Good news again for Dubai – this time from the aviation industry as Flydubai announces an 82% jump in their passenger numbers over the past year. With new routes opening up and a further 25% increase in its fleet this year, there is no doubt that in another twelve months, we will be witnessing more impressive growth from a carrier that has not yet been flying three years.
In addition, Emirates recently received Boeing’s 1000th 777 – not unexpected as they are their biggest customer for this model (helped by their last order in November 2011 totalling US$ 26 billion for 70 of these planes). Some tend to forget the impact of what this sort of trade has on the US economy! With its 122 destinations, the Dubai-based carrier is now the largest in the world in terms of international revenue passenger kilometres.
Another positive indicator is that the real estate market continues to improve. Official figures show the number of deals (448) in the first two months of 2012 was a massive 84% up on the 2011 equivalent. Furthermore the value of deals exceeded US$ 1 billion. These are sure signs that the market is becoming more stabilised.
Dubai has recently fallen 16 places in the EIU’s Worldwide Coast of Living Survey to 94th in the world. This is good news for its residents because it shows that the emirate is becoming more affordable, making Dubai a more competitive and attractive place for potential investors and incoming companies.
If you believe some pundits about the price of gold going through the stratosphere, you could do worse than purchasing some of UAE’s first gold coins which will be available to the general public later in the month.
As intimated in previous blogs, it is overseas events which will have a possible negative impact on Dubai’s drive forward. The never-ending Greek saga, the euro-zone debt crisis and on-going regional unrest are all contributors to a credit squeeze that has seen local banks constraining loans across the board. For instance, it has been reported that Mashreq Bank saw its loan portfolio drop by 8.5% to US$ 10 billion whilst Emirates Islamic Bank fell 11.3% to US$ 3.5 billion. Of all Dubai-based banks, only Dubai Islamic Bank did not experience a fall in its total assets.
As suggested in last week’s blog, the bull run on the Dubai Financial Market did stall with the Index 5% down at 1607. Despite this respite, the market is still almost 20% up since the beginning of the year.
The Sword of Damocles hangs over Greece as later today we will see whether investors have agreed to a 70% haircut on Euro 408 billion of government bonds. (That is some haircut!). Otherwise the country may be returning to the drachma quicker than expected. Small wonder that Moody’s became the third credit rating agency to cut its sovereign debt rating to the lowest possible level of Ca.
Greece is not the only cause of the euro-zone crisis and its problems are only the tip of the European debt problem. There is little doubt that very low growth (and even recession) will be the order of the day for European countries. In turn there will be further spending cuts, massive austerity packages, higher unemployment and inevitably social unrest.
This will have a knock-on effect on China as demand from its single biggest customer begins to shrink. Then it will be very interesting to see the effect on the price of oil, natural resources etc.
Iranian tensions keep surfacing and again this is a problem that requires action and some form of closure. Without any resolution, it will continue to bring instability and tension for Dubai and the region
Finally, when will the powers-to-be (whoever they are) get off their backsides and do something about the unbelievable tragedy that continues unabated in Syria?