Catch Us If You Can

dubai-terminal3Following its September 2013 off plan sale, when 262 townhouses were sold in a day, Nakheel has finally awarded Ginco General Contracting a US$ 191 million contract for the construction of 936 units in its Warsan Village development. The project will also include a shopping centre with over 350 outlets.

Select Group has given details of its planned US$ 817 million, three- tower development in Dubai Marina, with sales slated to start later this month. The developer already has two other projects on the go in this location – West Avenue due for completion this quarter and a 320-room Intercontinental Hotel expected to open early next year.

A JV between Parsons and Halcrow has been appointed by the RTA to manage the US$ 545 million Dubai Water Canal development. This infrastructure includes the creation of a 2.8 km canal, a 1 km bridge on SZR and raising the 3 main affected roads – SZR, Al Wasl and Jumeirah Beach. This is a huge project when one considers that the SZR will have to be elevated by up to 8.5 mtr to allow marine traffic to pass through.

Damac was heavily oversubscribed as it went to the London market with a US$ 650 million sukuk sale to finance their growing order book, at a price of midswaps plus 310 points. Although this was the company’s first foray into Islamic finance, late last year it raised US$ 350 million in an IPO.

Meanwhile Emirates Reit’s IPO was heavily oversubscribed as 128.67 million shares were snapped up at a unit price of US$ 1.36. This offering brought in US$ 175 million in new funds which will be used to capitalise further on the fast growing real estate market in the emirate.

Two conglomerates reported their 2013 results. The government-owned Dubai Holdings Commercial Operations Group, which includes Jumeirah, Tecom and miscellaneous property in their portfolio, saw a threefold jump in net profits to US$ 900 million, on a 27% revenue rise of US$ 3.19 billion.

With growth of 14% in its properties division, allied with retail growing 6%, Majid Al Futtaim released 2013 results showing an 11% hike in profits to US$ 900 million. Its assets, including 56 Carrefour hypermarkets, 53 supermarkets, 16 Magic Planets and 92 VOX cinema screens, are valued at US$ 10.6 billion.

Dubai’s 4 and 5 star hotels continue their upward trend with February figures showing occupancy rates at 87.6% along with rises in all other key indicators – average room rates up 8.7% to US$ 367, revenue per available room 7.3% to US$ 322, total revenue per available room 5.8% to US$ 555 and gross operating profit per available room 8.6% to US$ 282.

The industry will receive a boost next week when the Chinese company, Nu Skin China, treats 19,500 staff to a 10-day holiday in the emirate. It is reported that it will take 77 flights to bring them here where they will stay in one of 39 nominated hotels.

Meanwhile about 100 equine personnel have left here for Chengdu to manage the first official racehorse meeting there at the new Meydan track. This is the first step to try and promote horse racing in China, along with other facets of the equine industry.

HH Sheikh Hamdan bin Rashid Al Maktoum announced the launch of a US$ 7.9 million Hatta Heritage Inn and Market project, to be completed within a year. Located on the Hatta / Oman highway, it will comprise 34 hotel rooms, along with 46 retails units and three restaurants.

With previous reports predicting up to 40% increases in Dubai property prices, the latest one from HSBC errs on the side of caution with a 10% – 15% guesstimate. Even as we enter Q2, the reality is that nobody really knows what is exactly going. It does seem that the ones with an interest in the market, including estate agents and financial institutions, are those who are talking up the market.  However, some sectors have seen little or no rises over the past six months which may indicate that prices have flattened.

The local financial institution, AE Exchange, estimates that in excess of US$ 14 billion is remitted annually from the UAE, with the four leading beneficiary countries being India, Bangladesh, Pakistan and Philippines. On a global scale, it is estimated by the World Bank that total remittances are over US$ 550 billion, of which 75% is bound for the developing world countries.

Having reported 2013 turnover of US$ 1.1 billion, Dubai Duty Free looks certain to reach new heights this year as its Q1 revenue increased 10% to US$ 477 million. Sales at Terminal 3, which accounts for 62% of all sales, rose by 11%.

Dubai is regarded as a global hub for many types of economic activity and now they can add tea to that ever growing list. Last year, trade in this beverage surged over 34% to US$ 463 million, with the Dubai Multi Commodities Centre reporting a doubling in volumes.

Since its 2010 US$ 25 billion debt restructuring programme, Dubai World has begun settling part of the debt and indeed has paid back US$ 285 million, ahead of schedule. However, with massive repayments of US$ 4.4 billion, due next year, and a further US$ 10 billion three years later, the company has sought advice from the US investment bank, Blackstone.

Investment Corporation of Dubai expanded their interest in Kerzner International Holdings this week by purchasing a reported 46% of the hotel management company’s shares from the founder, Sol Kerzner. Dubai’s sovereign wealth fund now owns 71% of KIHL.

The DFM had another great week jumping 5.41% from its Sunday opening of 4381 points to close on Thursday at 4618. Bellwether stocks, Emaar and Arabtec, were trading at US$ 2.75 and US$ 1.68 respectively. The market is already 39.25% up this year and earlier had a Q1 gain of 32.08% from its 01 January opening of 3370 points to 4451.

Christine Lagarde, head of the IMF, has painted a bleak picture of the global economy. Three of the critical factors that she has highlighted are the worrying low inflation in the eurozone (currently at 0.5%), the continuing market volatility and the on-going crisis in the Ukraine. She is also rightly concerned about the negative impact of the Fed’s tapering of its monthly monetary stimulus, which has been cut by US$ 30 billion to US$ 55 billion from the beginning of the year. This has resulted in massive amounts of monies being withdrawn from emerging markets back to the US.

Another potential fraud is being investigated by the FBI, involving what is known as high frequency trading. Although not unlawful, and is used in about half of all business on New York exchanges, the practice involves super-fast computer systems carrying out trades in fractions of a second. The worry is that they are being exploited, in an illegal manner, to manipulate the market including what is known as spoofing the market, phantom trading and insider trading.

February finally saw Heathrow losing its crown as the world’s busiest international airport, being superseded by Dubai.  This is a reflection of the local economy which is brimming with consumer confidence and growing at double the rate of most other countries. On behalf of the emirate, the message from Dubai International Airport to the rest of the world is Catch Us If You Can!

This entry was posted in Finance and tagged , , , , , , , , , , , , , , , , . Bookmark the permalink.

1 Response to Catch Us If You Can

  1. Muhammad Atif says:

    I LIKE,,,

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s