Giving It All Away

Paramount towerDubai has announced the construction of the first functional 3-D building in the world. The whole 2k sq ft project – building, fit-out and furniture – will be printed on a massive 20’ high 3D printer. This development is an initiative of Dubai’s Museum of the Future, in liaison with WinSun Global. The developers are looking at savings in time (60%), labour costs (80%) and waste (50%) on traditional methods.

It is estimated that the value of three of Dubai’s current mega projects is in the region of US$ 34.2 billion, the biggest of which is the Metro worth US$ 14.4 billion. The other two are the RTA’s Emirates Road master plan (US$ 12.0 billion) and the Dubai Airport expansion (US$ 7.8 billion).

Dubai Land Department reported that Q1 property transactions reached US$ 17.4 billion, of which US$ 10.1 billion resulted from new mortgages and US$ 6.5 billion from land and property sales.

Damac has added another project to its Dubai collaboration with Paramount Hotels & Resorts – a 64-storey, 824-room hotel and residences. Located on SZR, building of the luxury development – with an iconic rooftop infinity pool – has already started and slated for completion by 2019. The developer is currently building the four-Damac Towers by Paramount Hotels & Resorts as well as the Paramount Hotel Jumeirah Waterfront in Maritime City.

The first of five exclusive villas on Palm Jumeirah’s Frond M has been sold for US$ 19.1 million to a Briton of Indian descent. The residence will include six bedrooms, a cinema, 17 mt infinity pool and a 51 mt private beach.

Dutch contractor, Van Oord, has won a US$ 150 million, 2-year Nakheel contract to deliver 23.5 km of coastline and breakwaters at Deira Islands. When the whole project is complete, Dubai will have an additional 40km of coastline. This development is an integral part of the 15.3 sq km waterfront city which will have numerous hotels, apartments, retail outlets and a huge marina.

Being Dubai, it is no surprise that Reef Worlds has submitted its final design for the approval of the world’s largest sustainable underwater tourism site – “Pearl of Dubai”. Its exact location is not known but will probably be off one of The World islands and will now include a Hamour Habitat.

Emaar’s chairman has released plans for a world class centre for training real estate professionals. HE Mohammed Alabbar will fully fund the non-for-profit educational facility.

There is more worrying news for the hospitality sector with latest reports indicating a 6.5% fall in average daily rates over the past year to US$ 272, with even bigger monthly falls in April (12.8%) and May (10.8%). The main drivers are the increased supply of inventory, a drastic fall in Russian tourists and the weakening euro (down 19.6% over the past 18 months). Although occupancy levels rose by 1.9% to 83.8%, driven by a double-digit surge in Chinese visitors, Dubai is still perceived an expensive destination. In June, the emirate ranked in the top 10 most expensive destinations in a TripAdvisor survey and this week Bloomberg rated Dubai the 4th most expensive in the world. The emirate (at US$ 255 per night) came in behind San Francisco (US$ 397), Geneva (US$ 292) and Milan (US$ 271).

Following a 2014 10.0% growth in annual visitor numbers to 2.45 million, covering 93 exhibitions, DWTC will see a similar expansion pattern this year, as it will host 28 new events. This will be a fillip for the MICE sector and will be a boost for Dubai’s hospitality industry.

It took over two years for the three American airlines – American, Delta and United – to prepare a report for the US government, claiming state subsidies and unfair competition by Gulf carriers, including Emirates. In less than three months, the Dubai-based airline has refuted all allegations made and submitted their own 380+ page testimony to the US Departments of State, Transportation, and Commerce. Just like the NRA and AIPAC, the US airlines will have strong lobbying powers in the Capitol but if truth and logic are the main considerations then Emirates will win hands down. But remember the trouble with P&O and its ownership of some eastern US ports? (Ironically these three airlines are under an anti-trust US government investigation for illegal collusion to inflate seat prices).

Having only been open for five years, DWC is now ranked in the top 20 global busiest cargo hubs as well as expanding its passenger turnover. The facility recorded 825k tonnes of cargo carried last year and expects to top over 1 million tonnes in 2015, as more operators move from Dubai International. The latter facility has seen a 9.4% YTD increase in passenger traffic to 32.4 million as at the end of May.

It is forecast that the 23 free zones in Dubai will generate at least 5.3% more trade this year reaching a total of US$ 140.3 billion. The free zones, with JAFZA accounting for 80% of the total, have over 20k companies, employing 200k whilst contributing 25% to the emirate’s GDP.

dubizzle may find a rival with the local e-trader, EZHeights.com, setting up the country’s first online Barter Shop. The company estimates that it has US$ 71.9 billion worth of items in their system, with sale property accounting for 94.3% of that total – US$ 67.8 billion.

Local on-line shopping will soon receive a boost when two major supermarkets – LuLu and Geant – upgrade their delivery services. The former has spent US$ 5 million on a new website and app and will extend its deliveries in the UAE, Kuwait and Qatar. Further enhancements will be made by the French-based supermarket chain.

Dubai-based on-line clothes retailer, Namshi.com, has received US$ 11 million Silicon Valley venture capital funding to develop a new app. Fetchr will offer consumers improved service levels and, at the same time, enhance e-commerce firms’ efficiency by tracking down details more effectively.

Also on the e-commerce front, Dubai start-up, Bayzat, has completed a US$ 900k funding exercise. The company is primarily a medical insurance comparison website but is also involved with credit cards, finance loans and car insurance.

Trussbridge, a Dubai-based independent financial services firm, is the lead arranger for an investment consortium that has just bought a majority shareholding in the Canadian food producer, La Maison Cannelle. The Quebec company, established in 2005, focuses on gluten-free goods.

Centum Investment Company and Dubai-based Investbridge Capital will provide funds for SABIS Holdings to build at least 20 schools in Africa over the next five years. Each school is estimated to cost up to US$ 35 million.

It is reported that the once troubled developer Limitless will soon repay its creditors US$ 564 million; it has also arranged to extend its remaining debt of US$ 648 million to December 2018.

The government-owned Investment Corporation of Dubai (ICD) recorded an impressive 63.0% increase in 2014 profit to US$ 6.5 billion. Its revenue rose 11.3% to US$ 54.1 billion, whilst both assets and liabilities increased by 10.5% to US$ 18.3 billion and 8.1% to US$ 13.1 billion respectively.

A Ministry of Finance official has confirmed that there have been discussions relating to  corporate and value added tax laws, with a draft expected this quarter. Hopefully, it will be some time before any tax is levied but it will be a necessary addition if oil prices remain at their current low levels.

Although not hitting the levels of 2007, when Q1 personal borrowing reached US$ 137 billion, latest Central Bank figures show that such lending in the twelve months ending 31 March amounted to US$ 354 billion – up 6.5% on the previous year.

It seems that several UAE banks were targeted this week by a co-ordinated cyber-attack, temporarily bringing down operations and websites.

It was no surprise to see that the 12.99% Emaar Misr IPO has been heavily oversubscribed. Of the 600 million US$ 0.50 shares on offer, the first tranche of 510 million – for institutional investors – was 11 times oversubscribed with tranche 2 of 90 million – for retail –  had subscriptions totalling 3.23 billion shares. It is reported that the company carries a portfolio amounting to almost US$ 7 billion.

Etisalat has advised the Abu Dhabi bourse that its Q2 revenue and profit will be dented by US$ 168 million and US$ 56 million respectively, as a result of a restatement of Mobily’s inaccurate 2014 and Q1 financials. Etisalat holds a 28% shareholding in the Saudi telecom which had been investigated over certain of its clients’ contracts.

This week, the Bank of China listed a conventional 2 billion yuan bond, equivalent to US$ 322 million, with Nasdaq Dubai, bringing the bourse’s total listings of such bonds to a record high of US$ 11.64 billion.

The DFMI fell 1.4%, starting on Sunday at 4,147 to close on Thursday (02 July) at 4089. Bellwether stocks headed south with Emaar (down US$ 0.06 to US$ 2.12) whilst Arabtec closed US$ 0.03 lower at US$ 0.71. Thursday saw decreased activity with 539 million shares, valued at US$ 751 million, traded – compared to the 745 million, worth US$ 1.0 billion, the previous week. 

Both gold and oil continued their recent downward trend with the yellow metal down US$ 25 to US$ 1,174 and Brent crude off US$ 1.17 to US$ 63.56 at Thursday’s close.

Founded less than seven years ago, Airbnb is now valued in excess of US$ 25.5 billion. Recently, the so-called community marketplace has raised US$ 1.5 billion, from several investment funds, to expand operations in Asia. There is every possibility that the company, which does not own any hotel but has 35 million guests in over 160 countries, will go public. Its revenue – normally 3% commission from property owners and 6% from guests – has surged 340% over the past two years to US$ 850 million.

The following chart highlights how certain benchmark indices have fared over the past 18 months and, more specifically, over the past quarter. Interestingly, seven of the fifteen listed are in negative territory whilst only three – including the Dubai Financial Market General  Index – show double digit growth over the past three months.

 

 

Unit

%age

30 Jun 15

31 Mar 15

01 Jan 15

01 Jan 14

 

 

 

3 mth

 

 

 

 

Gold

US$

oz

-0.68%

1,174

1,182

1,186

1,236

Iron Ore

US$

lb

-1.59%

62

63

73

135

Oil – Brent

US$

Barrel

14.78%

63.05

54.93

57.33

102.50

Coffee

US$

lb

-2.24%

131

134

161

260

Cotton

US$

lb

-18.07%

68

83

62

86

Silver

US$

oz

-5.66%

15.68

16.62

15.77

20.15

Copper

US$

lb

-4.73%

2.62

2.75

2.88

3.37

AUD

US$

 

1.32%

0.77

0.76

0.81

0.89

GBP

US$

 

6.08%

1.57

1.48

1.53

1.64

Euro

US$

 

2.78%

1.11

1.08

1.21

1.38

Rouble

US$

 

5.88%

0.02

0.017

0.017

0.03

FTSE 100

 

 

-3.71%

6,521

6,772

6,548

6,730

CS1300

 

 

26.70%

4,409

3,480

3,532

2,291

S&P 500

 

 

3.67%

2,063

1,990

2,091

1,831

DFMI

 

 

13.53%

4,087

3,600

3,774

3,370

ASX All Ord

 

 

0.02%

5,451

5,450

5,415

5,352

Australian house prices continue to head north with latest figures indicating an annual increase in capital cities of 9.8% – down slightly from the previous year’s 10.1%. The housing shortage and historically low interest rates are the main drivers blowing up this property balloon.

In the UK, Q1 household disposable income rose at an annualised rate of 4.5% (its best return since 2001), largely attributable to a rise in wage growth and low inflation – up slightly to 0.4%. Conflicting signals saw GDP growth forecast revised upwards to 2.9%, whilst the current account deficit, at 5.9% of GDP, was at its highest level since records began in1948.

June’s eurozone inflation rate dipped to 0.3%, despite the March introduction of the ECB’s massive US$ 1.1 trillion stimulus package. Latest unemployment figures see the 11.1% rate unchanged in May – with Greece having the highest level at 25.6% and Germany the lowest at 4.7%.

Puerto Rico is following Greece having trouble with their finances. The US territory has declared that it is unable to pay its debts of US$ 72 billion and is on the verge of defaulting. It is unlikely that the federal government will offer any assistance to the self-governing US island which would normally file for bankruptcy but by law cannot do so.

Greece’s major banks – Alpha, Eurobank Ergasias, NBG and Piraeus – have seen Fitch slash their credit ratings from CCC to ‘restricted default’ because all four would have failed without this week’s imposition of capital controls, in the wake of the ECB action. On Tuesday, the eurozone ministers ruled out a bailout extension and it also became the first advanced country not to repay an outstanding loan to the IMF, amounting to US$ 1.7 billion. Now the financial world is waiting the outcome of this Sunday’s referendum – a no vote will inevitably see the Hellenic country leaving the eurozone.

A leading member of the Saudi royal family – and nephew of King Salman – has pledged his entire fortune to a trust fund to ensure that all his wealth will be used for “humanitarian projects and initiatives”. It appears that the chairman of Kingdom Holding Company has already donated US$ 3.5 billion to Alwaleed Philanthropies and now Prince Waleed bin Talal Al Saud, the 34th richest person in the world according to the Forbes list, with a US$ 34 billion fortune, is Giving It All Away!

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