There were fireworks this week as the country celebrated its 43rd National Day on 02 December and Burj Al Arab lit up the sky for its 15th birthday, a day earlier. Later in the week sees the Emirates Rugby 7s, the most popular event in the Dubai sporting calendar, with Fiji again providing the pyrotechnics.
The CEO of Dubai-based hotel group, Hospitality Management Holdings, is another voice raising concern about the emirate’s high land and building costs. Laurent Voivenel is worried that these will have a direct influence on returns and could have a negative impact on Dubai’s target of 20 million visitors by 2020. The ten year old company is looking to double its number of UAE hotels to 14 by the end of the decade.
Meraas Holding is partnering with Nikki Beach, the US luxury beach club brand, to open a 52k sq mt resort in Dubai Pearl, by the end of next year. The facility will have 132 apartments, 75 villas, 3 restaurants and 400 mt of beachfront.
It is reported that Dubai’s Al Habtoor Investment is to buy the President Abraham Lincoln Hotel in Springfield – its first foray into the US hospitality sector. The company already owns four hotels in Dubai – with three more 5-star properties being built on SZR. Earlier in the year it bought the Intercontinental in Budapest.
There is the possibility that the upcoming Floyd Mayweather / Manny Pacquiao fight could be held in Dubai, as a consortium of UAE investors have offered US$ 110 million to the champion to stage the fight in the country.
Dubai International reported that October passenger traffic reached 6 million and was 5.7% higher than the same period last year, with the YTD number of 58.4 million also up 6.1%. At these rates, it should top 71 million by year end with a possibility of overtaking London Heathrow as the busiest international airport in the world. As an increasing volume of cargo has been moving to the new Al Maktoum airport, friegt has softened being 6.2% down in October to 196k tonnes and YTD off 2.2% at 1.96 million tonnes.
The contribution of Indians to the local economy cannot be underestimated. According to the president of the Indian Business and Professional Council, that country’s nationals have invested over US$ 68 billion, of which US$ 13.6 billion has been in the real estate sector. Paras Shahdadpuri estimates that Indians own over 40k companies in the country, employing nearly one million people.
There are reports that Dubai International Capital is in talks to sell the UK aircraft component company, Doncasters, which saw its 2013 profits up 13% to US$ 210 million. The engineering company was bought in 2006 and would be expected to sell for over US$ 1.5 billion.
Falling oil prices may have been the main reason why Dragon Oil has exited from its US$ 785 million bid for the Dublin-based Petroceltic. Emirates National Oil Company (ENOC) is a majority shareholder in the Dubai energy company.
In London, 70% of Dubai World’s creditors seem to have agreed to the revised terms of the 2011 US$ 25 billion debt restructuring scheme. The plan is to repay the US$ 4.4 billion due in May 2015 and extend the outstanding balance of US$ 10.3 billion from 2018 to 2022, with a higher interest of 425 basis points over Libor – up from the existing 300bps.
To raise funds for general operations, Dubai Aluminium is set to arrange a 7-year, US$ 1.8 billion loan facility. Last year, Dubal merged with Emirates Aluminium to form Emirates Global Aluminium – the fifth largest such facility in the world, with a value in excess of US$ 15 billion. It is thought that two other Dubai entities – Dubai Festival City and Tecom Investments – are sourcing loan facilities in the region of US$ 1.1 billion each.
The new kid on the block had a nightmare introduction to the capital markets. Amanat, whose IPO was nearly tenfold oversubscribed, fell 21% at the start of its first day of trading before recovering somewhat to see the week out on US$ 0.24. There has to be some market worry with the latest IPO, Dubai Parks and Resorts, which closed subscriptions on Sunday, 30 November, reportedly 70 times oversubscribed.
Following this massive over subscription, it was announced that DFM listing will start next Wednesday, 10 December. The Meraas Holding company was selling 40% of its shareholding to the public with the US$ 681 million sale of 2.5 billion US$ 0.27 shares being allocated 60% to institutions and 40% to individuals.
The local bourse had another shaky month falling 9.4% in November to 4281, following a 9.9% slump in October. Having fallen 1.5% the previous seven days, the DFM fared little better this shortened National Day week sliding 6.8% from its Sunday opening of 4494 points to close Monday on 4186. Bellwether stocks, Emaar Properties and Arabtec, were down 19.1% and 5.6%, trading at US$ 2.41 and US$ 1.02 respectively.
Berlin-based Transparency International has issued its 2014 Corruption Perceptions Index which highlights the “performance” of 175 countries in relation to public sector corruption. No surprise to see the worst five countries being Somalia, N Korea, Sudan, Afghanistan and South Sudan. The top five least corrupt nations were Denmark, New Zealand, Finland, Sweden and Norway. The UAE is seen as the most transparent of all Arab countries in this survey.
It is difficult not to imagine that there are sinister forces moving the bullion market. On Monday, morning the yellow metal surged 6.2% to US$ 1,219 in a matter of hours whilst silver jumped 11.1% to US$ 16.69. Closing prices on Thursday stood at US$ 1,024.5 and US$ 16.45 respectively.
As the November inflation rate in the eurozone dipped to 0.3%, deflation continues to be a real threat especially now that energy prices are falling. Over the past three years, the rate has dropped from 3% and is well off the ECB’s target of 2.0% and less than the 1% rate that the central bank considers to be in the “danger zone”. Not helping the EU economic malaise is the fact that the unemployment level remains at a stubborn 11.5% – or 18.4 million. The vacillating Mario Draghi once again cut the eurozone forecast to 0.8% this year and 1.0% in 2015
Growth rates in other major global economies are also giving rise for concern. Both India and the Philippines both recorded Q3 GDP expansion of 5.3% – but down from the previous quarter, when the returns were 5.7% and 6.4% respectively. Australia has recorded weak Q3 data as the economy only grew by a disappointing 0.3% with the currency falling to a four year low as a consequence. Chinese growth slipped to 7.3% as its PMI dipped to 50.3 in November as factory output slowed yet again with the main drag factors being an increase in costs and falling demand. As Moody’s cut Japan’s credit rating, because of increasing worries about the country’s debt levels, the yen fell to seven year lows.
Russian officials have forecast a 0.8% contraction in its 2015 GDP in light of the continuing economic sanctions, a plunging rouble and sinking oil prices, with real incomes sliding 2.8%. The Russian currency lost 9% in value on Monday and then hit new lows on Wednesday, as it plunged to 54.8 to the US$. Oil prices have seen both the Nigerian naira and Angolan kwanza under pressure. Nigeria has devalued its currency and raised interest rates to 13% to try and stem further depletion of its falling foreign reserves, as did the Angolan officials as the kwanza hit an all-time low on Tuesday.
But back to Dubai where a pair of world’s most expensive boots, valued at over US$ 3.1 million, is on show at the 19th Dubai International Jewellery Week. The footwear – covered by over 39k diamonds and weighing 1,527 carats – has been designed by AF Vandervorst. No doubt the buyer of the size 38 boots will stand out in the crowd but it is unlikely that These Boots Are Made For Walkin!
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