region’s largest construction event. The Dubai Ruler commented that the emirate’s strong events and exhibitions sector offered a platform to forge new partnerships and opened up several growth opportunities. He also noted that technological advances were disrupting the construction sector, and that some aspects of the fourth industrial revolution, including AI, had already been introduced. Along with the inaugural Everything Architecture, the Big 5 hosted 55k professionals and 2k participants, (from sixty countries), along with twenty national pavilions.

The UAE has finally officially announced a 9% corporate tax on businesses for profits exceeding US$ 100k (AED 375k) from next year, with the first firms being those whose financial year starts on 01 June 2023. A company with a year-end of 31 December will start paying tax on profit as from the year ending 31 December 2023. Companies, whose annual profit is below US$ 100k, will be taxed at a 0% rate to support small businesses and start-ups. There are not that many exemptions from this tax, but they include natural resource extraction activities in the country, (although they remain subject to existing local emirate-level taxation). Other exemptions are available to organisations such as government entities, pension funds, investment funds and public benefit organisations, due to their vital importance and contribution to the social fabric and economy of the UAE. Furthermore, existing free zone entities will be eligible to benefit from a 0% Corporate Tax rate on qualifying income. There will also be generous relief for intra-group transfers and restructurings and allows group companies to use each other’s available tax losses.

According to Dubai World Trade Centre, October’s GITEX GLOBAL, generated over US$ 700 million, (AED 2.6 billion, worth of total economic output, of which 57% of that total was retained in the emirate’s economy. The five-day event was estimated to have supported 9.6k jobs, generating disposable household income of US$ 126 million – up 55% from pre-pandemic 2019 figures; of the 170k visitors, 40% were from overseas.

Next month, Dubai will host The World of Coffee Dubai 2023 which will see 1k international, regional, and local companies and brands from over thirty countries. Last year, the exhibition welcomed over 6k trade visitors, with more than 12k expected this time, due to increased global participation and the relaxation of travel restrictions. The three-day event, organised by DXB Live and the global Specialty Coffee Association, will be held at the DWTC, and is an annual meeting for the coffee industry’s leaders and experts, including farmers, merchants, brewers, distributors, SMEs, café owners, breweries, hotels, baristas/coffee enthusiasts and connoisseurs. Between 2015-2020, it is estimated that the value of retail coffee sales in the UAE nearly topped US$ 1.0 billion, growing at an 8.3% CAGR, with the volume reaching 28.4k tonnes, reflecting a 7.2% annual rise over the period. There are an estimated 615 coffee trade companies in Dubai – a 148% increase in licences issued in 2021.

Ahead of the 3rd edition of the two-day Dubai Equestrian Forum, which opened today at the Meydan Racecourse, the Minister of Economy, Abdullah bin Touq Al Marri, noted that US$ 572 million had been spent on training racehorses and that the average annual expenditure of equestrian clubs in the country had reached US$ 100 million. The main aim of the event, hosted by Dubai Racing Club and Dubai Equestrian Club, is to meet with various equestrian suppliers from around the world and to give them a chance to showcase their products to what remains a huge regional market.

The UAE has launched The Future 100 initiative to support the top one hundred start-ups in numerous sectors such as space, renewable energy and emerging technology, which will shape the country’s future economy. This is one of many initiatives that the government has introduced to enhance the country’s position as one of the most proactive governments worldwide, and to keep it ahead in a fast-changing landscape defined by digital transformation. The Future 100 also aims to boost the UAE’s ranking in global indices, particularly in criteria such as competitiveness, entrepreneurship and investment.

The sixth and latest auction of the government’s treasury bonds was 4.5 times over-subscribed, with bids totalling US$ 1.83 billion; as with previous issues, the total raised was US$ 409 million (AED 1.5 million) and split equally between three-year and five-year tranches, with an 18-basis point (bps) over US Treasuries for three years, and a spread of 30 bps for five years. This is the final issue of 2022 and is part of an official strategy to enhance a local currency bond market and diversify its financial resources. In 2021, the country raised US$ 4.0 billion through the issuance of multi-tranche sovereign bonds, the first time it had issued bonds at the federal level.

Cavendish Maxwell confirmed that it will acquire a majority stake in Property Monitor, with no financial details readily available. The Dubai-based property consultancy, established in 2008, is looking to this move, with the real estate technology and market intelligence firm, to establish a “real estate innovation hub aimed at bridging the gap between traditional expertise and artificial intelligence-enabled disruptive solutions”. Cavendish Maxwell is the largest firm of independent property consultants in the region and employs more than one hundred staff in the region.

With the aim of driving innovation in the fields of aviation and logistics, Dubai Future Labs has signed three preliminary deals with Emirates Airline, Dnata and DP World, with Sheikh Hamdan bin Rashid, tweeting that the partnerships will help to “deploy future technologies to drive innovation in our aviation and logistics sectors”. The three partnerships aim to activate the Dubai Robotics and Automation Programme to support the development of the technologies as part of the emirate’s move towards the future economy. Dubai’s Crown Prince also noted that “we continue to advance Dubai’s leadership in robotics and automation technologies”. So far this year the government has taken steps to support the development of its future economy, including unveiling a metaverse strategy, to create 40k jobs and add US$ 4 billion to the emirate’s economy in the next five years, and formed a higher committee for the future technology and digital economy which aims to help shape the future of AI. There is no doubt that these initiatives will see Dubai in the top ten cities that will shape the emerging technology’s future globally, as the emirate aims to double the number of blockchain companies and the metaverse by five times.

Deyaar Development announced that it had received an initial sum of US$ 54 million (AED 200 million), following an agreement that finally settled its ongoing dispute with master developer Limitless. The developer’s board had approved a US$ 136 million (AED 500 million) cash settlement, along with some land, in June 2021. At the time, the company announced that the deal takes into account that “any proposed land [has] the necessary infrastructure and master plan approvals from the relevant authorities, and that such land [is] to be valued by independent external valuers appointed jointly by the two parties”. In 2019, a UAE court ordered Limitless, to pay US$ 112 million to Deyaar in a dispute related to the purchase of land, and also to pay fees, as well as US$ 17 million in compensation to Deyaar. There were no details about when the remaining US$ 82 million (AED 300 million) would be paid.

The DFM opened on Monday, 05 December, 19 points (0.6%) higher on the previous week, nudged 1 point higher to close on 3,325 by Friday 09 December. Emaar Properties, up US$ 0.05 the previous week, gained US$ 0.01 to close the week on US$ 1.66. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.64, US$ 3.61, US$ 1.55, and US$ 0.44 and closed on US$ 0.65, US$ 3.56, US$ 1.53 and US$ 0.43. On 09 December, trading was at 92 million shares, with a value of US$ 52 million, compared to 393 million shares, with a value of US$ 213 million, on 30 November 2022.

By Friday, 09 December 2022, Brent, US$ 16.52 (16.0%) lower the previous four weeks, slumped by US$ 10.07 (11.6%) to close on US$ 76.70.  Gold, US$ 59 (1.2%) higher the previous fortnight, shed US$ 2 (0.1%), to close at 1,809, on Friday O9 December.

TotalEnergies is expected to take a major hit to its Q4 financials, with a US$ 3.7 billion impairment charge for losses related to its stake in Novatek, Russia’s largest producer of liquefied natural gas. The French energy giant had a 19.4% stake  and has had to withdraw its two nominee representatives from the Russian company’s board. TotalEnergies signed an agreement to sell its 49% stake in Terneftegaz, one of the largest Russian oil companies, to Novatek.  Following the exclusion of Novatek’s assets, it confirmed that its reported proved reserves will decrease by 1.7 billion barrels.

Because of the Sunak government extending the windfall tax on oil and gas firms in the UK, TotalEnergies has said it will cut North Sea investment by 25% in 2023, as the French oil giant plans to reduce US$ 120 million of spending on new wells in the region. The UK’s Energy Profits Levy was raised from 25% to 35% in last month’s Autumn Statement and will now stay in place until March 2028, with the government stating that the tax “strikes a balance between funding cost of living support while encouraging investment”.

According to IATA, the global aviation sector is set to return to profitability in 2023 for the first time since the early 2020 onset of Covid-19. Passenger traffic in North America and Europe is expected to come in slightly lower than the 2019 pre-pandemic levels by just 3% and 11%. This year, it is expected that the total loss will be US$ 6.9 billion, down on the massive US$ 138 billion deficit in 2020 and the US$ 42.0 billion loss posted last year.  However, its forecast 2023 net profit of US$ 4.7 billion will be well down on the US$ 26.4 billion posted four years earlier in 2019. The profit levels on a regional global basis are mixed, with North America posting profits of US$ 9.9 billion and US$ 11.4 billion, in 2022 and 2023, with Europe’s return being minus US$ 3.1 billion and a US$ 621 million profit, and losses of US$ 10.0 billion and US$ 6.6 billion for both years in the Asia-Pacific region. Whilst ME airlines are also expected to return marginally to the black, Latin American and African airlines will continue in the red for both years.

A new report reckons that the poorer countries, numbering over seventy, eligible to borrow from the World Bank’s International Development Association are spending more than 10% of their export revenue to pay off debts – the highest rate this century. To be eligible for IDA support in 2023, a country’s GNI per capita is set at US$ 1,255. Further analysis sees that in 2021, those countries’ debt-service payments, on long-term public and publicly guaranteed external debt, reached US$ 46.2 billion — equivalent to 10.3% of their exports of goods and services and 1.8% of their GDP, and well above that of the 2010 figures of 3.2% and 0.7% respectively. This year, the debt service payments are forecast to jump 35% to US$ 62.0 billion, with China expected to account for 66% of payments to be made by IDA countries on their official bilateral debt. By the end of 2021, the external debt of all developing economies — low as well as middle-income economies — stood at US$ 9 trillion, more than double the amount a decade ago, with the total external debt of IDA countries nearly tripling to US$ 1 trillion.

In a bid to bolster its faltering economy, China announced that it would issue US$ 108 billion (750 billion yuan), worth of three-year special treasury bonds next Monday, 12 December. The Ministry of Finance confirmed that the issue will only involve particular banks in the interbank bond market, and that the People’s Bank of China, the country’s central bank, will also conduct open market operations with relevant financial institutions.

Because of “distortions” created by a US$ 430 billion US plan to incentivise climate-friendly technologies, President Ursula von der Leyen has indicated that the EU should “adjust our own rules”. Some member nations are concerned that the US Inflation Reduction Act, that seems to incentivise climate-friendly technologies, could be the start of a new trade war and lure away EU businesses. Under the legislation, Americans will get incentives to purchase new and second-hand electric cars, to warm their homes with heat pumps and even to cook their food using electric induction. US President Joe Biden, has commented that there could be “tweaks” made to make it easier for European firms to benefit from the subsidies package and that “we will continue to create manufacturing jobs in America, but not at the expense of Europe.”

For the 28th consecutive month, hyperinflation in Lebanon continued, increasing by a massive 186.4% in the first ten months of 2022, with October’s inflation, at 158.5% higher compared to the same month in 2021, and up 14.6% on the month. Lebanon has yet to carry out some IMF reforms – including the formation of a new government, the election of a new president and consensus among the country’s political elite – so as to receive a US$ 3 billion assistance package.  Securing IMF backing will help to unlock a further US$ 11 billion of assistance that was pledged at a 2018 Paris donor conference, which is also tied to a string of reforms. It is estimated that its economy has the second highest inflation rate in the world behind Sudan. Some of the sectors that have been badly hit include healthcare and water, electricity, gas/other fuels – four times and 350% higher over the past twelve months – whilst the likes of communication and food/non-alcoholic beverages more than tripled over the same period. The economy will see an improved 5.4% contraction this year, compared to a 58% slump over the three previous years. Meanwhile, the Central Bank Governor Riad Salameh indicated that it plans to devalue the pound officially to 15k Lebanese pounds to the US dollar, with the aim of unifying the country’s multiple exchange rates and abandon the 25-year peg of 1,507 pounds to the greenback.

According to the ECB’s Chief Economist Philip Lane on one hand consumer-price growth is probably near its peak, but on the other that borrowing costs will be raised again, and that it “would be reasonably confident in saying that it is likely we are close to peak inflation.” The bureaucrat noted that consumer price increases could not be ruled out but opined that “in the spring or summer, we should see a sizeable drop in the inflation rate”, but that it will take time – maybe two years – to return to the bank’s 2.0% target. He said that the inflation rate might drop to 6%-7% in 2023, with a further reduction to follow, but that “we do think there will be a second round of inflation;” this will be the result of bigger-than-usual pay increases over the next three years. However, any reports by the ECB should be taken with a pinch of salt, as twelve months ago, as inflation started to creep above their target level, they were slow to act. In July 2021, inflation was hovering at 2.16% and had risen to 4.96% by the end of December 2021; when it had almost doubled to 8.64% in June 2022, the ECB finally acted. Until July, after it had maintained rates at below zero for eight years, it lifted rates by 0.75% to its highest level since 2009. By the end of October, the base rate was 2.0% higher, with inflation at 10.62%. The authorities have definitely lost their way when it comes to its management of inflation; this time, last year, as inflation moved higher, no positive action was taken and the general feeling was that the upward trend was ‘transitory’. Since then, incompetence and inactivity  has seen inflation only go Up, Up and Away! 

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Things Can Only Get Worse!

Things Can Only Get Worse!                                              02 December 2022

The 1,600 real estate and properties transactions totalled US$ 1.31 billion, during the shortened three-day week, ending 30 November 2022, because of the National Day holidays. The sum of transactions was 176 plots, sold for US$ 272 million, and 1,052 apartments and villas, selling for US$ 632 million. Jabal Ali First recorded the most transactions, with 110 sales worth US$ 78 million, followed by Al Hebiah Fifth, with fifty sales transactions, worth US$ 39 million, and Al Yufrah 2, with six sales transactions, worth US$ 2 million. The top three transfers for apartments and villas were for an apartment, valued at US$ 10 million, in Jumeirah Second, followed by one in Palm Jumeirah for US$ 10 million and in Al Barsha First for US$ 9 million. The mortgaged properties for the week reached US$ 373 million and 38 properties were granted between first-degree relatives worth US$ 31 million.

The latest Knight Frank report has indicated that Dubai’s prime residential market is set for the world’s strongest growth in 2023 among its twenty-five-city ranking. The consultancy has forecast that global growth in this sector will be just 2.0%, as Dubai is expected to expand at almost seven times this average at 13.5%; six months ago, the global prediction was 2.7%. Dubai is well ahead of the likes of Miami (5%), Los Angeles (4%) and Paris (4%). The report noted that “Dubai’s prime residential market has and continues to be a global outlier, with record price growth in 2022, albeit this has been from a low base.” The emirate continues to be one of the most “affordable” luxury residential markets in the world, with prices trailing the 2014 peak levels by a staggering 21.4%. Knight Frank also expects that 2023 will see 13.5% price hikes in Palm Jumeirah, Emirates Hills and Jumeirah Bay Island because of “prime values are being fuelled by Dubai’s safe-haven status, an exceptionally diverse range of international ultra-high-net-worth individuals in search of luxury second homes, combined of course with the government’s world-leading response to the pandemic, which has spurred business confidence.” There is also a marked shortage in the supply of new high-end homes, with just eight villas in Dubai’s prime precincts expected to be delivered by 2025, whilst the main supply of apartments will be Bulgari Lighthouse on Jumeirah Bay Island, (thirty-one apartments), and Aloago’s Palm Flower on The Palm Jumeirah, (eleven apartments). It does not take a genius to see that there is a clear demand-supply imbalance.

Orla, Dorchester Collection, Omniyat’s new development on Dubai’s Palm Jumeirah, is expected to see the developer pull in over US$ 1.36 billion (AED 5 billion) in sales revenue. The luxury developer has posted that over 60% of its eighty-six units, designed by Foster + Partners, with prices starting at US$ 6.0 million, have either been booked or sold. The Orla project will also include three sky palaces and Omniyat’s first mansion, which will sit on a dedicated beach frontage of about 50 mt which will have the Dorchester Collection service as well. Construction will start imminently and is slated for completion by H1 2026.

Emirates Airline is confident of returning to 100% capacity, and network, by the end of 2023; currently they stand at 80% and 95%. Meanwhile, the carrier is carrying out a major retrofit of the aircraft, having announced last month a massive multi-billion-dollar two-year retrofit programme with work starting on the first of 120 aircraft earmarked for a full cabin interior upgrade and the installation of the airline’s latest Premium Economy seats. It is estimated that global airlines have added over 110k seats to on Dubai route in November to accommodate the increased flow of tourists and FIFA World Cup football fans.

The Ministry of Energy always adjusts fuel prices in the UAE by the first day of every month. According to the government, the UAE liberalised fuel prices help to rationalise consumption and encourage the use of public transport in the long run and incentivise the use of alternatives. The UAE Fuel Price Committee marginally decreased December retail petrol prices:

  • Super 98: US$ 0.899 – down by 0.067% on the month and up 24.51% YTD from US$ 0.722  
  • Special 95: US$ 0.866 – down by 0.069% on the month and up 25.69% YTD from US$ 0.689
  • Diesel: US$ 1.019– down 0.586% on the month and up 46.20% YTD from US$ 0.697
  • E-plus 91: US$ 0.847 – down by 0.700% on the month

The Investment Corporation of Dubai posted marked increases in both H1 revenue and net profit – 61.0% higher, at US$ 33.0 billion, and more than ten times higher at US$ 4.03 billion – driven by improvements in all sectors. ICD, the principal investment arm of the Government of Dubai, posted increases in both its assets and liabilities to US$ 309.5 billion, attributable to a much higher level of activity overall, and US$ 241.8 billion, as borrowings and lease liabilities slightly declined. Its share of equity increased by 4.8% to US$ 54.4 billion.

The DFM opened on Monday, 28 November, 102 points (3.0%) lower on the previous fortnight, gained 19 points (0.6%) to close the shortened week, (because of the National Day holidays), on 3,324 by Wednesday 30 November. Emaar Properties, US$ 0.13 shy the previous fortnight, gained US$ 0.05 to close the week on US$ 1.66. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 3.60, US$ 1.57, and US$ 0.42 and closed on US$ 0.64, US$ 3.61, US$ 1.55 and US$ 0.44. On 30 November, trading was at 393 million shares, with a value of US$ 213 million, compared to 170 million shares, with a value of US$ 70 million, on 30 November 2022.

For the month of November, the bourse had opened on 3,332 and, having closed the month on 3324 was 8 points (0.1%) lower. Emaar traded US$ 0.01 higher from its 01 October 2022 opening figure of US$ 1.65, to close the month at US$ 1.66. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the month on US$ 0.68, US$ 3.50, US$ 1.60 and US$ 0.47 and closed on 30 November on US$ 0.64, US$ 3.61, US$ 1.55 and US$ 0.44 respectively. The bourse had opened the year on 3,196 and, having closed November on 3324, was 128 points (4.0%) higher, YTD.  Emaar traded US$ 0.33 higher from its 01 January 2022 opening figure of US$ 1.33, to close at US$ 1.66. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the year on US$ 0.00, US$ 3.69, US$ 1.47 and US$ 0.72 and closed on 30 November on US$ 0.64, US$ 3.61, US$ 1.55 and US$ 0.44 respectively.

By Friday, 02 December 2022, Brent, US$ 14.77 (14.4%) lower the previous three weeks, was down a further US$ 1.75 (2.0%) to close on US$ 86.77.  Gold, US$ 3 (1.2%) higher the previous week, gained US$ 56 (3.2%), to close at 1,811, on Friday O2 December.

Brent started the year on US$ 77.68 and gained US$ 9.09 (11.7%), to close 30 November on US$ 86.77. Meanwhile, the yellow metal opened January trading at US$ 1,831 and has shed US$ 38 (2.1%) during 2022, to close on US$ 1,793. For the month, Brent opened at US$ 94.83 and closed on 30 November, US$ 8.06 lower (8.5%) at US$ 86.77. Meanwhile, gold opened November on US$ 1,642 and gained US$ 151 (9.2%) to close at US$ 1,793 on 30 November.

SIngapore Airlines is in line to take a 25.1% stake in Air India, which will result in its Vistara full-service airline having a JV with Tata Sons, into India’s national carrier; SIA will invest US$ 250 million in the venture. Tata Group currently owns a 51% in Vistara, and the remaining 49 per cent shareholding is with SIA. After sixty-nine years as a government-owned enterprise, Air India and Air India Express were welcomed back into the Tata Group last January after a US$ 2.4 billion deal with the Modi government. The new set-up will see Air India becoming the country’s leading domestic and international carrier, with a combined fleet of 218 aircraft, making it India’s largest international carrier and second largest domestic carrier.

With delivering sixty-six planes last month, to bring its YTD total to 563, Airbus will probably not meet its 700-plane target, having delivered an estimated sixty-six jets in November, leaving itself a near-record challenge of 137 in December. However, it did manage to turn out a monthly record of 138 planes in pre-Covid December 2019, but this will probably not be replicated this year because of ongoing supply chain problems, which are said to continue for at least a further six months However, it was reported that eleven aircraft left the Toulouse factory on 01 December.

It is reported that Jaguar Land Rover will reduce output at the Solihull and Halewood factories, due to ongoing problems obtaining enough computer chips for new vehicles. This will impact its Jaguar F-Pace and Land Rover vehicles, whilst it will focus on more profitable models such as the Range Rover Discovery; it is estimated that there is a one-year waiting list for this US$ 120k vehicle.

In a US$ 41 million deal, Joules has been rescued from administration by retail giant Next, and founder Tom Joule, that will see about one hundred Joules stores remaining open and save 1.45k jobs; six years ago, the company was valued at US$ 162 million, when it was floated on the London Stock Exchange. The new set-up will see Next with 74% of the equity. There is no doubt that the retailer, founded in 1989, had lost its way in the sector and even when struggling spent US$ 24 million on a new head office, as well as acquiring an online furniture accessories business; Next bought the head office for US$ 9 million. However, the clothing chain has announced that nineteen stores will be closed, with immediate effect, with the loss of 133 posts. Next will continue to operate Joules’ website but will also sell Joules-branded clothing through its own e-commerce platform from 2024.

A report by the Economist Intelligence Unit, which compares the prices of more than 200 products and services in 172 global cities, ranks New York and Singapore as the world’s most expensive cities, overtaking last year’s top-placed Tel Aviv. The remaining top leading places are Hong Kong, Los Angeles, Zurich, Geneva, San Francisco, Paris, Copenhagen and Sydney.  The other end of the chart is taken by Damascus and Tripoli. A strong greenback ensured that US cities moved higher, whilst most European cities fell because of fall in the value of the euro and other local currencies. The average 8.1% price rise across the 172 cities is the strongest seen in the twenty years, driven by several factors including the war in Ukraine, supply chain problems, rising interest rates, exchange rate shifts, and the cost-of-living crisis.

The World Travel and Tourism Council has ranked Dubai, ahead of Doha and London, as the city with the highest spending by international visitors this year. The report, covering eighty-two cities, indicates that the emirate has raked in US$ 29.4 billion in international visitor spending so far this year, well ahead from its two main competitors with spends of US$ 16.8 billion and US$ 16.2 billion. It was also noted that the three cities to recover fastest from the pandemic were Doha, Orlando and Antalya, with spend increases of 21%, 19% and 15%. The study concluded that ten of the cities would have surpassed pre-pandemic levels, in term of direct travel and tourism GDP to their economies, before the end of the year. Paris, Beijing and Orlando are the three cities with the largest direct travel and tourism contribution to GDP of US$ 36 billion, Beijing (US$ 33 billion) and Orlando (US$ 31 billion)., Within a decade, it is estimated that the sector will directly generate up to 8% of all jobs, (126 million jobs), by 2032 in the cities analysed, compared to 6.6% in 2019 and 5.1% in 2020.

Last year it is reported that the EU spent on imports of cars:

  • non-plug in hybrid – US$ 12.4 billion (40.5% of extra-EU imports of hybrid/electric cars)
  • full electric – US$ 12.0 billion (39.2%)
  • plug-in hybrid – US$ 6.2 billion (20.3%)

and earned export sales revenue of:

  • non-plug-in hybrid – US$ 24.1 billion (54.5%)
  • full electric – US$ 13.0 billion (29.3%)
  • plug-in hybrid – US$ 7.2 billion (16.2%)

Between the years of 2017 to 2021, total extra-EU exports and imports both rose significantly by almost 800% to US$ 44.3 billion and by 400% to US$ 30.6 billion respectively

The World Bank estimates that the world’s poorest countries now owe US$ 62 billion, with a 35% year on year increase, in annual service charges to official bilateral creditors, as its president David Malpass warning that the rising cost is increasing the risk of default. Over 67% of the debt is owed to China. He is also concerned that the growing debt in advanced economies, such as the US, is drawing more capital away from developing countries, as well as the fact that when rates head north, debt service charges go up in tandem, with the knock-on impact that more money is required to service the debt and less to invest.

The International Labour Organisation is concerned that H1 global monthly wages fell 0.9% in real terms – the first time this century that negative growth has occurred. It noted that the purchasing power of middle-class families has been reduced, while low-income households have been badly impacted, placing “tens of millions of workers in a dire situation as they face increasing uncertainties”. It is obvious that if the purchasing power of the lowest paid is not maintained, any post-Covid recovery will be further delayed and the danger of social unrest increases. Their latest Global Wage Report estimated that H1 real wages declined 2.2% in the advanced G20 countries but grew by 0.8% in emerging G20 countries – down by 2.6% compared to pre-Covid. Furthermore, inflation rose at a higher rate in the developed countries compared to poorer nations, with the knock-on effect that real wages dipped. For example, in Canada and the United States, average real wage growth dropped to zero in last year, and then fell by 3.2% in H1 and by 1.4% and 1.7% in Latin America and the Caribbean. However, the comparative figures in Asia and Pacific see growth levels of 3.5% and 1.3%.

The World Bank has indicated that 2022 remittance flows to low and middle-income nations are set to rise by 5% to US$ 626 billion, including a record US$ 100 billion to India, on the year – and this despite the global macroeconomic malaise; this is less than half the 2021 growth figure of 10.2%, when such flows to poor and middle-income countries grew to US$ 589 billion.  Location-wise the remittances grew 9.5% in in Latin America and the Caribbean, 3.5% in South Asia, 2.5% in the MENA region, to US$ 63 billion, and 0.7% in East Asia and the Pacific.  The study noted that the five most common remittance destinations were India, China, Mexico, the Philippines and Egypt, and that “migrants help to ease tight labour markets in host countries, while supporting their families through remittances”. The global average cost of sending US$ 200 remained high at 6.0% in Q2 2022.

The International Labour Organisation is concerned that H1 global monthly wages fell 0.9% in real terms – the first time this century that negative growth has occurred. It noted that the purchasing power of middle-class families had been reduced, while low-income households have been badly impacted, placing “tens of millions of workers in a dire situation as they face increasing uncertainties”. It is obvious that if the purchasing power of the lowest paid is not maintained, any post-Covid recovery will be further delayed and the danger of social unrest increases. Their latest Global Wage Report estimated that H1 real wages declined 2.2% in the advanced G20 countries but grew by 0.8% in emerging G20 countries – down by 2.6% compared to pre-Covid. Furthermore, inflation rose at a higher rate in the developed countries compared to poorer nations, with the knock-on effect that real wages dipped. For example, in Canada and the United States, average real wage growth dropped to zero in last year, and then fell and by 3.2% in H1 and by 1.4% and 1.7% in Latin America and the Caribbean. However, the comparative figures in Asia and Pacific see growth levels of 3.5% and 1.3%.

Recording the biggest drop since June 2020, the average UK house price fell by 1.4% in November,  with the annual price growth slowing to  4.4%, compared to 7.2% a month earlier in October; the average UK house is now at US$ 320k.The sector is still recovering from the financial debacle of the Liz Truss mini-budget which spooked markets and which still sees new mortgages remaining elevated, with  the market having lost a significant degree of momentum. Four factors that, despite the imminent recession, may see the housing sector keeping its head above water are that borrowing costs have fallen back in recent weeks, lack of supply, unemployment levels are at a near-fifty year low and that household balance sheets remain in good shape, with significant protection from higher borrowing costs, as about 85% of mortgage balances are on fixed interest rates. Knight Frank expect average house prices to be 10% lower two years from now, but others argue that this figure could come in higher.

US October jobs growth remained strong, with a further 263k jobs added, while wages climbed sharply, as the average hourly pay rose 5.1% on the twelve months; the unemployment rate remained at 3.7%. These figures surprised the market, at a time when the Federal Reserve is making concerted efforts to slow the economy and stabilise prices by raising interest rates, which many had thought would weaken the country’s job creation growth. Wages are not rising as fast as price, with November Inflation hitting 7.7% and though the rate has eased since June’s 9.1%, it still remains near a forty-year high.

Earlier in the week, the President of the ECB warned that Eurozone inflation had yet to peak and that there was the possibility of it rising even higher than the record 10.6% recorded last month. Christine Lagarde also indicated that there could be possible interest rate hikes in the future, fuelling speculation that the bank would not take the gentler path to curb inflation. She commented that “we do not see the components or the direction that would lead me to believe that we’ve reached peak inflation and that it’s going to decline in short order.” There is no doubt that the main driver behind these figures is the war in Ukraine, causing the cost of energy to spike and that the bank will push rates higher at their next meeting later in the month; the only point of discussion whether this will be at 0.5% or 0.75%. The market is also expecting further rate hikes into the new year, whilst inflation rates, which reached double digits in October, will remain high in the short term driven by soaring energy/food prices, and supply shortages. The euro zone faces a grim winter as a recession bites, with the bloc’s economy shrinking now and which will continue to contract into the new year. Things Can Only Get Worse!

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Practice What You Preach!

Practice What You Preach!                                        25 November 2022

The 2,867 real estate and properties transactions totalled US$ 4.09 billion, during the week ending 25 November 2022. The sum of transactions was 313 plots, sold for US$ 428 million, and 1,936 apartments and villas, selling for US$ 1.22 billion. The top two land transactions were both for land in Hadaeq Sheikh Mohammed Bin Rashid – US$ 12 million and US$ 7 million. Al Hebiah Fifth recorded the most transactions, with 110 sales worth US$ 96 million, followed by Jabal Ali First, with seventy-three sales transactions, worth US$ 64 million, and Al Yufrah 2, with twenty-three sales transactions, worth US$ 8 million. The top three transfers for apartments and villas were for an apartment, valued at US$ 14 million, in Jumeirah Second, followed by two transactions in Palm Jumeirah for US$ 11 million and US$ 9 million. The mortgaged properties for the week reached US$ 2.30 billion, with the highest being for land in Al Warsan First, mortgaged for US$ 817 million. 145 properties were granted between first-degree relatives worth US$ 143 million.

The increasing number of doomsayers in the market who have been saying, for several months now, that Dubai property prices will go down, will be disappointed that, according to Property Monitor, sales prices rose 1.77% last month. The average property values in Dubai now stand at US$ 294 per sq ft – a level not seen since the time of the last market upswing in November 2013. The volume of sales transactions remains at par with last month, dipping 0.7% to 8.6k registrations, with residential transactions accounting for 92% (7.9k sales transactions) of the total, followed by hotel apartments (3.4%), office (1.9%), and land sales (1.7%). YTD, there have been 77.2k transactions registered (89.2% of which were residential) equal to 126% of the entire annual transaction volume of 2021. At this rate, total 2022 transactions could easily top 92k, which would be second best year in the annals of Dubai’s property history. YTD, new off-plan development project launches total almost 37k, as a further 3.4k being added in October, expected to raise US$ 28.34 billion in cumulative gross sales value. There is no doubt that, to date, the local market has remained aloof from many of the problems being experienced in other countries and has benefited by the dirham being pegged to the greenback and several progressive initiatives, introduced by the Dubai government. Investors should continue to be confident in a market that is set to move higher for at least the next six months, but there could be some realignment in prices towards the end of 2023, when the doomsayers will be shouting that they were right.

Arada, Sharjah’s largest property developer with projects valued at over US$ 9.0 billion, and with property sold valued at US$ 2.34 billion, has unveiled its first ever project in Dubai with the launch of Jouri Hills at Jumeirah Golf Estates; the announcement was made during Cityscape Dubai. The luxury villa project will include 294 high-end villas, ranging from three B/R townhouses to six-bedroom mansions. All detached villas come with swimming pools as standard, while the community’s most luxurious homes will encompass 14k sq ft of space, spread across four floors and encompassing underground parking, basements with a flexible entertainment or fitness floor plans and a landscaped ‘English courtyard’ for outdoor entertainment. The development will have its own community park and will see facilities, including cycling and running tracks, swimming pools and a fitness centre. Construction will start next year, with the first homes scheduled to be handed over by Q2 2025. It was also reported that the Sharjah-based developer had acquired the last remaining beachfront land plot on The Palm Jumeirah. The launch for the concept design – an ultra-luxury mixed-use project – is ongoing, with the sales launch slated for Q1 2023.

Inspire Home Contracting, currently developing villas in Dubai South and a tower on Dubai Islands, is planning a community on the Oman Island at Dubai’s The World Islands. It has already received preliminary approval from master developer Nakheel and is in the process of applying for a building permit. On completion, the US$ 20 million development will comprise 167 villas, (all with one B/R), with a massive swimming pool in the middle of the island, a clubhouse that will have a spa, five-star restaurant, cinema and ballroom. All the villas, some of which will be floating, will be manufactured in South Korea and will take two years to complete, during which time, infrastructure work will be carried out on the island. The villas will be guaranteed for fifty years, with prices starting at US$ 1.63 million.

The development on the World Islands has been ramping up, with Anantara expected to launch a hotel on the South American section before the end of the year and Kleindienst’s Heart of Europe project  is in its final phases to completion; indeed, the first of its Floating Seahorse villas  were handed over in 2020, with its chairman, Josef Kleindienst,  noting that there has already been an appreciation in the price of its floating villas..

Sobha Realty launched two new megaprojects – Sobha 1 and Hartland 2 – valued at US$ 6.53 billion and located adjacent to the Sobha Hartland master development in MBR City. The developer expects both projects, with 10k apartments covering a 220-acre site, to be finalised by 2030 at the latest, with full-scale construction starting next year; financing will be via a mix of debt and equity.

Meanwhile, Azizi Developments has bought a fifteen million sq ft plot of land from Dubai South, an aviation and logistics urban master developer, to build a mixed-use development, valued at US$ 3.27 billion, taking advantage of a booming Dubai property market to expand its portfolio of assets. Part of the development will be 24 million square feet of gross floor area, within the Dubai South development, a 145 sq km city that includes Al Maktoum International Airport.  Full details of the development have yet to be released but what is known is that Azizi, will also be in charge of constructing the project’s infrastructure and road network.

Savills latest Prime Office Costs analysis points to Dubai having one of the largest increases in net effective cost to occupiers of prime office space in Q3 as fit-out costs in key global office markets have climbed 10% over the past twelve months. In Q3, Dubai’s net effective cost to occupiers of prime office space was 3.0% higher on the quarter at US$ 108.. Demand for office space has been concentrated across prime properties, leading to limited availability and an increase in rents. The study also noted that the best returns were seen in Dublin, London City, Dubai and Berlin – up 7.0%, 5.0%, 3.0% and 3.0% respectively. Some analysts forecast the cost of leasing office space in the emirate rising by double-digit numbers on the year, as strong demand continues to outstrip supply significantly. By the end of September, Dubai’s office market had a portfolio of 9.1 million sq mt of gross leasable area, with supply nudging 53k sq mt in Q4.

The latest IMF report indicates that the UAE’s economy is set to grow by more than 6.0% this year which would be the highest rate since the 6.9% expansion of 2011; the Q1 economy was 8.4% higher, as “fiscal and external surpluses have increased further, benefitting from the higher oil prices, as well as the removal of the temporary Covid crisis-related fiscal support to businesses and households as the pandemic has gradually waned. 2023 growth is expected at 4.0%. H1 foreign trade exceeded US$ 272 billion (AED 1 trillion), compared with US$ 229 billion for the same period before the pandemic. The IMF noted that this major improvement was helped by a rebound in tourism, construction and activity related to the Expo 2020 Dubai. Tourism revenue, in H1, topped US$ 5.2 billion, with the number of hotel guests at over twelve million, climbing 42%, compared with the same period before the pandemic.

More than 60% of the exhibitors at this year’s Cityscape Dubai, which opened on Monday, were from outside the UAE, including from Tunisia, Germany, Georgia, Bali, Canada and the UK. These developers, along with most of the major local players such as Azizi, Sobha Realty, Damac and Arada, all hope to cash in on the booming local property sector. By the end of Q3, prices were 9% higher on the year, with average residential prices up to 25% higher on the year. Another factor pushing property prices higher was the 18% rise in high-net-worth individuals, moving to the emirate, in the first six months of this year; it is estimated that Dubai’s growing millionaire and billionaire population now amounts to almost 68k and thirteen respectively.

Last week, Dubai Harbour welcomed its first cruise ship, the AIDAcosma, officially starting the emirate’s 2022-23 cruise season. With 5.5k passengers on board its maiden voyage from Germany, this is the start of an expected influx of more than 300k to land at the Dubai Harbour, over the next seven months. Dubai Harbour will pave the way for green cruising by becoming the first to host a brand-new LNG powered cruise ship, with usage of LNG cutting emissions by 30%. Shamal Holding is the owning-company and curator of Dubai Harbour and is the driving force behind making it an exceptional seafront district. Dubai Harbour Cruise Terminal comprises two terminal buildings, designed to process over 3.3k passengers per hour, on a pier stretch of over 910 mt and can accommodate a complete passenger turnaround of two mega cruise ships simultaneously.

Despite a recent downward trend in the price of Brent, with a decline to around the US$ 90 a barrel level, caused by several factors, including a slowing global economy and a potential drop in demand from China, YTD prices are still 12.0% higher. Allied with this, business activity in the UAE’s non-oil private sector economy continued to improve last month, with the S&P Global PMI at a healthy 56.6, as new business and output climbed along with a rise in demand and employment. To date, the country has not seen the double-digit inflation rates, compared to many other countries, with the UAE Central Bank looking at a relatively low 5.6% figure for 2022, which are expected to soften into the new year. It is highly likely that if higher oil prices continue in 2023 – along with the healthy fiscal buffers – the country will remain a haven for investors and many expats.

The IMF also noted that the economy will also benefit from several other initiatives which will help to underpin growth and fiscal consolidation including:

  • expected introduction of corporate tax
  • gradual phasing out of business fee structures
  • reforms under the UAE 2050 Strategy, with a focus on diversification of the economy
  • ongoing structural reforms, such as those to support private sector employment and female labour force participation
  • increase in trade and foreign investment
  • harnessing the benefits of technology and education

Following the onset of Covid in early 2020, the Insurance Authority introduced a 50% discount on MV premiums, replacing the previous up to 30% discount, depending on the driver’s history; insurance companies were permitted to offer a 10% discount for drivers with no claims for a year, 20% on a two-year policy and 30% for three years and above in case of no claim history. Another move in 2020 saw the merger of the Insurance Authority with the Central Bank in order to boost the insurance industry’s role in the country’s economy. Now it seems that insurers are returning to the 30% norm, and most of them would have these “new” rates in place by the end of the month, which could see insurance premiums coming in 15%-20% higher, as the premium collection is 40% lower to maintain the loss ratios at a profitable position. It also seems that health insurance premiums will move up to 10% higher due to factors such as the ageing population and healthcare inflation.

The FTA has notified eligible taxpayers that the deadline, to apply for the re-determination of administrative penalties on taxes, is 31 December 2022. However, the authorities have confirmed that non-compliance to this deadline could be extended subject to three conditions:

  • the administrative penalty must be imposed under Cabinet Decision No. (40) of 2017 before 28 June 2021, and remain outstanding
  • the tax registrant needs to have settled all due Payable Tax by 31 December 2021
  • the tax registrant must have paid 30% of the total unsettled administrative penalties due until 28 June 2021 no later than 31 December 2022.

In line with all tax payments, the authority has cautioned that bank transfers can take up to three working days to process the payment.

Qashio has raised US$ 10 million in a seed round, which consisted of both equity and non-equity financing, and backed by various international and regional investors, including One Way Ventures, Mitaa, Cadorna Ventures, Sanabil 500 Mena, Nuwa Capital, Iliad Partners and Phoenix Investments. Money raised will be pointed at expanding into Saudi Arabia, the Arab world’s biggest economy. The UAE-based FinTech start-up, only founded last year by Armin Moradi and Jonathan Lau, issues charge cards to automate the management of a company’s expenses, by linking them to the FinTech’s software. Transactions made, using Qashio’s cards, are automatically captured by its software and interfaced to the company’s accounting system, cutting down the time companies spend on reconciling expenses and receipts. The latest MasterCard report estimates an almost tripling of the FinTech global market from last year’s US$ 112.5 billion to US$ 332.5 billion by 2028. Currently there are some 470 FinTech unicorns, (start-ups with a US$ 1 billion+ valuation), and it is expected that the MENA region will have forty such entities by 2030.

This week, Dubai Islamic Bank sold US$ 750 million of its debut five-year sustainable Islamic bond, sold at 155 bps over US Treasuries; this was tightened by 20 bps to 155 bps after demand topped US$ 1.6 billion. Because of the pandemic of economic volatility, and surging interest rates, international bond sales have plummeted this year. Late last week, there were two bank-related sales – Dubai’s Mashreq raising US$ 500 million in Tier 2 bonds, and a US$ 700 million bond sale by Banque Saudi Fransi.

Marked occupancy improvements in both its Al Thuraya Tower 1, (recently hitting a 50% rate following the completion of a major refurbishment in March 2022), and Burj Daman, topping an 80% occupancy rate, ENBD REIT announced its 30 September net asset value had risen to US$ 172 million ($0.69 per share), compared to US$ 166 million in Q2 and US$ 164 million, a year earlier. Its rental income nudged 0.7% higher to US$ 15 million, whilst the Weighted Average Unexpired Lease Term (WAULT) stands at 4.13 years for the portfolio, and the Loan-to-Value (LTV) ratio remains stable at 54%.  Operating expenses came in 2.2% higher, with fund expenses and finance costs being 3.7% and 5.5% higher respectively. The property value was 1.3% higher, on the quarter, to US$ 362 million, as its portfolio occupancy jumped 9% to 84%, on the year, mainly attributable to strong growth seen in the Dubai property market. The Board recommended a US$ 4.5 million dividend, equating to US$ 0.018 per share.

DEWA has announced that at its second general assembly meeting will be held physically and virtually on Monday, 12 December, at which time the meeting will most probably approve a special one-time cash dividend of US$ 552 million to its shareholders; if this goes through the dividend record date has been set for 22 December. In the past, its MD and CEO, Saeed Mohammed Al Tayer, had indicated that the utility intended to pay its shareholders a total dividend of US$ 2.24 billion in 2022. Last month, it paid US$ 844 million in dividends for H1, with the same amount being paid as an H2 dividend payment in April 2023.

On Monday, the DFM launched its new general index culminating the successful accomplishment of a comprehensive transformation of its indices’ methodology, with S&P Dow Jones Indices acting as the calculation agent of the indices. The eight new sectors include Communication Services, Consumer Staples, Materials, Real Estate, Utilities, Financials, Industrials, and Consumer Discretionary. The various key features of the new methodology of DFM indices include:

  • amending the current 20% cap of the threshold of a DFM index individual constituent to 10% percent of the index weightage
  • index calculation based on actual free float adjusted market capitalisation
  • amending the current semi-annual review to a quarterly rebalancing of the index
  • a DFM independent index committee overseeing current and future methodology changes
  • the alignment of DFM’s sectors with the Global Industry Classification Standard (GICS) that are tracked by institutional clients

The DFM opened on Monday, 21 November, 55 points (1.6%) lower on the previous week, lost a further 47 points (1.4%). to close on 3,305 by Friday 25 November. Emaar Properties, US$ 0.06 shy the previous week, shed US$ 0.07 to close the week on US$ 1.61. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 3.58, US$ 1.59, and US$ 0.43 and closed on US$ 0.65, US$ 3.60, US$ 1.57 and US$ 0.42. On 25 November, trading was at 170 million shares, with a value of US$ 70 million, compared to 185 million shares, with a value of US$ 61 million, on 18 November 2022.

By Friday, 25 November 2022, Brent, US$ 11.02 (2.7%) lower the previous fortnight, was down US$ 3.75 (11.2%) to close on US$ 87.62.  Gold, US$ 22 (1.2%) lower the previous week, gained US$ 3 (0.2%), to close on 1,755 by Friday 25 November.

Following the windfall extension on energy companies by the Sunak government, (from 25% to 35%), Shell is reviewing plans to invest US$ 29.7 billion in UK projects, over the next decade, indicating that it would now look at each of its projects on a “case-by-case basis”. It is forecast that the tax extension will fill the Exchequer’s coffers by an extra US$ 16.6 billion. It is estimated that this tax takes the total levy paid on oil and gas profits to 75%, among the highest in the world. Obviously, the more a company is taxed will see the amount available for investment being diminished, as Shell confirms that it does not expect to pay any extra tax this year because of its heavy investment in the North Sea. It is sometimes forgotten that many of the energy giants only make a small portion of their profits in the UK and that they can deduct most investments in new oil and gas projects from any tax levied. Its profits over Q2 and Q3 came in at US$ 11.4 billion and US$ 9.5 billion, resulting from the soaring energy prices which rose to as high as US$ 120 per barrel.

Guess, the US clothing brand has been advertising its latest collection, “with graffiti by Banksy” – an arrangement that had not been authorised by the UK street and graffiti artist, whose actual identity remains unknown. He noted that “they’ve helped themselves to my artwork without asking, how can it be wrong for you to do the same to their clothes?”, and posted a photo of the London Regent Street, and suggested shoplifters should visit the branch which was subsequently closed. It seems that the company’s defence is that its collection was created in collaboration with Brandalised, which licenses designs by graffiti artists and apparently had the rights to commercialise and use Banksy’s artwork on goods.

Penguin Random House has scrapped a US$ 2.2 billion planned takeover of rival Simon & Schuster, after a US court blocked the deal, saying it could “substantially” weaken competition in the industry. Penguin’s parent company Bertelsmann said Paramount Global, the owner of Simon & Schuster, decided not to appeal the ruling. The world’s largest book publisher commented that “we believe the judge’s ruling is wrong” but we have to accept Paramount’s decision not to move forward.” The judge in the case opined that the US Justice Department had shown the deal could substantially lessen competition “in the market for the US publishing rights to anticipated top-selling books”. If the deal had gone through, Penguin and Simon & Schuster combined would control nearly half the market for publishing rights of blockbuster books. Penguin Random House, (established in 2013 by the merger of two major publishers from the UK and the US), is obligated to pay a US$ 200 million termination fee to Paramount.

In what is thought to be first time that Amazon has had an international strike day, following Make Amazon Pay initiative calling for a global strike today, Black Friday, it appears that more than thirty countries, including France, Germany and the US, could be directly impacted on one of the online retailer’s biggest revenue days. It is reported that Germany’s Verdi union expect planned stoppages in at least ten fulfilment centres and is canvassing Amazon to recognise collective bargaining agreements for the retail and mail order trade sector.

By the end of last week, it was estimated that Twitter could have lost at least 33% of its payroll numbers of 7.5k, mainly driven by the sweeping changes introduced by Elon Musk, who had acquired the company for US$ 44 billion. The latest layoffs resulted in some core teams without any staff, at a time when the new owner is considering closing one of the company’s main data centres in the US, which would see the workforce down to about 2.5k. Things started badly for Elon Musk even before he took over the running of Twitter in late October. Throughout the months-long saga, that led to his purchase of the company, he did not put forward any clear strategy on how to run it, thus alienating many employees. The first of his staff emails sent to his new employees threatened dissenters and suggested he would fire anyone who was not a “hardcore” worker, whilst banning remote working. By early November, he had fired senior executives and began introducing rigid changes to the company’s operating structure, saying it needed to boost its revenue streams because it was losing US$ 4 million a day. Matters seem to have gone from bad to worse as his first month in charge, comes to a close.

There are reports that Mitsubishi Chemical UK may make a decision to close down its Teesside production plan that would see 238 made redundant. Three of the major drivers are “rapidly escalating” gas prices, a downturn in the European economy caused by inflation and weaker demand. It seems that the company has already started consulting with its workers and a decision could be made as early as January. Its production of methacrylates, which are used in acrylic products and require large quantities of gas, initially stopped in January as part of a planned overhaul and had remained halted since September because of negative economic factors.

Earlier in the week, it was reported that the bankrupt cryptocurrency exchange FTX owes its fifty largest creditors almost US$ 3.1bn (GBP 2.6 billion), including US$ 1.45 billion to its ten unnamed major creditors. It also seems that more than one million people and businesses could be owed money following its collapse; the betting is that any pay-out to creditors will be minimal. On Saturday, the firm indicated that it had launched a review of its global assets and was preparing for the sale or reorganisation of some businesses. The new chief executive, John Ray, who took over the reins from the Sam Bankman-Fried, commented that he had never “seen such a complete failure of corporate controls” and he criticised FTX’s founder for a “complete absence of trustworthy financial information”. The firm recently filed for US bankruptcy court protection, and has fired three senior executives, including co-founder Gary Wang, engineering director Nishad Singh and Caroline Ellison, who ran the firm’s trading arm Alameda Research.

It is reported that cryptocurrency custodian company BitGo has already managed to recover US$ 740 million from the FTX debacle but experts say it may be many years before customers have any chance of getting any of their money back, whilst others may never recover the funds.

YTD, cryptocurrencies have lost more than US$ 1.4 billion in value, with Bitcoin’s Tuesday trading at US$15.5k – its lowest level in two years. The world’s second-largest cryptocurrency Ethereum also shed more than 13% in the last week to reach US$ 1.1k on Tuesday, with  Coinbase’s shares closing more than 8% lower on Monday, its lowest point since it came into the market in April 2021.There are several factors impacting this sector, the latest being the collapse of FTX, the world’s third-largest crypto exchange, earlier in the month and the Terra Luna saga. The match that led to FTX imploding earlier in the month was lit by Binance’s Chang Peng Zhao (better known as CZ), saying it would sell its FTT tokens – the coin of FTX; earlier, the crypto exchange had signed a letter of intent to buy FTX but then reversed its decision, saying FTX’s issues were “beyond our control”. 

It is reported that cryptocurrency custodian company BitGo has already managed to recover US$ 740 million from the FTX debacle but experts say it may be many years before customers have any chance of getting any of their money back, whilst others may never recover the funds.

Credit Suisse expects Q4 losses of up to US$ 1.5 billion, on the back of further outflows of wealth management funds, as client confidence worsens, with continued withdrawals of customer assets, as market conditions continue to soften. The troubled lender also commented that net asset outflows were about 6.0% of the assets, equating to US$ 89.4 billion in outflows, under management at the end of Q3. It is changing its main focus towards private banking and less on its investment bank sector. On Wednesday, shareholders approved a US$ 4.26 billion capital raise and agreed to 9k staff cuts by 2025.

There was no surprise to see that the OECD has forecast that the UK economy will suffer a bigger blow from the global energy crisis than other leading nations, (with a 0.4% contraction next year, followed by a small 0.2% rise in 2024), whilst growth in the US and the eurozone will be weak, with Germany being the only other major economy expected to shrink – by 0.3%.  This figure contrasts with UK’s Office for Budget Responsibility’s prediction of the UK posting a 1.4% contraction in 2023 and a 1.3% growth a year later. The world body forecasts a “significant growth slowdown” globally next year but sees global growth at 2.2%, attributable to the strength of emerging economies, whilst the Ukraine war has resulted in European countries bearing the brunt of the impact on business, trade and the spike in energy prices. When that happens, the BoE can do little else but to move rates higher, which in turn will lead to higher costs of servicing debt. The OECD noted that UK inflation rate, which hit a 41-year high of 11.1% last month, should peak next month but will remain above 9% in early 2023, halving to 4.5% by the end of the year – still more than double the bank’s fantasy 2.0% target.

It expects UK interest rates to raise by 50% to 4.5%, from its current 3.0% level, by April, whilst unemployment is expected to rise to 5.0% by the end of 2024. The Office for National Statistics estimated that with the first tranche of a US$ 475 (GBP 400) subsidy, along with the lower US$ 2.97k, (GBP 2.5k) energy price cap, has cost the government an estimated US$ 4.0 billion; this extra spend pushed up the cost of government borrowing by 28.4% to US$ 16.04 billion, compared to a year earlier. In the seven months of the UK government fiscal year, public borrowing at – US$ 100.3 billion – is 20.5% lower than the same period in 2021.

As the first week of the World Cup comes to an end, there seems to be more news about everything except the accrual football. Scoring on own goal even before the first match started Gianni Infantino, born and bred in Switzerland, to Italian parents, told the world’s press in an hour-long ramble that he felt like a migrant worker. The FIFA supremo raked in US$ 3.2 million in 2019 – not bad for a migrant worker! Using words very similar to those used by disgraced New York Governor Andrew Cuomo in January 2017, he made an awkward attempt to compare his personal backstory to disenfranchised populations across the globe. He opened proceedings with the words “I am Qatari” and it is reported that he has a rented house in the country and two of his children go to school there; initially it seemed that FIFA continually denied that this was the case and confirmed that Infantino spends half of his working time in Doha and that the house in the Qatari capital allows him to spend a lot of time with his family. However, it is alleged that Infantino is rarely present in the FIFA’s Zurich headquarters.

Infantino said he was “dismayed” when he was implicated in the FIFA corruption scandal in documents released in the 2016 Panama Papers which showed that UEFA undertook deals with indicted figures where previously they had denied any relationship as well as confirming that he had never personally dealt with the parties involved. In the same year, he was suspected to have broken the FIFA code of ethics and was interviewed by the investigatory chamber of the body’s Ethics Commission, (FIFA being judge and jury).   The enquiry focussed on three matters which were  “several flights taken by Mr Infantino during the first months of his presidency, human resources matters related to hiring processes in the president’s office, and Mr Infantino’s refusal to sign the contract specifying his employment relationship with FIFA”. Despite a document being leaked indicating illegitimate spending of funds by FIFA, the matter concerning expenses and governance was not investigated, although they revealed that Infantino had billed FIFA for personal expenses such as US$ 10.6k for mattresses at his home, US$ 8.3k, for a stepper exercise machine, and US$ 1.3k for a tuxedo, as well as billing FIFA for an external driver for his family and advisors while he was away. He was also accused of   potential conflicts of interest receiving special treatment by the 2018 and 2022 World Cup hosts who had organised private jets for Infantino and his staff to visit the two countries.

Two years ago, he faced further allegations accused of having a secret meeting, (and at least two more), with the Swiss Attorney General Michael Lauber, at a time when the Swiss government was actively investigating FIFA for irregularities in the awarding of the World Cup to Qatar. The Attorney-General had opened official proceedings against four members of the organising committee for the 2006 World Cup in Germany, including disputed payments and vote-buying for that country to host the event. Among the more than twenty other football matters discussed involved TV rights deals signed by the then UEFA’s chief legal officer and current FIFA president. In June 2019, the Federal Criminal Court criticised Lauber’s conduct in the football proceedings, and especially his secret meetings with Infantino, which Lauber had not recorded and described as informal. It seems that when it became known that there had been a third meeting with Infantino, which Lauber had kept secret, Infantino himself and the Valais senior public prosecutor Rinaldo Arnold, who had arranged the meeting, also claimed that they had no memory of the meeting. In September 2019, Lauber was not reselected to his position by the United Federal Assembly, which noted that Lauber had grossly negligently violated his official duties by meeting FIFA President Infantino. So much for transparency, democracy and governance!

Let’s hope Infantino’s actions after the World Cup speak louder than the words, he uttered in his pre-opening welcome address and that the US$ 6 billion expected to be raised from this World Cup does not end up in FIFA’s treasury and that they do something to make good the crass words with which he addressed the footballing world. He had the gall to forget that he was a leading member of the footballing bureaucracy in the latter days of Sepp Blatter’s reign and for even suggesting that criticism of Qatar is “just hypocrisy”, and that western countries were in no position to criticise the host nation, which in itself could not be more hypocritical. A week earlier, this is the same person who had sent a circular to all concerned that they should just focus on football. At least the FIFA supremo should Practice What You Preach!

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