Oh What A Circus!

cityscape-dubai

The circus came to town this week in the shape of the 13th Global Cityscape – 25% bigger than last year (using 31k sq mt of hall space) and the largest since the hedonistic days of 2008. With 280 exhibitors and attendance well up, numerous new developments were launched.

The largest was La Mer – Meraas Holding’s four-zone mixed-use development of a 9.5 million sq ft in Jumeirah. The four areas – the beach, a leisure and entertainment hub, North Island, and South Island – will include 699 apartments and villas, hospitality (a 160-room hotel) dining, leisure and  two marinas. Although the project will use reclaimed land, there is no doubt that public beaches will be affected.

Nakheel’s offering of the week was The Palm Gateway, comprising 1,300 waterfront apartments in three tower blocks, the tallest of which will reach 260 metres. With its own private beach club and park for its tenants, the towers will be constructed on the existing Palm Monorail Gateway terminal.

Another was the announcement involving Tecom’s Dubai Design District (d3) – covering 21 million sq ft, with a 1.8 km water frontage. Phase 1 of the project will start in Q1 2015 and will include residential, dining and retail outlets along with several hotels (adding 4k rooms) and art galleries – all with the aim of making the area the artistic centre of Dubai. It is expected that up to 4k designers will use d3 as their base.

Indigo confirmed that its US$ 408 million Dubai Golf City project will start early next year which will comprise 346 villas, numerous parks and, in keeping with its Zen theme, several meditation areas. Completion date is expected in Q1 2017.

With Donald Trump in town, it came as no surprise to see Damac  announce another golf course project, in liaison with the American property tycoon. The Trump World Golf Club will be located in the 55 million sq ft development – Akoya Oxygen (Dubailand). The first golfers will be teeing off by the end of 2017.

Damac also announced their fourth Paramount-related hotel which – with 1,250 rooms – will be the third largest in the emirate after Atlantis and JW Marriot Marquis. The Dubai-based developer is not concerned about diluting the brand, with all four hotels being released around the same time, and is confident of selling all the hotel rooms.

As part of Salim Ahmed Al Moosa’s Falcon City development, the planned 20-storey glass structure – Taaj Arabia – will be open by 2017. The 350-room, 5-star hotel, to be managed by Leela Palaces, Hotels and Resorts, will be modelled on the original Taj Mahal.

Some may say not before time as Union Properties announce the building of three new hotels in MotorCity. In addition, the once-troubled developer is also planning a leisure and entertainment area which would replace a proposed F1 theme park that was officially scrapped last year. It also came up with three other projects –  a US$ 300 million 5-tower block in Motor City – The Vertex, US$ 177 million on Phase 3 of Green Community DIP and US$ 109 million on phases 2 and 3 of Green Community Motor City.

Dubai Wharf is yet another new development announced by Dubai Properties, a division of Dubai Holdings. The US$ 218 million project will be based near the Creek in the middle of Culture Village. Its central feature will be a canal promenade.  The developer is also planning to open a 270-room luxury waterfront hotel in early 2018, to be operated by Anantara Hotel Resorts and Spa.

The company announced their latest Downtown project – Maram Residence – two 27-storey towers with apartment prices for a one-bedroom unit costing US$ 463 million. The development will have a 19th floor viewing bridge along with the usual retails, and leisure accessories.

Dubai Municipality’s plans, for its US$ 9.5 billion smart Desert Rose city, are gaining pace with news that phase 1 of the project will be tendered next year. The new satellite city, approved by the government in May, will be flower-shaped and will be located near Al Lusail desert on a 14k hectare site. The infrastructure design work is currently being carried out.

As part of phase 2 of the US$ 5.7 billion Mohammed bin Rashid City, Meydan is planning to construct 1.5k 4-bedroom villas, specifically for use by Emirates deck crew. A further 700 villas will be built for sale in the area known as District Eleven which will include Kent College Canterbury – a private 2k pupil school, specialising in equestrian training.

Where else in the world would you expect to find the Perfect City as Dubai launches the first global property-related metropolis which will incorporate all facilities associated with the realty sector. These will include all government-related offices (including the Land Department, and RERA), court, university, brokers, agents and even a museum. It will have 75% green space, a 500-metre canal and will be 100% sustainable. (The pace of expansion in this sector can be seen from the fact that Rera have already registered 567 new brokerages so far this year).

One project that will not get built in Dubai is the locally based Invest Group Overseas confirming that it would be involved in a US$ 700 million mixed use development in the Texan town of Frisco.

A growing trend in the Dubai hospitality sector is the increase in hotel apartments which provide 28.1% of the total 88.7k room inventory. Guests tend to stay in serviced apartments on average 5.3 days – twice as long as traditional hotel guests – and pay US$ 118 per night, 31% less for their room. More and more of the bigger players, both local and international, are beginning to move in on this burgeoning sector of the market. It is estimated that 38% of properties are individually owned with the balance almost evenly split between local brands, such as Jumeirah Living and Golden Sands, and international.

Good news for Dubai tenants is that after ten successive quarters of growth, the rental market dropped by 1% in Q2. According to a recent CBRE report, rents in areas such as Media Production Zone fell by 3% whilst The Greens and Dubai Marina remained flat. This comes at the same time that property sales have begun to stabilise.

Although a recent report indicated that the current cost of living in Dubai is still 16% lower then it was in 2008, Savills has Dubai as the 9th most expensive city in the world.

July and August had 2,525 property transactions, totalling US$ 1.41 billion – down 22.5% on the same period in 2013.  The latest CBRE study indicated that The Palm Jumeirah, Emirates Living and Dubai Marina were the main locations, by value, accounting for 58.9%, 18.8% and 17.0% of the total value.

Drake & Scull have been awarded a US$ 129 million contract by Gulf Related for a residential compound in Riyadh.

After a summer slowdown, not helped by the 80-day runway upgrade, business returned to normal at Dubai International which reported a 10.8% rise in passenger numbers to 6.6 million, bringing the YTD total to almost 44 million – a 5.7% rise over the same 2013 period. Monthly cargo returns of 192k tonnes were up 4.3%.

The Executive Director of the RTA, Mattar Al Tayer, has been attending InnoTrans 2014 in Berlin. He told the conference on how fast the Dubai transport system has grown, with a further 35 projects coming on stream, including extending the Red Line, acquiring a further 39 trains, expanding the bus network, with 18 new districts, and introducing the initial 10 km tram system, by the end of the year. Over the past eight years, the Agency has invested US$ 20 billion upgrading the emirate’s transport infrastructure including 75 km of Metro track, 47 stations, expanded the road network by 43.9% to 12,545 lane km and refurbished the bus and taxi fleets along with the marine transit. Accordingly the number of persons using the public transport system has risen almost fourfold to 446 million over the period.

Having already invested US$ 5.4 billion in space science and technology, the newly established UAE Space Agency has been discussing the progress to date of their Mars probe project, The unit is confident that  the UAE will become the first Arabic nation to explore the Red Planet, within an estimated 7-year target.

Last year, Dubal and Emal merged to become Emirates Global Aluminium, valued at over US$ 15 billion. Now the 5th largest global aluminium company plans a further US$ 3 billion expansion to build a refinery, ready for operations within three years.

An increasing number of GREs (government related entities) is making use of the more favourable financial climate as borrowing costs fall. Dubai Duty Free has just renegotiated their July 2012 US$ 1.75 billion loan for the second time. This – along with another US$ 750 million facility – now carries improved terms of 1.5% above Eibor (for the dirham balance) and 1.75% above Libor for the dollar part.Following the success of this week’s heavily over-subscribed Emaar Malls partial IPO, Nakheel is reportedly looking at going sown the same road. The government-owned developer is considering various avenues to raise much needed funds, with an IPO one of the options available.

Dubai-based Ithmar Capital, founded in 2005 and managing over US$ 800 million in equity capital, is planning the listing of US$ 436 million to raise funds to then make private investments, mainly in the healthcare and education sectors. If all goes well, the listing could take place next month with a Dubai bourse listing. DIFC Investments is reportedly preparing to raise US$ 700 million by way of a sukuk to finance further investment in the DIFC and to refinance a current loan balance of US$ 650 million.

It is reported that Habtoor Group may be planning a US$ 2.5 billion IPO, two years after pulling out of a similar move due to the then economic climate. The current favourable financial conditions may see the conglomerate offer up to 30% of designated businesses within the group.

It seems that Citigroup is bucking the trend as it plans to expand operations in the UAE. just as other large financial institutions, including Barclays, HSBC and Standard Chartered, are cutting back. This comes at a time when the New York-based bank has closed retail operations in Greece, Pakistan, Romania and Turkey to concentrate on more lucrative markets.

After 23 years as governor of the UAE Central Bank, Sultan Nasser Al Suweidi is stepping down to be replaced by Mubarak Rashid Khamis Al Mansouri. The federal decree saw other changes to the Board.

HH Sheikh Mohammed bin Rashid Al Maktoum has approved a secondary financial market so that private companies can trade shares. The exciting new development will allow designated private companies the opportunity to test the share market and offer a further option for such entities to raise finance. Earlier in the year, the US NASDAQ introduced a similar exchange.

According to S&P, an extra US$ 700 million could flow into the local bourses as the result of attaining official emerging market status. It has joined 24 other countries.  The UAE has been given a 1% weighting and the money inflow will result from passive investors replicating this weighting of the market.  Major economies are listed as emerging markets, and these include the BRIC countries, Mexico and the Philippines. Not surprisingly the likes of China (24%) and Brazil (11.3%) have a larger weighting than the UAE.

Having risen 3.0% the previous week, the Dubai bourse opened on Sunday on 5098 points – and after a relatively quiet week closed 0.86% down on Thursday, at 5054.  So far this year, the market has jumped 50.0% from its 01 January opening of 3370. Bellwether stocks, Emaar and Arabtec closed on US$ 3.22 and US$ 1.25 respectively.

An indicator that some of the recent measures – introduced by the ECB to reinvigorate the sluggish eurozone economy – are not working is the fact that there is little appetite for the cheap bank loans on offer. Of the US$ 510 billion made available, only US$ 105 billion has been used despite an interest rate of 0.15% to the participating banks. More proactive measures are required to save the sluggish economy from nose-diving into a potential depression, as inflation drops to 0.3%, unemployment levels remain stubbornly high and manufacturing output has stalled.

GlaxoSmithKline, was fined a record US$ 480 million by a Chinese court for bribing medical personnel and hospital officials. The UK pharmaceutical giant accepted the verdict and admitted that illegal activities had taken place.

Jack Ma, the founder of Alibaba, was a happy man this week as the Chinese e-market company saw its IPO share price surge from its US$ 68.0 listing to US$ 92.70, making it the second biggest entity on the FTSE 100, behind Royal Dutch Shell. The flotation on the NYSE raised almost US$ 25 billion, making it the largest in US history. Yahoo invested US$ 1 billion in the company in 2005 and could be in for a windfall of US$ 10 billion if it decides to lower its stake.

Tesco has had a worrying twelve months as sales (and profits) have tumbled and now to make matters even worse, it has been found to have overstated H1 profit by US$ 405 million. On the news breaking, the UK grocery chain saw its value lose US$ 3.5 billion as the share price shed 11.6% to US$ 3.29.  The board, senior management and auditors face major questions on what went wrong.

Another organisation that is has been beset by alleged wrong-doings is FIFA – but, in this case, it seems business as usual as nobody will be held responsible. The international body commissioned high profile US lawyer, Michael Garcia, to look at the controversial bidding process involved in the 2018 Russian and 2022 Qatar World Cups. Now, having received a 350-page report, the opaque and sinister sports body seems to have decided not to publicly release the findings and have intimated that it will only be made available to two members of their inner cabal. Oh What A Circus!

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