Good Riddance (Time of Your Life)

dubai-aiport2Dubai Land Department reported that H1 real estate transactions totalled US$ 30.8 billion, of which US$ 14.2 billion occurred in Q2 indicating a slowdown compared to the previous quarter. The 6.9k mortgage deals, totalling US$ 12.9 billion, accounted for nearly 42% of all transactions. During the period, 16.0k units were sold, totalling US$ 6.7 billion of which 2.6k, amounting to US$ 1.6 billion, took place in Dubai Marina.

Office rents are still on the rise but increases have slowed in Q2 to around 3% compared to 25% over the past twelve months. 40% of stock is still vacant but space in prime locations is filling fast where rents average US$ 513 per sq mt. Secondary office space has seen prices jump 24.2% to US$ 312 over the past year.

Abdulla Al Moosa’s Arenco Real Estate has just awarded the China State Construction Engineering Co (CSCEC) contracts to build two 5-star hotels on Palm Jumeirah. The world’s third largest construction company expects to complete construction of the two 13-storey buildings by the end of 2016.

Marina 101, standing at 425 mt, is expected to be handed over early next year. What will then be the tallest tower in Dubai Marina – and second only to Burj Khalifa – will comprise a 420-room, 5-star hotel, 60 3-bedroom apartments and 8 duplexes.

Damac Properties’ latest Loretto project sold out at its Monday’s launch. The 300 luxury apartments – part of the massive Akoya development – will finally be completed by 2018, with hand over on the early starts by the end of next year.

Deyaar saw Q2 profits skyrocket 229% to reach US$ 17.0 million – a sure sign that the Dubai-based property developer has recovered well from its dark days following the GFC. Sales were buoyed by the April launch of its Atria hotel apartments, located in Downtown.

Dubai-listed Emirates Reit Limited reported a 194% surge in H1 net profits to US$ 34.1 million compared to the same period in 2013. The Shariah-compliant real estate investment trust also saw its portfolio increase by 73.1% to US$ 561 million. Over this period, REIT raised US$ 200 million in an IPO which has funded US$ 32 million and US$ 167 million for the purchase of Le Grand Community Mall in the Marina and office and parking space in the DIFC’s Index Tower respectively.

Commercial Bank of Dubai reported satisfying H1 figures with Operating Profit up 4.4% to US$ 196 million and Net Profit up 17.0% to US$ 158 million over the same period in 2013. Loans and advances surged 6.8% to US$ 8.5 billion whilst deposits were up 12.1% to US$ 8.8 billion. Another indicator that consumer confidence has returned to the market was the fact that CBD’s gross loans climbed 40.4% to US$ 1.0 billion.

Mashreq went even better with a 45.3% jump in Q2 net profits to US$ 159 million, with H1 at US$ 316 million.

Following its 80-day partial closure for refurbishment and maintenance, Dubai International services returned to normal this week with 31% more flights. Even with its reduced workload in June, it was still the busiest international airport in the world and will probably carry more than 70 million passengers this year.

Of the 1,226 billionaires listed by Forbes, four come from Dubai – Abdul Aziz Al Ghurair (Mashreq bank) has a wealth fund estimated at US$ 2.9 billion, Saif Al Ghurair – US$ 2.0 billion, Abdullah Al Futtaim (Al Futtaim Group) – US$ 1.6 billion and his cousin, Majid Al Futtaim – US$ 1.1 billion.  The latter’s MAF Group reported a 14% H1 hike in revenue to US$ 3.5 billion resulting in EBITDA being US$ 490 million – an increase of 13.0%. Most units performed well, including retail with revenue up 15.0% to US$ 2.9 billion, with EBITDA at US$ 151 million.

A recent Q2 survey by Morgan McKinley indicated that demand was greater than supply when it came to professional job opportunities in the UAE; it found that there was a 21.1% increase in job opportunities, to 8.1k, compared to Q1, whilst the number of professionals looking for work jumped by 29.7% to 45.6k. There was no surprise to see that construction was the primary driver and these figures underlie the continuing strength of the economy which is growing at its fastest rate since the halcyon days of 2007.

The Dubai Financial Market General Index opened on Thursday at 4667 – down 4.8% on Sunday’s opening of 4903.  Emaar and Arabtec, were at US$ 2.65 and US$ 1.15 respectively. 

If not so serious, it would be laughable, that despite all the rhetoric about the imposition of tough sanctions against Russia, the UK is still exporting arms to the value of US$ 225 million. No doubt some of these are being used for “illegal” activities as well as for military and security purposes. It is about time that western governments toughened up and imposed more severe restrictions that will damage the Russian economy, rather than individuals and small companies. Why has Robert Mugabe faced the full force of sanctions whilst Vladimir Putin has not? The answer is simple!

Analysts are keeping a close eye on developments in the eurozone as a Bundesbank report expects that the German economy has stagnated in Q2 with growth at a pitiful 0.2%. Apart from the inevitability of further bad news from bloc members, external factors – such as the Russian / Ukraine stand-off and the immoral expansive Israeli ground offensive in Gaza – are slowing down European economic growth and are primary reasons for German economic indicators heading southwards.

It is indeed a matter of when – and not if – the ECB introduces QE (quantitative easing) as current growth is at best patchy and consumer confidence is weak. The troika of high public debt, very low inflation and minimal expansion will leave countries marginalised, with high unemployment levels and reduced tax revenue, which will continue to spiral ever downwards, unless immediate positive measures are taken. The central bank has to act now and start buying government bonds – this is the only way to kick start the eurozone economy.

Unlike its European neighbours, the UK economy is beginning to build up a head of steam with a forecast 2014 growth rate of 3.1% – the highest in the G7 and over 70% higher than Germany’s forecast of 1.8%. Although sterling is strong (at over 1.70 to the US$), unemployment levels are plummeting and business investment – rather than consumer spending – is the main economic growth driver, interest rates will probably remain at their historical lows until at least the end of the year. One drawback to some is that house prices will continue to head upwards – probably as high as 10% in certain hot spots.

A defeat in the World Cup final could well be followed by another loss that could have ramifications not only for Argentine but for the global bond market. The country is refusing to follow a US court decision that it pay all its creditors – including a minority that have refused to take a hair-cut of up to 70%. \if the current impasse continues into next month then Argentine will again be in default for the second time in the past decade.

Improprieties and banks seem to go hand in hand, whether it be gold price fixing, money laundering, manipulation of Libor rates, mis-selling of mortgage-backed bonds – the list goes on. Indeed it is estimated that UK’s four largest banks’ exposure in the PPI scandal runs at over US$ 34 billion!  Now that country’s Senior Fraud Office is to investigate whether currency traders have been rigging forex rates to their advantage – and customers’ disadvantage. 40% of the daily US$ 5.3 trillion market is carried out in London and it would be against the grain if no manipulation has been taking place. It seems that people in this business cannot help but help themselves and already almost forty staff from ten banks are on garden – or permanent – leave. Good Riddance (Time of Your Life).

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1 Response to Good Riddance (Time of Your Life)

  1. billhicks42 says:

    “Another turning point, a fork stuck in the road” or “For what it’s worth it was worth all the while”?

    Excellent reportage, very much enjoy reading the comprehensive analysis.

    Martin Hughes, @Carranmore

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