Here’s To The Good Times!

shops-crystal-lasvegasWith the launch of three projects, it was a week of “1s” – One at Palm Jumeirah, One Central and 1/JBR. The developer, Omniyat, has appointed Brookfield Multiplex as the main contractor for the US$ 544 million One at Palm Jumeirah. The 108k sq mt development will house only 90 luxury apartments, with prices ranging from US$ 4 million to US$ 54 million.

The 54-year old construction company was one of the first international entrants to Dubai and built the original towers in The Marina. Under its now Executive Chairman, John Ferguson, it has built some of Dubai’s most famous landmarks, including Emirates Towers (2000), The Index (2011) and JW Marriott Marquis (2013). In 2007, the Australian company, Multiplex, was taken over by the Canadian Brookfield Asset Management.

HH Sheikh Mohammed bin Rashid Al Maktoum has approved plans for the US$ 2.1 billion One Central development. Located in the CBD, adjacent to the Dubai World Central, the project, covering 500k sq mt, includes 4 hotels (with 2k keys) and 1.3k residential units.

Dubai Properties has started enabling work on its 1/JBR project, located at the entrance to JBR. The 46-storey building, with 153 apartments ranging from 2-5 bedrooms, will be completed within 3 years.

The US$ 163 million Union Museum will be finished in September and will be officially opened during the 45th National Day celebrations in December. Located in Jumeirah 1, the museum highlights the origins of the country from pre-union times to the present.

Al Jaber LEGT Engineering and Contracting (Alec) has been awarded phase 1 of the planned passenger terminal building expansions at Al Maktoum International Airport. Within a year, the built up area will increase by 120% to 146k sq mt. By 2030, the facility will have the capacity to handle 220 million passengers a year.

Emphasising the importance of the retail sector to Dubai, latest figures indicate that 2016 sales will top US$ 43 billion in the emirate. Furthermore, wholesale and retail trade accounts for more than 11% of the UAE’s GDP – and almost 30% for Dubai.

Network International estimates that card spending in the country increased by 9.0% last year, and this despite Russian spend down by 50% and Chinese declining by 13%. Notwithstanding all the doom and gloom merchants around, domestic consumer spending jumped by 13%.

The UAE has moved up to 2nd place, behind Malaysia, in the MasterCard-CrescentRating Global Muslim Travel Index (GMTI) 2016. The report, covering 130 countries, estimates that the 117 million annual Muslim travellers account for about 10% of the total market; by 2020, this percentage is set to increase to 11%, with a market value of US$ 200 billion.

Al Islami Foods is to open an office in Sao Paulo, as the Dubai-based company moves to expand its international operations, with a planned poultry processing plant in Brazil.

Last December, Dubai business tycoon, Khalaf Al Habtoor, made a US$ 8.5 billion investment proposal for a mixed-use development in Cairo; to date, he is still awaiting a response from the Al Sisi government.

Dubai’s Telecommunications Regulatory Authority reported that there was a 41.5% jump in 2015 online blackmail cases to 300.

With one of the highest malware infection rates in the world, it is no surprise to see that US-based cyber security company Malwarebytes plans to open an office in Dubai next month. The company estimates that over the past 3 years, ME countries have witnessed double the number of infected systems than the worldwide average.

There was another boost for embattled developer Arabtec, with the announcement that it had won a US$ 463 million contract to build 1.1k villas in Fujairah; so far this year, the company, 36.1% owned by Abu-Dhabi government’s Aabar Investments, has won four contracts, totalling US$ 2.3 billion. It was also reported that the company has recommenced legal action against Meydan to recover 50% of its US$ 763 million claim; dating back to 2009, the dispute involves work carried out at the home of the Dubai World Cup.

Troubled Dubai-based contractor, Drake & Scull International, 12.8% owned by Emirates Islamic Bank, has won a US$ 93 million MEP building services contract on phase 1 of the Doha Metro project.

It is reported that the 2007 JV, between DP World and MGM Mirage, has sold City Center’s The Shops at Crystals in Las Vegas for US$ 1.1 billion to Invesco Real Estate and the Simon Property Group. The 324k sq ft luxury mall was part of the massive US$ 8.5 billion CityCenter project which opened in 2009.

Limitless has finally started work in Vietnam on a US$ 550 million residential and tourism project, announced nearly ten years ago. Located in Halong Bay, the development includes a 5-star hotel, 340 residential units along with retail and leisure facilities.

Dubai-listed retailer Marka is planning to issue a 7%, 5 year US$ 68 million bond to finance future expansion. The company has acquired both Retailcorp (from Istithmar World) and Reem Al Bawadi and has majority shareholdings in Cheeky Monkeys and Icons.

Abraaj Group is involved in a US$ 150 million fundraising exercise, with an Indian online grocery business, Big Basket. This is its third foray in the e-commerce sector, already having stakes in the local taxi service, Careem, and the Turkish online retailer, Hepsiburada.

There are at least three Dubai entities considering IPOs. After the 2014 success of a US$ 1.6 billion float of its Malls division, there are reports that Emaar is to consider listing its overseas units, in India and Turkey, as well as its hotel division. Al Masah Capital Management is also deliberating on whether to go public, with both its Al Najah Education and Avivo Group. Its education company, established in 2012, operates schools and nurseries in the UAE, as well as Oman and Singapore. Its healthcare service is looking at a US$ 300 million London listing next year. Al Shafar General Contracting has completed “90% of preparations” ahead of a planned October public offering.

MAF Properties reported impressive 2015 figures, with both revenue and profit heading north, by 3.9% to US$ 1.09 billion and 29.6% to US$ US$ 954 million respectively. This helped the parent company, Majid Al Futtaim’s revenue jump 9.2% to US$ 7.4 billion.

Dubai-based Topaz reported a 53% slump in 2015 profits to US$ 21 million, as revenue dipped 10.3% to US$ 362 million. The shipping company, a wholly owned subsidiary of Muscat-listed Renaissance Services, also posted a US$ 71 million impairment charge, as the value of their ships fell in tandem with the oil industry slump.

There are reports that Dubai Police is investigating an alleged fraud in which 60 Gold AE clients have been unable to access their funds totalling US$ 3.2 million; consequently a further 200 (from a client base of 1.2k) have come forward with the same complaint. The company suspended trading last October and, a month later, the Dubai Multi Commodities Centre cancelled its trade licence.

A total of US$ 354 million has already been pledged to the newly created Mohammed Bin Rashid Global Centre for Endowment Consultancy. Based on the model of sustainable charitable endowment, it will centre on a mix of philanthropic causes. The Dubai Ruler has also donated land for the construction of a new Dubai Awqaf and Endowment District which will be devoted to charity and long-term endowments. (GEMS Education has already announced that 4% – 3k students – will benefit from endowment scholarships in support of this initiative).

The bourse ended its recent bullish run closing after opening Sunday at 3385 to close 66 points at 3319 by Thursday (24 March 2016). Bellwether stocks, Emaar Properties and Arabtec, both fell – the former by US$ 0.05 to US$ 1.66, and the latter down US$ 0.03 to US$ 0.41. Trading volumes on Thursday were slightly up on last week at 441 million shares, valued at US$ 131 million, changing hands, (cf 410 million shares for US$ 257 million, the previous Thursday).

Brent crude returned to negative territory falling 3.8% (US$ 1.58) to US$ 39.92, whilst gold was also down US$ 46 to US$ 1,219, by Thursday (24 March) close.

The decline in US oil exploration can be gauged from the fact that the number of rigs has fallen 55.5% to 476 over the past year; of this total, 387 are exploring for oil and the balance for gas. Crude production is at its lowest level since 2014, as imports (8.4 million barrels) rose to a 3-year high.

PetroChina posted a 66.9% decline in 2015 profits to US$ 5.46 billion. The Beijing-based conglomerate is one of the largest global producers and the oil price slump has impacted on both its exploration and production sectors.

Petrobas reported a Q4 US$ 10.2 billion loss, after a massive write-down in assets, following the collapse of oil prices. The Brazilian state-owned company has been stuck in a corruption scandal, involving senior executives and government officials.

Woodside has shelved a massive US$ 40 billion gas project in W Australia. It is estimated that, over the past two years, global energy projects totalling US$ 400 billion have been delayed.

At least two Australian banks are suffering from increased bad debt charges, blaming slower economic growth and a sluggish resources sector. ANZ and CBA have provisions of US$ 675 million and US$ 423 million whilst the markets expect even worse news slashing US$ 15 billion off the market value of the Big 4 (including Westpac and NAB) this week.

Lloyd’s recorded a 30% slump in 2015 profits to just over US$ 3 billion citing “challenging market conditions and a turbulent macro-economic backdrop” as the main drivers. The world’s specialist insurance market is underwritten by more than 80 syndicates and is considering expansion into Dubai and Beijing.

Just when it seemed that Marriott had been gazumped by Anbang, a Chinese insurance company, to acquire Starwood, the American hotelier has upped its offer to US$ 14.4 billion; this equates to US$ 21 cash, US$ 0.8 shares of Marriott International Inc. Class A stock and Interval Leisure Group stock valued at $5.83 per share for each Starwood share.

Now that Steinhoff International has withdrawn from the race to acquire the Home Retail Group (owner of Argos), it seems that the way is clear for Sainsbury’s to make a formal US$ 2.0 billion offer. The supermarket chain’s cash and share offer values HRG shares at US$ 2.46 each. Although the South African rival withdrew from the UK bid, it has made a US$ 975 million offer for Darty – Europe’s 3rd largest electrical goods retailer.

Following reports that Virgin America, an offshoot of Richard Branson’s empire, is up for sale, its shares jumped 15% to nearly US$ 35 on Wednesday. The company only went public in November 2014, when its shares were valued at US$ 23 and its market cap was US$ 1.24 billion.

Although Nike’s latest quarterly figures showed increases in revenue (8.0% to US$ 8 billion) and profit (US$ 950 million), its shares fell 7% on Tuesday. The market was expecting better results and is wary that the next quarter will see more pressure on sales because of the strong greenback and the global economic slowdown.

The same two factors have also has hit Tiffany’s, with the luxury retailer announcing a 9.0% fall in profit to US$ 494 million for the year ended 31 January 2016. In Q4, all major regions – excluding Japan and the UK – witnessed deteriorating performances; the downward trend is expected to continue into the new financial year.

Following a 2015 annual loss of US$ 2.4 billion (its first since the GFC), Credit Suisse has followed last month’s 4k job cut with another tranche of 2k. This will help the bank achieve its planned US$ 820 million cost cutting exercise.

Australian shareholders have seen a 23.1% fall in dividend payments to US$ 14.5 billion, with the drop attributable to the big commodity companies cutting back on pay-outs in the wake of falling profits. According to CommSec economists, these payments equate to 1.2% of the country’s GDP. The three companies with the largest dividend pay-outs are Commonwealth Bank, Telstra and Wesfarmers, distributing dividends totalling US$ 2.6 billion, US$ 1.5 billion and US$ 0.9 billion respectively. Next week will see a boost to consumer spending, as over 50% of total dividends will be paid out.

The former head of Tabcorp, Australia’s biggest bookmaker, the grandly named Elmer Funke-Kupper, has resigned his position as head of the country stock exchange – the ASX. It has been alleged that, in 2010, Tabcorp paid US$ 150k to the family of the Cambodian PM’s family as part of its attempt to gain quick entry into the country’s lucrative online gaming business, ahead of the 2010 FIFA World Cup.

From a recent Repucom European Football Jersey Report, shirt sponsorship in the top six European football leagues has jumped 12.7% to US$ 933 million. 19.6% of this revenue emanated from the UAE, with Emirates being the largest sponsor. The EPL recorded a 35% surge in shirt revenue to US$ 371 million, with the Bundesliga lagging in 2nd place at US$ 153 million.

Finally someone agrees with this blog that the property market is not facing an oversupply and that prices are set to rise! Interestingly, leading brokerage, Allsopp & Allsopp, has reported its highest sales volume since starting operations in 2008 and claims that a property oversupply is patently false. Further good news came with reports that on Thursday, the Dubai Land Department dealt with 170 transactions totalling US$ 401 million – one of their busiest days on record. There’s no doubt that market equilibrium is fast returning to the Dubai real estate sector so Here’s To The Good Times!

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