If I Were A Rich Man

standard-chartered-bankHH Sheikh Mohammed bin Rashid Al Maktoum announced a seven-year plan to make the UAE one of the leading innovative countries in the world. His National Innovation Strategy will focus on seven main areas – education, health, renewable energy, space, technology, transport and water. The main target is to set up an environment that actively encourages innovation and entrepreneurship between the public and private sectors.

The first ever UAE-built satellite is expected to be launched in 2017, as Emirates Institution for Advanced Science and Technology (EIAST) announced that it had completed its design of KhalifaSat. This will be followed by actually manufacturing the unit that will then put Dubai well and truly on the map, as a leader in space technology.

As part of the move to make the emirate a Smart City, Dubai Municipality has signed an agreement with du to introduce free Wi-Fi for all its beaches, parks and public places.

Atlantis The Palm becomes the latest government related entity to make use of the favourable debt market conditions. The luxury hotel, owned by the Investment Corporation of Dubai (ICD), is to refinance its US$ 880 million loan at the new rate of 375 basis points over Libor (compared to its original September 2013 facility at 500 bps). Furthermore, it has increased its principal to US$ 1.2 billion and extended the tenure from five to seven years.

Over the past three months, both Dubai Duty Free and DP World have done likewise. DDF repriced its US$ 1.75 billion loan, for the second time in a year, to take advantage of better terms whilst the port operator refinanced and amended its loan from US$ 1 billion to US$ 3 billion.

Jumeirah Group announced that it had signed three new hotel management agreements with Chinese operators – in Hainan, Hankou and Nanjing. The luxury hotel company, owned by Dubai Holding, operates the Jumeirah Himalayas Hotel in Shanghai and has a further seven Chinese properties in the pipeline whilst currently managing 22 properties, half of which are in the ME, six in Europe and five in Asia.

The hospitality sector has seen better Septembers with latest figures indicating falls in both average daily rate, down 4.0% to US$ 183, and revenue per available room, 3.7% to US$ 140. At the same time, occupancy rose marginally to 76.3% as demand was up 7.8% just outstripping the supply increase of 7.4%.

After its highly successful Decmber 2013 launch of Maison Dubai Mall Street, Damac has just opened Canal Views in the Burj Area. The 211 luxury hotel suites tower will be operated by Damac Maison, one of the company’s two hospitality brands – the other being NAIA by Damac.

2014 continues to see a slowdown in the real estate market with the third straight quarter that both sales and rentals have fallen. There is no doubt that the 2013 introduction of the mortgage cap (75% for expats and 80% for locals) and the doubling – to 4% – of the DLD transfer fee have taken the froth off the top of the market.

As the residential sector appears to be flat lining, it seems a strange time for Christies International Real Estate to open its first regional office in Dubai. Just to let the market know of its arrival, the company’s first major sale is a US$ 99 million Arabic palace.

Coincidentally, Christie’s auction house is selling over 200 items this week, including 125 modern and contemporary Arabic art pieces. The three-day sale is expected to raise almost US$ 10 million.

With its shares losing over 20% last week, Arabtec bounced back on Sunday with a jump of 10% in valuation following positive news about its role in the US$ 40 billion Egyptian housing project. The company announced that work will start in Q4 on the first phase of the one million homes project.

MAF, the exclusive franchisee for Carrefour in the ME, is extending the French supermarket brand by introducing Carrefour City – The Neighboring Store. The new smaller outlet concept will see its first opening next month in conjunction with the RTA Metro and will carry up to 4,000 line items, for a quick and convenient shopping experience.

Dubai Parks & Resorts have announced a tie-up with Sony Pictures Studio and Smurfs Zone for one of their proposed theme parks in Jebel Ali. It will host 12 themed attractions in one of the planned four parks, encompassing 4 million sq ft.  It also reported that its Bollywood venture, covering 3 million sq ft, will comprise five movie theme zones and 16 other attractions. Phase 1 of this mega project, also including Legoland and a hotel, will be completed by the end of 2016.

Three local banks reported September results this week – all heading north in line with the resurgent Dubai economy and an uplift in consumer confidence.

Emirates NBD will keep their 55.6% majority shareholder, Investment Corporation of Dubai, happy with an impressive 101.3% surge in Q3 net profit to US$ 425 million. Deposits rose by 9.2% to US$ 68 billion whilst total loans were at US$ 67.5 billion. Meanwhile Dubai Islamic Bank saw Q3 net profits up 55.7% to US$ 184 million. Commercial Bank of Dubai recorded an 18.4% net profit jump in the first nine months of the year to US$ 243 million despite a 14.6% hike in operating expenses to US$ 143 million. Loans and advances were up 3.5% to US$ 8.58 billion whilst deposits jumped 10.6% to US$ 8.66 billion.

According to a recent MEED report, 2014 will be a bumper year for GCC construction projects, with over US$ 180 billion of contracts – up 15.4% on last year and the highest figure since the GFC.

Dnata has obtained UK regulatory approval to buy Stella Travel Services which includes TravelBag. The Chester-based company has long been an important contributor to Dubai’s inbound tourism sector.

Gaureng Desai has been appointed temporary CEO of the Dubai Gold and Commodities Exchange (DGCX) in the wake of the resignation of the current incumbent, Gary Anderson, due to ill health.

Last week it was Lego and now another Danish company is about to expand its Dubai presence. Ready by Q3 2015, Ikea is building a regional distribution centre at Dubai World Central, capable of handling 50k 20’ equivalent containers every year.

Along with TPG Capital, Dubai-based private equity firm, Abraaj Group, is planning to buy a controlling share in Kudu. The Saudi fast food chain is reportedly valued in the region of US$ 530 million and is currently owned by four Saudi shareholders.

Following a seemingly unstructured buying spree prior to the GFC, Dubai International Capital is planning to divest itself of the two remaining trophy assets still on their books. In 2012, it was forced into a US$ 2.5 billion restructuring programme and has a current net debt in the region of US$ 1 billion. Sale of these two assets – the UK engineering aerospace company, Doncasters, and the German alumina products maker, Almatis – will provide sufficient funds to meet these liabilities within the next eighteen months.

As part of a New York legal settlement, in which it was fined US$ 300 million, Standard Chartered was ordered to close high risk SME accounts in the UAE. Accordingly, the bank has notified thousands of effected clients here and given them 30 days’ notice to find another bank. Many are not too happy with this unilateral action.

ES Bankers (Dubai), a unit of the disgraced Portuguese Banco Espirito Santo, has been closed down by the Dubai International Financial Centre court. Earlier in the year, major accounting irregularities led to a US$ 6.3 billion Portuguese government bailout of what was that country’s largest financial institution.

There are some out there who consider that prices in Dubai are heading northwards too fast and if the latest Shake Shack Index is anything to go by, they may have some credibility. Dubai International Airport came out as the most expensive burger meal, at US$ 23.22, from a list of 56 different global sites.

Not unexpectedly, Dubai’s September inflation rate hit a five-year high rising to 4.2% year on year. Housing and utility costs, which account for 44% of the “inflation basket”, recorded a 6.5% surge.

With due respect to neighbouring countries – Bahrain, Oman and Qatar – it is hard to agree with a recent HSBC Expat Explorer survey that ranked them more popular than the UAE. Bahrain came in 5th – ten ahead of the UAE as the latter lost marks for a rising cost of living and increased education expenses.

In the wake of last week’s major sell-off, when the market dropped 13.6%, the DFM regained 303 points – or 7.1% – as the index rose from its Sunday opening of 4270 to its Thursday close of 4573. This week, Emaar and Arabtec shares recovered from US$ 2.70 to US$ 2.81 and from US$ 0.98 to US$ 1.14 respectively. So far this year, the market has jumped 35.7% from its 01 January opening of 3370.

The French government is waiting to see whether the EU will reject their 2015 budget plans because it will be unable to bring its deficit below the EU required target of 3% of output.  The country seems to be doing very little in the urgent requirements of structural reforms and a speeding up of reducing the deficit.

It has not taken that long for the trade sanctions against Russia to make a negative corporate impact with Rolls Royce reporting that its revenue will be down up to 4%. The reason given is that customers, who are experiencing worsening market conditions, have delayed or cancelled certain projects.

Although recent forecasts from both the Bank of England and the IMF are bullish on British growth forecasts, there are increasing signs that the future is not as rosy as it first appears. The effect of sluggish growth on the continent – UK’s biggest trading partner – and geopolitical problems, especially in the Ukraine and ME, will inevitably have a drag on future growth prospects. The country would be doing exceptionally well if it were to meet the current forecast expansion of 3.0% next year.

The Chinese economy had its lowest growth level since the GFC with Q3 GDP up by 7.2% year on year – down on the forecast 7.5%. The main areas of concern are the reduced demand for its products – especially from Europe – and a property slow-puncturing bubble. When its economy hit the rails in 2008, the government introduced a US$ 630 billion stimulus package but the introduction of a similar measure is currently unlikely. But it did inject some US$ 80 billion into the banking system for relending purposes last month.

Despite the best efforts of Abenomics, Japan’s economy is still causing concern as its September trade deficit balloons out to almost US$ 9 billion – 35% higher than this time last year. Furthermore the IMF has just cut its growth forecast for the world’s third largest economy from 1.6% to 0.9%. Prime Minister Shinzo Abe had raised the sales tax in Q2 with the aims of reducing the country’s debt burden and hope that a weakening yen would result in stronger exports – but neither has transpired.

It seems that three financial institutions have got off lightly as the European Commission issued fines for their participation in banking cartels. JP Morgan, UBS and Credit Suisse have to pay US$ 91 million, US$ 17 million and US$ 12 million respectively whilst RBS were let off any penalties because they were the first to notify the EC of any wrongdoings!  To further prove the cosy relationship banks have with the regulatory authorities, they all received a 10% discount for admitting their transgressions.

If they have problems paying these fines, the banks could turn to Microsoft boss, Satya Nadella, for assistance whose current pay package tops US$ 85 million. If I were A Rich Man!

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