Reporting season is in full flow with four major Dubai banks announcing their 2013 results. The emirate’s largest lender, Emirates NBD, witnessed a 27% jump in profits to US$ 888 million along with loans up 9% to US$ 64.9 billion whilst a 12% rise saw deposits at US$ 65.2 billion. However, the bank, 55.6% owned by the Investment Corporation of Dubai, had profits dragged down by an 18% increase in impairment write-offs of US$ 1.28 billion. Dubai Islamic did well with a 42.1% surge in 2013 net profit to US$ 469 million whilst its total assets rose by 36.6% to US$ 32.9 billion. Meanwhile Mashreq reported an impressive 32.1% spike in 2013 profits to US$ 493 million. Emirates Islamic announced a massive 72.0% leap in net profit to US$ 38 million, with bank assets up 6.7% at US$ 10.8 billion.
Dubai Investments’ 2013 profits more than doubled to US$ 224 million on a 21.7% rise in revenue to US$ 763 million. Sovereign wealth fund, Investment Corporation of Dubai, owns 11.5% of the company.
The region’s largest shopping mall developer, Majid Al Futtaim, is set to splash out US$ 817 million over the next five years on developments in Dubai. These will include two new hotels, four new Carrefour supermarkets and the renovation of both the Mall of the Emirates and Deira City Centre. The family-owned unlisted company reported a 12% profit rise to US$ 900 million on revenue up 10% to US$ 6.3 billion. The group also bought a one million sq ft plot from Tecom, a unit of the Ruler’s Dubai Holding group, to build a shopping mall in the International Media Production Zone.
There is no doubt that Emaar’s Dubai Mall is the biggest and best in the world as they announce that 2013 footfall rose by more than 15% to 75 million visitors – streets ahead of the competition with Mall of America and Birmingham’s Bullring, both with 40 million. Sales in the 1,200 outlets increased by more than 26%.
Dubai Land Department has recorded total 2013 real estate transactions of US$ 64.3 billion, of which 48.3% – or US$ 31.1 billion – were from foreign investors. Five countries accounted for 27.8% of the sales – UAE (US$ 6.5 billion), India (US$ 4.9 billion), UK (US$ 2.9 billion), Pakistan (US$ 2.4 billion) and Saudi Arabia (US$ 1.2 billion).
It seems that the recent introduction of both the 4% property transfer fee and new mortgage cap rules have had some effect on the market. A recent Knight Frank report indicates a marked slowdown with growth levels of 15% in Q4 – down on the 21% reported for the preceding four quarters.
The US$ 89 million final phase 8 of Dubai Investment Park is scheduled to open in March. The park, owned by Dubai Investments, has nearly 3.5k tenants and covers an area of 2.4k hectares.
Dubai-based investment company, Skai Holdings has arranged a US$ 200 million finance package with the Industrial and Commercial Bank of China to help develop their US$ 1 billion Viceroy Palm Jumeirah development.
Emirates’ love affair with sport continues with the announcement of further rugby sponsorship. The world’s leading airline has signed an agreement with Rugby World Cup Limited for the next two world cups – England (2015) and Japan (2019). At the same time, it extended its branding of match officials’ kit to 2019.
Dubai International is fast catching up on London’s Heathrow to become the busiest international airport in the world. With a 2013 15.2% increase in passenger numbers to 66.4 million, it expects to overtake the ailing London airport this year despite the fact that May and June will see a partial closure as major maintenance is carried out on its two runways.
It was almost impossible to find an empty hotel room in Dubai as the four-day Arab Health Exhibition and Congress got under way. With a captive audience, and an inequilibrium in supply and demand, some hoteliers took advantage of the situation and pushed up room rates. The region’s largest healthcare convention has seen a 10% increase in exhibiting companies to 3.9k and expects around 85k visitors.
Hotel management company, HMH (Hospitality Management Holdings) have signed a contract with Mohammed Tayyeb Khoory & Sons to operate a new 228-room hotel in Barsha, due to open within two years. This will be the third Dubai property that HMH manage for MTK.
Two district cooling providers have been in the news. Empower has signed a six-year US$ 600 million loan facility with four banks including Mashreq and Emirates NBD. National Central Cooling Company reported a 15.3% hike in profits to US$ 74 million, with chilled water revenue up 3.5% to US$ 280 million.
It was a busy week for the Dubai Ruler. HH Sheikh Mohammed bin Rashid Al Maktoum opened the US$ 850 million remote controlled container terminal that has a capacity of four million TEUs. This expands the port’s capacity to nineteen million units.
He was also on hand to launch District One – the first phase of the US$ 8.2 billion Mohammed bin Rashid City. When completed in 2019, the new urban area will cover 54 million sq ft including 7 km of lagoons and 14 km of beaches.
HH Sheikh Mohammed issued a decree to establish the Dubai Investment Development Agency with one of its main aims to attract overseas investment into the emirate. Another decree saw the creation of the Dubai Corporation for Tourism and Commerce, with a dual purpose of attracting both tourists and commercial activity.
Dubai Healthcare City and Dubai-based MAG Group have formed a US$ 218 million joint venture. The project will comprise two hospitals along with apartments and retail outlets.
The highly successful Aster DM Healthcare is expected to go to market this year with a share sale in the region of US$ 100 million. The Moopen family is the largest shareholder in the healthcare company that operates throughout the Gulf and India.
The Dubai General Market Index opened the week at 3809 points and dropped 1.03% when closing on Thursday at 3770; despite this not unexpected fall, it is still up 11.87% on its 01 January opening of 3370. Bellwether stocks, Emaar and Arabtec, were trading at US$ 2.18 and US$ 1.17 respectively.
Banks are once again in the news with RBS, the UK bank 80% owned by the taxpayer, announcing that it has provided US$ 5 billion for upcoming legal claims. These include US$ 3.1 billion for iffy US mortgage backed investments, US$ 830 million for misselling rate swaps to SMEs and US$ 772 million for misselling payment protection insurance to its UK customers.
The apparent cosy relationship between big business and government once again reared its ugly head as the US Justice Department settled with HSBC for alleged money laundering. For dealing in billions of dollars from Mexican and Columbian drug cartels, and breaking other serious laws, the bank was not prosecuted but received a penalty of US$ 1.9 billion!
2013 has not been a good year for Francois Hollande with the latest bad news being French unemployment levels hitting record highs of 3.3 million registered out of work. This represents 11.1% of the work force and comes despite the French President’s earlier promise that joblessness would fall by the end of 2013: this year he has promised to put the economy back into shape. (What shape remains to be seen).
Another person who could end up red-faced is the European Central Bank head, Mario Draghi. Speaking at Davos, he indicated that there had been a dramatic improvement in the eurozone economy over the past two years and was confident that, despite the current inflation level of 0.8%, the 2.0% target would be met in the medium term.
Japanese prime minister, Shinzi Abe has finally realised that a coin has two sides as a weak currency does indeed makes exports cheaper but it also results in more expensive imports. The end result for Abenomics is the country’s worst ever annual trade deficit of US$ 111 billion, compared to US$ 66.7 billion in 2012 and US$ 25.1 billion in 2011 – and this for a country that had recorded surpluses for all thirty years to 2010.
As widely expected, the US Federal Reserve continued to cut back on QE and reduced its monthly bond purchases by a further US$ 10 billion to US$ 65 billion. It indicated that it had seen an improvement in both economic activity and employment levels. Whilst QE was going at full whack, interest rates remained low and this resulted in investors looking for higher returns in emerging economies. Now tapering has begun in earnest, monies are flowing back into the US market along with the increasing likelihood of global interest rate hikes.
In recent weeks, the Argentine peso has plummeted to new depths not seen since the 2002 economic disaster. The main causes for this debacle include economic mismanagement, a massive current account deficit, sinking foreign reserves and rising domestic inflation. The country has become an epitome of the economic malaise which seems to be mounting across developing countries, including the Fragile Five; emerging markets are in for a rough ride! President Fernandez de Kirchner is no Eva Peron but she for one can disregard Tim Rice’s Don’t Cry For Me Argentina.