May was another great month for Dubai’s burgeoning hospitality sector with returns showing an 18.8% hike in hotels’ RevPAR (Revenue per available room) to US$ 173.09. ADR (average daily rate) also had a double-digit growth to US$ 216.22.

There will be yet another tourist attraction with SkyDive Dubai constructing the world’s largest vertical wind tunnel, due to open as early as this August. The four-storey glass structure has a 16.5ft diameter and will give visitors the opportunity to float in mid-air. The facility will be powered by four electric motors that will generate wind speeds up to 280kph. Being Dubai, it will only be a matter of time before they break the world record of having most jumpers simultaneously in a vertical wind tunnel – currently at 22 people.

China State Construction Engineering Corporation has bought an equity stake in the recently announced US$ 1 billion Viceroy Dubai Palm Jumeirah. Already the main contractor on the project, this massive Chinese construction company becomes the first from that country to make such a major property investment in Dubai. The SKAI Holdings venture – with 481 rooms and 221 residences – will be completed in 2016.

Drake & Scull have won a Saudi contract with Habtoor Leighton Specon for the National Institute of Neurosciences in Riyadh. The project, worth US$ 139.6 million, is for MEP work and forms part of the US$ 615 million to be spent building the region’s largest medical complex.

This week saw the launch of phase 3 of the Cedre Villas project, developed by Dubai Silicon Oasis Authority. The 160 luxury villas – with a cost of US$ 77.7 million – will be ready within the next fifteen months, with features including two parks, a pool and a cycle track. As the company was responsible for the first two phases, it was no surprise to see Arabtec being awarded the building contract valued at US$ 48.8 million. (The company also extended the subscription period for its US$ 627 million rights issue to 04 July).

Dubai Properties Group expects completion of six buildings in Business Bay this year, two of which have just been handed over. Their Bay Square development covers an area of 5 million sq ft and will eventually include twelve towers and comprise I million sq ft of commercial space and residential units.

Although it is estimated that up to 45% of current commercial property is vacant, Dubai now ranks 25^th most expensive city for office space in the world. Compared to the top two – Hong Kong (US$ 235.23 per sq ft) and London’s West End (US$ 222.58) – Dubai rates are comparatively cheap at US$ 92.64.

Just three years after its first flight, budget carrier, flydubai, has announced that it will introduce a business class service across its 60-destination network. Benefits will include dedicated staff, seat pitch of 42 inches, enhanced entertainment system, priority check-in and preferred car parking.

It will come as no surprise to see that Emirates scooped the Skytrax ‘World’s Best Airline’ award at the Paris Air Show. In addition, they picked up ‘Best ME Airline’ and ‘World’s Best Inflight Entertainment’.

According to a study by Brand Finance, Emirates Airline has a brand value of US$ 4.1 billion and UAE companies have fifteen brands in the top 50. Others on the list include Etisalat (US$ 3.4 billion), DP World (US$ 681 million) and Emaar Properties (US$ 468 million).

Emirates International Telecommunications, owned by Dubai Holding, is evidently considering a sale of its remaining 26% shareholding in Axiom Telecom. It is estimated that if the deal went through, it would be worth in excess of US$ 300 million. Furthermore, there are reports that EIT have divested its 35% share in Tunisie Telecom for US$ 2.25 billion.

Troubled government property developer, Nakheel, is reportedly in talks to refinance a US$ 2.2 billion loan due for repayment in 2015.This comes two years after the company agreed a US$ 16 billion restructuring with its creditors. If, as is expected, the Fed slows down or phases out its asset buying policy, global borrowing costs are bound to rise which would impact on future repayment plans.

To keep up with growing demand, DEWA have now completed almost 40% of work on its new US$100 million pipeline extension. Spanning 65 km, the final phase is due to start in Q3 2014.

Dubai International saw a massive 18.9% surge in May passenger traffic. With 5.2 million passengers last month, the five-month total of 27.1 million shows a 16.8% increase over the corresponding period last year. Cargo saw similar growth with YTD returns of 995k tonnes – up 11.6%. May aircraft movements rose by 10% to 31k.

Covering 132 countries, the UAE was ranked 19^th in the World Economic Forum’s recent Global Enabling Trade Report and even made the top ten for efficient trading procedures and security. In yet another study Dubai was placed fifth in AT Kearney’s Index for Retail Trade Growth – the highest-placed country in the region.

With a low inflation rate (slated to be at no more than 1.6%), and an economy that the IMF expects to grow by 3.1% this year and 6.4% in 2014, the economic outlook for the country looks promising. The main drag factor, that will cause problems, will be the real estate sector. According to REIDIN, the rental index has risen by 11.62% over the past twelve months and property prices continue to surge. However with the present demand, it would seem that any downturn will not be felt until mid-2014.

Another indicator of business confidence was the fact that local banks are lending more – for the first four months of the year, they approved personal loans of US$ 2.2 billion out of a total loan book of US$ 6.0 billion. At the end of April, total loans stood at US$ 305.8 billion with a bad loan provision of US$ 19.3 billion – still on the high side.

2012 was a bumper year for Foreign Direct Investment into the country, with an estimated US$ 9.6 billion pouring into local coffers – the third straight year of growth. On the flip side, UAE is the Arab world’s largest exporter of capital.

The Dubai Financial Market Index closed the week on 2222 – an 8.6% drop from its 02 June high of 2430. However, it is still up – 42.77% on the year and 59.52% over the past fifty two weeks.

Global financial markets have definitely been spooked following Fed Chairman Ben Bernanke’s recent mumblings of an early exit from the US QE policy. As global bond yields surge, investors face an uncertain future with the possibility of losing trillions of dollars which, in turn, would be the precursor of another financial crisis – just six years after the last one brought economies to their knees.

Gold producers were probably the main casualty of Bernanke’s comments and shares in many of the leading miners took a pasting during the week. When the Fed was printing money, at an unprecedented rate, by the issue of bonds to the monthly value of US$ 85 billion, the price of gold touched US$ 1,920 last September – since then, it has fallen by almost 37%. Simultaneously, production costs rose resulting in the double whammy of lower margins and lower prices. Indeed as the US Treasury bond yield increases, the price of gold will inevitably head south.

Australia has received the brunt of recent market falls as their commodities and mining boom fizzles out. Both its stock market and currency have been on the receiving end of a beating with both down – the former by almost 10% since its 14 May high and the dollar by almost 9% to US$0.92, since the beginning of May. There will be even more turbulence as the lucky country, with the demise of PM Julia Gillard, heads towards federal elections in September.

In the UK, Starbucks has still not woken up and smelt its own coffee. Although it has had sales of US$ 4.6 billion since 1998, it has managed to pay tax of just US$ 13.1 million. But to placate its ever-growing disgruntled customer base, it has decided to “pay” the Treasury US$ 15.4 million this year! There cannot be too many companies that are still operating after fifteen years of apparent losses.

Meanwhile there are indicators that the UK economy has now come off life support and recovering at a faster rate than most of its European neighbours. The boost in economic confidence can be seen from a 4% monthly jump in consumer spending, a 12% hike in on-line spending and a welcome improvement in household financial outlook.

And despite all the apparent good news emanating from the US, the country has debts of over US$ 16 trillion. If, and when, interest rates rise, this will become a huge millstone around Obama’s neck.

Dubai is the place to be where this week, HH Sheikh Mohammed bin Rashid Al Maktoum launched a platform, utilising Google’s Street View technology, showing all facets and a 360 degree view of  Burj Khalifa. Users will be able to have a virtual tour of any part of the world’s tallest building with the Burj Khalifa Select application – the first time the technology has been used in the Middle East. The results are impressive, the views are stunning and maybe the Dubai Ruler was humming I Can See Clearly Now. (His view is a lot a brighter than for most other global leaders).