Both Sides Now

wayne-rooneyValuStrat’s latest report shows an 11% drop in Q2 Dubai residential property prices, but only a 3% drop in rentals, compared to a year earlier. The research firm also indicated that 26.1k apartments and 2.4k villas will be added this year, with a further 28.5k units in 2016. Yet another report seemed to imply that currency movements in the home countries of Dubai’s three main source markets – India, UK and Pakistan – affect the local realty sector.

However, Knight Frank’s Global House Price Index indicated that annual, H1 and Q2 prices had fallen by 12.2%, 6.4% and 2.8% respectively. In fact, of the 56 markets surveyed, Dubai was ranked as the worst performing over the past 12 months. Cluttons has reported that 41k off-plan units have already been announced this year and of the 20k units to be handed over, within the next two years, only 6k would be apartments, with the balance being villas!

It does seem that the market is flooded with so many companies reporting on the state of the sector and all coming out with different findings – on both the demand and supply sides!

Next Tuesday, Cityscape Global will open and many local developers will be showing off their new projects. Meraas will be displaying a model of its Marsa Al Seef, located on the Creek, that will extend 1.8km and include three hotels, a museum, amphitheatre and art galleries, along with floating markets and retail outlets.

Emaar is planning to release discounted apartments in its Emirates Living cluster whilst Deyaar will be selling units in its upcoming US$ 817 million Midtown project. Both Damac and Nshama will be in the mix, with the former launching more residences for sale from its Akoya Oxygen development and its 29-floor Merano Tower. The latter will showcase its huge Midtown project, including Jenna apartments that will see 2-bedroom units on the market at the bargain price of US$ 204k.

Property developer, Seven Tides, has reported that 80% of its 227-key serviced apartments, being built in conjunction with a 273-room 5-star hotel, have already been sold. Located on Palm Jumeirah, Dukes Oceana will be the UK-based Dukes London’s first foray into the international market.

RP Global has appointed Jumeirah Group to manage a US$ 1 billion project, encompassing a 200-room hotel, 350 serviced apartments and 290 residences. The mixed-use development, with a built-up area of 3 million sq ft, will be located in Business Bay and is slated for completion by 2019. 

The Juma Al Majid Group has cancelled a management contract, which had run for 14 years, with Taj Hotels Resorts and Palaces; the Dubai company has taken back the Taj Palace Hotel, now renamed Al Doon Palace, located in Deira.

Dubai Tourism already has licensed 37 operators to rent out some 800 holiday homes. The government body will be responsible for issuing permits and ensuring that high standards are set and followed. The number of registered holiday homes is set to rise, as Dubai gets ready for Expo 2020. 

Both DuBiotech (Dubai Biotechnology and Research Park) and EnPark (Energy and Environment Park) reported 20%+ increases in the number of businesses opening in H1, bringing the combined total in the two free zones to 270. It is expected that the new twin-tower DuBiotech headquarters, encompassing over 500k sq ft of office space, will be ready by next year. 

JAFZA reported a 15.4% hike in H1 profits to US$ 141 million, as revenue increased by 9.0% to US$ 245 million. During the period, the free zone welcomed 313 new companies, compared to 346 in H1 2014.

DEWA will spend US$ 29 million in building a new 132/11kV substation in Dubai Academic City to meet the growing energy demand in that area.

According to a recent Ventures Onsite report, there will be a 1.0% fall, to US$ 194 billion, in the number of GCC construction projects this year. Of that total, the UAE expects awards to top US$ 60 billion, slightly lower than Saudi Arabia’s US$ 85 billion but higher than Qatar’s US$ 21 billion.

SKAI has secured a US$ 300 million syndicated finance package for its three Dubai projects – Viceroy Dubai Palm Jumeirah, Viceroy Dubai Jumeirah Village and a third one to be announced shortly. 

Deyaar Development is seeking up to US$ 245 million finance, as it starts development work on the US$ 817 million Midtown project in the IMPZ (International Media Production Zone). The development, covering 5 million sq ft, will include 2.5k apartments, 400k sq ft of landscaping and a 1km stretch of outlets, including retail, restaurants and cafés. It is anticipated that this will be completed by 2018, well in time for Expo 2020.

Locally based GEMS Education has managed to refinance a 2013 US$ 817 million, 7-year loan facility on improved terms. With over 50 schools in its portfolio – and major plans for international expansion – the company introduced two separate units, one focusing on the MENA region and Asia, with the other concentrating on Europe and North America. In 2014, Blackstone, Fajr Capital and Mumtalakat acquired significant minority shareholdings in the former entity.

A year after a US$ 35.8 billion agreement in principle to build one million homes in Egypt, Arabtec has announced that nothing has yet materialised between the two parties and no progress has been made.

Although no figures were available, the iMENA Group has bought a significant minority stake in the 7-year old JRD Group that includes JustRentals.com and JustProperty.com portals. It is reported that the company plans to invest US$ 25 million in online real estate over the next twenty-four months.

 

Abraaj Group has sold its stake in Peru’s Condor Travel to the Carlyle Group for an undisclosed amount. The Dubai-based asset management company has been involved in South America for the past seven years and currently has two investments in Peru – Acurio Restaurantes and logistics provider Urbano. 

Police have reportedly detained two family members of Atlas Jewellery over bounced cheques, following complaints by up to five banks.  The Dubai-based chain, with nearly fifty regional outlets, also has involvement with the realty and healthcare sectors. According to one newspaper, Atlas may have debts of over US$ 163 million, including one of US$ 19 million with the Bank of Baroda.

With a 42.3% surge, to 443k tonnes, in H1 cargo traffic, the Al Maktoum International is now ranked as 19th in the list of global cargo airports. Dubai International recorded 6.7 million passengers in July, bringing the YTD total to 45 million – up 12.9% on last year. Freight for the month reached 206k tonnes and YTD rose 2.7% to 1.44 million tonnes. 

Not many carriers receive four aircraft in one day but Emirates did just that this week. The arrival of three Boeing 777s and one Airbus A380, costing a combined US$ 1.5 billion, brings the fleet size to 238 with a further 270  – a mix of 777s and 74 A380s – on order.

Following the recent announcement that Jennifer Aniston would be the face of Emirates, it has been confirmed that she will appear in TV adverts – and not in print. The airline plans to spend US$ 20 million on this particular TV worldwide advertising campaign.

The Federal Customs Authority reported a 6.0% increase in Q1 non-oil trade to US$ 73.6 billion, with imports at US$ 46.5 billion, re-exports – US$ 16.0 billion and exports up 35% to US$ 11.1 billion. 

There is no doubt that the country’s industrial sector is growing in importance and is now second, only to oil and gas, contributing 14% of the national output. The sector’s 6k entities, with an estimated US$ 34.6 billion investment, employ an estimated 433k.

The UAE’s August non-oil PMI – up 1.3 to 57.1 – shows that the low oil prices are having minimal effect on business confidence. Although indicators  – such as output up to 63.1 and new orders to 61.3 – moved north, it is only a matter of time before the low oil price take their toll.

A year after listing on the DFM, Marka, with 34 stores, continues its expansion with recent launches of international brands – including City Chic, Essentiel Antwerp Laurel, Sonia and Weill. The company has also been active in acquiring major stakes in Cheeky Monkeys, Icons and Reem Al Bawadi, as well acquiring Retailcorp from Istithmar.

In line with global markets, the DFMI had a topsy turvy week – opening Sunday at 3648 and eventually closed only 2.1% lower at 3570 by Thursday (03 September). It closed the month of August down 11.6% on 3663 and was 2.9% off YTD, having opened the year on 3774. 

Of the bellwether stocks, Emaar Properties lost ground, dropping US$ 0.03 to US$ 1.75, whilst Arabtec fell US$ 0.04 to US$ 0.51. Trading volumes on Thursday were at rock bottom, well down on seven days earlier, with only 119 million shares, valued at US$ 107 million, being exchanged (cf 331 million shares for US$ 262 million, the previous Thursday). For the month of August and YTD, both stocks lost ground – Emaar 14.4% (US$ 0.31) to US$ 1.84 – and 7.0% YTD with Arabtec sinking even further – 16.9% (US$ 0.11) to US$ 0.54 and 32.8% YTD.

Just as happened for the past few weeks, both oil and gold had another turbulent time so that by Thursday, Brent crude had closed 7.0% up at US$ 50.89, with gold closing US$ 4 higher at US$ 1,125. Over the month of August, oil was marginally lower at 0.3% (US$ 0.15) to US$ 54.15 – and YTD 5.5% off.  Gold climbed US$ 47 during the month to close on US$ 1,134 but YTD was 4.4% or US$ 52 lower.

As sluggish demand continues for the Galaxy smartphones, Samsung has seen US$ 44 billion wiped off its share value since April.

It seems that Malaysian Prime Minister, Najib Razak, has received a US$ 700 million payment into his personal bank account, with allegations that the money came from the state investment fund 1MDB. (Both parties have refuted the charge). This week Swiss authorities got in on the act by freezing tens of millions of US$ in certain 1MDB accounts in that country and are investigating certain parties on suspicion of money laundering and corruption.

Argentina is far from happy with the shenanigans of HSBC who have been accused of threatening the country’s stability by helping its 4k alleged tax-evading clients there to repatriate US$ 3.5 billion of funds. Following a March raid on the bank’s local offices, the authorities found that most of the relevant documents had been stored with a company, called Iron Mountain, which ironically had suffered an arson attack a year earlier. Other countries’ tax authorities are taking note of the bank that a UK legislator has said appeared to be “rich in bureaucracy and very, very short on common sense” – and probably other attributes.

The world’s 7th largest economy has gone into recession in the midst of a myriad of corruption probes, political instability and falling commodity prices. Brazil, which hosted the FIFA World Cup last year and will hold the Olympics next year, has seen its economy contract by 0.7% and 1.9% in the first two quarters of the year. Other economic indicators – rising unemployment (at 7.5%), a 25% fall in the real against the greenback, a 2.7% drop in agriculture and escalating inflation, now at 9.6% – point to the fact that there is no short-term solution.

Although reaching the 7.0% level, India’s latest quarterly growth figures disappointed the markets, down from the 7.5% mark at 31 March 2015. Since coming to power in May 2014, Prime Minister Narendra Modi has still much work to revive a flagging economy, beset by bureaucracy and corruption.

There is still a myriad of depressing economic news emanating from China, with the latest being the August PMI falling to 49.7, a usual sign of contraction in the economy, whilst the private Caixin/ Markit index, at 47.3, was at its lowest level in six years. Furthermore, the equity markets have lost almost 40% of its value since June. 

Canada has fallen victim to being blessed with natural resources, including oil, as it struggles from the negative impact of the Chinese slowdown. Having contracted 0.8% in Q1, the economy continued in negative territory falling a further 0.5% in Q2, so as now to be in recession for the second time in six years.

Just like Canada, and for mainly the same reasons, Australia’s economy is struggling. After a 0.9% growth in the March quarter, the latest figure of 0.2% disappointed the markets. The 3.0% decline in mining production, weakness in the construction sector and a fall in exports have seen the currency fall to 7-year lows, at around the 0.70 mark to the greenback. The end results are that the RBA had no alternative but to maintain interest rates on hold at 2% and that growth this year will be lucky to top the 2% level.

Although the ADP National Employment Report indicated a disappointing 190k increase in US August private payroll numbers, it was still 19k higher than a month earlier; early forecasts point to a slight decline in the current unemployment rate down to 5.3%, whilst productivity was revised up to 3.3% (from 1.3% in July) – and a major improvement on the Q1 contraction of 1.1%. Despite the global slowdown, the US economy is showing positive signs of strength and momentum. Whether this is enough for the Fed to raise interest rates this month seems unlikely.

There was good news out of Egypt, with the discovery of a “supergiant” natural gas field that could be holding up to 30 trillion cu ft of gas. Potentially, it could supply Egypt for decades but size wise is dwarfed by Qatar’s estimated 900 trillion cu ft reserves.

Unemployment rates in the eurozone are improving but are still at the unacceptable high level of 10.9% (down from 11.1% in July). There was a wide divergence between different countries with Germany at 4.7% with Spain and Greece at other end of the scale on 25.0% and 22.2% respectively. Probably the most disturbing figure was the bloc’s youth unemployment level of 21.9%.

The ECB introduced its US$ 67.4 billion monthly bond buying exercise with the express aims of boosting the economy and lifting the inflation rate to its target of 2.0%. It seems to have failed on both counts – growth is still sluggish and the inflation rate is still way off at 0.2%. This week, both the ECB and the IMF downgraded eurozone’s growth forecast for the next two years resulting in an expansion of QE being all but inevitable.

It has been estimated that English Premier League teams spent US$ 1.33 billion during the summer transfer window that closed on Tuesday. The Etihad-sponsored Manchester City accounted for 18.4% of that total, with an outlay of US$ 245 million. The fact is that this league can spend more than double that of any other European league because in Q1, Sky and BT Sport paid a record US$ 7.85 billion for live TV rights, to 168 games, for the next three seasons; this equates to US$ 15.6 million per match and represented a massive 70% increase on the existing deal. With the average player earning US$ 3.5 million – and the likes of Wayne Rooney US$ 24 million – playing in the EPL is very lucrative for Both Sides Now.

Advertisements
This entry was posted in Finance and tagged , , , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s