Dubai’s hospitality sector continues to confound its critics with all pointers showing sustained growth patterns – in June, occupancy rates by 3.6% to 79.2%, Average Room Rates (ARR) by 6.2% to US$ 207.29 and Revenue per Available Room (RevPAR) by 11.2% to US$ 164.22. It seems that Dubai is succeeding in its aim to make the emirate an all year holiday destination.
The Director-General of the Dubai Land Department, Sultan Butti bin Mejren, has announced that seven proposed pieces of legislation will be introduced over the next two years to better control the burgeoning real estate sector. These measures will protect the market from speculators and other damaging factors that have blighted the industry over recent times as well as enhance current legislation in relation to tenants’ rights, landlords’ associations and stalled projects.
Depa, the Dubai-based interiors contractor, has bought Loher Raumexklusiv, the German private jet and yacht outfitter, for an undisclosed amount. The company, based in Munich, had been facing bankruptcy earlier in the year and the sale will help with Depa’s aims of diversifying into an ever growing niche market.
Nakheel, has awarded five contracts to the value of US$ 127 million, the two largest for the building of villas in its Jumeirah Park location (US$ 82 million) and for the expansion of Ibn Battuta Mall which will cost US$ 25 million.
A raft of Q2 corporate earnings results hit the market this shortened week and most continued the trend of earlier announcements with increased revenue and profit levels – a sure sign of the upturn in Dubai’s economic fortunes.
Union Properties saw a 35.5% hike in Q2 profits to US$ 30.9 million compared to a year earlier and this despite a fall in revenue from US$ 151.8 million to US$ 116.3 million. The reduction in expenses came about because of liability settlements, totalling US$ 21.8 million, with various creditors during the period.
Another property company, Deyaar reported a 46.8% rise in Q2 profit to US$ 7.4 million and an even bigger H1 jump of 66.8% to US$ 12.7 million. The company has two new projects in the pipeline including a US$ 136 million residential project in Business Bay.
Even better results emanated from Drake & Scull International that saw both Q2 contract revenue and profits heading north – 86.8% up to US$ 365 million and 63.0% to US$ 14.2 million respectively. As a sign of the good times returning to these shores, the company has an order backlog of US$ 3.19 billion, 58.1% higher than in June 2012.
Meanwhile Dubai Islamic Bank – in line with most other Dubai-based financial institutions – announced a 34.8% surge in Q2 profits to US$ 113.9 million on a nominal 1.7% rise in its revenue to US$ 351 million.
After seven consecutive quarters of losses, Shuaa Capital finally turned the corner with a Q2 profit of US$ 354k – only the sixth time the troubled investment bank has not recorded a quarterly deficit over the past five years. The bank’s loan book has increased by some 15% to US$ 199 million.
Dubai Investments have seen its H1 profits swell by 116.4% to US$ 101 million but only on a 15.2% rise in total income of US$ 351 million. With total assets of US$ 3.43 billion and a net worth of US$ 2.34 billion, the company is the largest investment company listed on the Dubai Financial Market.
The Dubai Financial Market Index closed trading on Tuesday because of the upcoming Eid al Fitr holidays. However even in a three-day week it still managed to close 3.0% up at 2674 after a Sunday opening of 2595 points. Over the past year, the market is 79.04% in front and has risen 71.79% already in 2013. (in Q2 the Index rose 21.5% being only surpassed by the Damascus bourse which jumped 44.7% mainly on technical – rather than market – influences).
Official data confirms that UAE’s real GDP expanded 4.4% in 2012 to a record US$ 278 billion with the non-oil sector accounting for US$ 188 billion of this figure or an impressive 67.7%. The continuing positive move away from reliance on the oil industry is welcome news. Surprisingly, the official inflation rates last year was only 0.66% with more of the same expected this year coming in at just over 1%.
Greek prime minister, Antonis Samaras, is due to meet Barack Obama later in the week in an attempt to secure US approval to introduce stimulus policies for the embattled Ionic economy. The country is in its sixth straight year of recession and has 1.4 million of its population unemployed; this equates to 27.6% (compared to the eurozone rate of 12.1%) and even more depressing is the rise in youth unemployment which is now at 64.9%.
In stark contrast to its continental neighbours, the UK economy is showing signs of a grand revival. The world’s seventh largest economy recorded a major rise in the latest PMI (purchasing managers’ index) with the Markit/CIPS services survey posting a monthly jump from 56.9 to 60.2 – its highest level in six years. Other indicators are also heading in the right direction in July – retail sales were at their highest level in seven years, industrial production was up 1.2% and vehicle sales were 12.7% up. Despite the promising data, the country is still way behind the levels reached pre-GFC.
The Indian rupee continues to fall – this week sinking to all-time lows of 61.8 to the US$ with no apparent Reserve Bank of India intervention in sight. Unless the authorities rectify the country’s underlying economic problems and rein in its ballooning current and fiscal deficits, standing at 6.7% and 5.0% respectively, the currency will continue its descent – now 40% down over the past two years. Introducing half-baked measures, such as raising the gold import duty to 8% and lifting the price of fuel five times since June, have not appeased investors – both domestic and overseas – who are taking their money out of the country at record levels. High inflation and a slowing of growth to around the 5% mark will continue to drag the economy in a downward spiral.
Despite avoiding a recession during the GFC, the Australian economy is now going backwards as commodity prices tumble and growth forecasts are cut once again – this time to 2.5% for this year. The lucky country is now bedeviled with rising unemployment levels (expected to hit 6.25%), flat retail sales, slowing tax receipts and falling business confidence. The Rudd government has seen the currency drop 14%, in a matter of months, to AUD 0.90 to the greenback and its budget deficit expected to double to US$ 26.8 billion this tax year. Whether this week’s move by the Reserve Bank to cut interest rates to its lowest ever level of 2.5% will help the struggling economy remains a matter of conjecture.
Over 4,000 families were directly affected by the April Bangladeshi factory collapse that claimed 1,132 lives and injured over 2,500. It is no surprise to see that much of the promised compensation by the government and the federal garment association remains outstanding. With earlier pledges indicating individual payouts of US$ 21,000, it is reported that the government has paid between US$ 1,200 and US$ 3,500 to only 350 of the survivors and family members and will only pay those who actually turn up at the prime minister’s office in Dhaka. Furthermore no payments of three months’ wages, promised by the Bangladesh Garment Manufacturers and Exporters Association, have been made to any of the victims. If these reports are true, it may be time for the likes of H&M, Abercrombie & Fitch, Walmart and Gap to take more positive action.
As part of Dubai’s overall strategy, HH Sheikh Mohammed bin Rashid Al Maktoum has issued a decree to set up the Dubai Design and Fashion Council and has ambitious plans to grow small businesses, develop the global market for locally produced goods and increase employment levels across the industry. If all goes to plan, within five years, the emirate could rival the likes of Paris, London and New York. Soon Dubai could be seen to be A Dedicated Follower of Fashion.