Both Sides The Tweed

scottish-flagIt has been yet another busy week for HH Sheikh Mohammed bin Rashid Al Maktoum as he has reviewed and given his seal of approval to several projects, the largest of which was a for Royal Atlantis Resort on Palm Jumeirah. The new facility, with a cost of US$ 1.5 billion, will comprise 800 rooms and 250 hotel apartments and will be managed by Kerzner International Resorts – a company 46% owned by Investment Corporation of Dubai –  who already manage the 100% government-owned Atlantis The Palm.

The Dubai ruler was also briefed on the progress of the US$ 2.1 billion Dubai waterfront development. Phase 1, of three phases, will be completed by 2016 and have an area of around 820k sq mt.

ICD also published details of the One Zabeel project, located adjacent to Zabeel Park. At a cost of US$ 681 million, the development will include two towers, linked by a suspended bridge, that will house 550 apartments, two hotels and 130 hotel apartments.

Seven Tides have released twelve penthouse apartments, costing from US$ 5.6 million to US$ 10.9 million, at its prized Anantara Residence on Palm Jumeirah. These are part of two residential tower blocks which form Anantara Dubai Palm Jumeirah, Resort & Spa.

With prices starting at US$ 600k, Sun and Sand Developers will build 40 3-bedroom duplexes in Dubai Silicon Oasis. Construction will start shortly, with a 2016 completion date.

According to a study by Ventures ME, Dubai’s retail sector is set for a massive 33% expansion by the end of next year. The emirate is undoubtedly the regional leader in this segment and has more global brands than any other city in the world, barring London. Things can only get better as the number of new shopping experiences are expanded, including the US$ 6.8 billion Mall of the World.

Costing US$ 500 million, the RTA is planning two new roads – the first is in Zabeel and the other is the Al Ittihad bridge, replacing the current floating bridge which will be moved to moved further up the creek.

Following a disastrous July, the Dubai hospitality sector returned to some form of normalcy. Although supply increased by 8.6%, it was more than compensated by a 10.9% hike in demand. August saw occupancy up by 2.1% to 75.1%, compared to a year earlier. On the flip side however, both RevPAR (revenue per available room) and ADR (average daily rate) declined by 3.7%, to US$ 139.58 and 5.7% to US$ 185.89. With tourist numbers up in H1 to record levels of 5.8 million, it was expected that revenue would head north, which it did, ending the half year up 10.9% to US$ 3.47 billion.

As a prelude to next week’s Cityscape Global, Omniyat will showcase two new towers at the three day event. The first tower – costing US$ 245 million – will be located in Business Bay and will house 274 apartments in its 25 storeys. The other building in Dubai Maritime City, although bigger with 48 storeys, will only have 225 apartments and cost US$ 163 million.

Dubai Parks & Resorts has confirmed that 30% of the infrastructure on its massive US$ 2.72 billion leisure project has been completed. The Meraas Holding-owned company’s first phase will comprise three theme parks – Bollywood, Legoland and Motiongate – and cover an area of 25 million sq ft.

Jebel Ali Free Zone reported a 44.4% jump in H1 profits to US$ 122 million, compared to the same period in 2013,  along with a 9.3 hike in revenue to US$ 224 million. JAFZA’s performance was helped by lower finance costs  as it transferred its conference centre for US$ 300 million to its parent, Dubai World. The end result was that  its debt had fallen by 6.8% to US$ 1.26 billion and cash balance increased by 26.6% to US$ 275 million.

Although most reports show a softening in the local realty sector, a recent Knights Frank study indicates that for the fifth successive quarter Dubai’s growth – 24% annualised – is the highest in the world. However, Q2 saw only a 3.9% rise whilst H1 returns showed a 7.4% climb indicating that some of the steam has been taken out of the market and it will not attain the dizzying 2013 heights, that saw prices up by 35%.

The Al Futtaim Group has finally secured its first major African investment by currently owning 91.6% of Kenyan car dealer, CMC Holdings Ltd. Strangely, it does not hold any agency agreements with manufacturers that Al Futtaim represent in the UAE but does have major brands including VW, Ford, Suzuki and Eicher.

A new report puts Dubai as one of the hotspots for the world’s rich to purchase their second home with an estimated 8.2k multi-millionaires buying in the emirate. Dubai rose to fifth in the global ranking with London, New York and Hong Kong filling the top three positions.

In the UBS Billionaire Census 2014, Dubai has moved up to 8th in the world with 34 nationals with New York (103), Moscow (85) and Hong Kong (82) taking the top three rankings in a global list of 2,325 individuals.

To enhance its growing stature as a sector hub, the government has established a maritime arbitration centre which will settle marine trade disputes in the region.

DEWA announced record power generation in Q2 of a massive 10.692 GWh – 9.8% up on the same period in 2013. Despite a current production capacity of 9,565 MW, and a recorded requirement peak of 7,233 MW, the fact is that too much power is being consumed in Dubai. A 2013 report by World Resources Institute indicated that the country used 481 tonnes of oil equivalent for every US$ 1 million of GDP, compared to say Japan where the equivalent figure is 154 tonnes – 68% less!

A recent Hong Kong government US$ 1 billion 5-year sukuk was nearly five times oversubscribed, with the issue being listed on Nasdaq Dubai.

Meanwhile the DFM will see its first new share listing in five years as Marka, a retail group, goes public next week. (On Wednesday, the company’s chairman, Jamal Al Hai, announced that it had become the exclusive franchise operator for Cristiano Ronaldo’s CR7 footwear). Another indicator that investment confidence is buoyant is the fact that Dubai-based Ithmar Capital managed to sell 7.3% of its shares in Al Noor Hospital,  at US$ 16.73 per share, in a US$ 142 million deal.

Although not yet finalised, Emaar’s IPO of part of its Malls unit is expected to raise US$ 1.58 billion. Emaar announced that it had sold all the available allocated shares to institutional investors on Sunday which represents 60% of the 2 billion shares on offer for its Malls Group IPO. The offer closes next Wednesday, 24 September, for retail investors who have been allocated one share for every 36 held in the parent company. Some analysts consider the US$ 0.68 – US$ 0.79 offer price on the high side but only time will tell.

Having fallen 3.1% the previous week, the Dubai bourse opened on Sunday at 4961 points – and recouped most of that loss, by closing on Thursday, 2.98% up at 5098.  So far this year, the market has jumped 51.3% from its 01 January opening of 3370. Bellwether stocks, Emaar and Arabtec closed on US$ 3.16 and US$ 1.31 respectively.

It seems that the on-going Arabtec soap opera may be drawing to a close with news that the former CEO, Hasan Ismaik, who currently owns 27.90% of the company’s shares, is planning to sell half his stake to Aabar Investments who are the second largest shareholder with 18.94%.

In the US, the Federal Reserve confirmed that their quantitive easing program, which this time last year was pumping in a monthly amount of US$ 75 billion, will end in October. A decline in the energy price was the main driver in a fall in US consumer prices as the annual CPI levelled out to 1.7%. There is no apparent appetite among Fed members to tinker with interest rates which have now remained near zero for almost six years.

Oil prices have seen a decline with Brent Crude trading on Thursday at US$ 98.50 – down nearly 13% over the past three months, as inventory levels rise sharply. There are many reasons for this decline, including the role of speculators, but probably the most interesting fact is the position of the USA which now uses some 18.6 million bpd. It was not long ago that the country consumed 25% of the world’s output and imported 75% of its requirements. In 2005, the US imported 12 million barrels per day – today this figure is 7.5 million bpd – and this despite increased demand. In addition, the country exports 3.5 million bpd (1.1 million bpd – 2005). At this rate, the country will become a net exporter of crude which will have a significant impact on the global oil market, especially in this region.

The OECD (Organisation for Economic Cooperation and Development) joined the clamour for more positive action from the ECB coming out with a gloomy eurozone outlook and slashing its growth forecast for this year and 2015 to 0.8% and 1.2% respectively – from their May estimate of 1.2% and 1.7%. There is no doubt that if more aggressive measures are not taken soon to boost domestic demand, employment and economic growth, the bloc will be mired in a deflationary cycle and a major recession. Maybe this Friday’s G20 meeting in Brisbane may act as a catalyst.

It seems certain that Scotland will not get the independence that  Alex Salmond’s SNP dearly craved for. Outside of Scotland, most observers were for the “nae” vote, mainly for economic reasons and also all the niggly administration problems that would arise if the Scots got their independence. It is ironic that the two persons – Gordon Brown and Alistair Darling – headlining the push against independence were the same UK Labour leaders, who nearly turned the union into a banana republic with their mishandling of the nation’s finances. If the Scots get more devolutionary power, belatedly promised by the panic stricken CCM (Cameron, Clegg and Miliband) then there will be some form of satisfaction Both Sides The Tweed.

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