Livin’ On The Edge!

ecclestoneLatest Dubai Land Department data show that for the first 8 months of the year, there have been 38.8k sales, mortgages and other transactions, totalling US$ 43.0 billion, with 15.5k dealings, worth US$ 16.5 billion, over the past three months. Of the YTD total, property sales accounted for US$ 19.4 billion (28.1k transactions), mortgages – US$ 18.0 billion (8.5k deals) and others – US$ 5.6 billion (2.2k).

Days after announcing that the proposed Mall of the World would be moving to a new location, HH Sheikh Mohammed bin Rashid Al Maktoum revealed plans for Jumeirah Central on the same site – along SZR, presently housing the Police College. Covering an area of 47 million sq ft, the Dubai Holding US$ 20 billion mixed-use development will be home to 35k residents, have 7.2k hotel rooms, 3 shopping malls, 4.5 million sq ft of outdoor shopping, along with a cycling network, spanning 33 parks and open spaces. Phase 1, costing an estimated US$ 6.5 billion, will be completed in time for Expo 2020.

A JV between Emaar Properties and Dubai South will see the development of a 7 sq km area, adjacent to Al Maktoum International. The “reasonably” priced project will house 15k new residential units, a golf course and the usual accoutrements – schools, retail, hotels and parks. Phase 1 is expected to be completed within four years. This is in addition to Dubai South’s previously announced US$ 6.8 billion The Villages middle-income development, including 6k units, to be ready by 2019.

Also at this week’s 15th Cityscape Global, Nakheel announced plans not only to build 15k homes in its new US$ 2 billion Jebel Ali Gardens project but also two towers, next to Ibn Battuta Mall. These will have 531 apartments and be ready by Q4 2019. Nakheel’s chairman, Ali Rashid Lootah, also indicated that the developer will double the size of its leasing portfolio, to 36k, over the next five years.

Nakheel has also awarded the final phase of its high-end Nad Al Sheba residential community to Square General Contracting Co in a US$ 51 million contract to build 133 villas. The total project was valued at US$ 708 million, with contracts for the earlier 1,439 units, and a 1.2 million sq ft mall, awarded last year.

It has been a busy month for Nakheel as the developer announced yet another launch – this time, Palm 360. Located on a 500k sq ft Palm Jumeirah site, the twin tower hotel/residential apartment project will have 264 luxury residential units and two boutique hotels, on the first 9 storeys, with 110 rooms. A restaurant complex will link the two buildings at the 30th floor level.

Last week, Nakheel announced that a new 372-room Premier Inn, located adjacent to its 210 mt link between the Metro and Ibn Battuta Mall, would open later in the year. This week, the developer has appointed Hilton Worldwide to operate its 256-key, 18-storey property, under the DoubleTree brand, due to be built as part of a US$ 409 million project, including a mall, in JVT; construction, which will start next month, will be completed in 2019.

AE7 has been appointed by Nakheel to oversee the construction of Nakheel’s 20-tower development at Deira Islands. The US$ 1.9 billion, 9 million sq ft DI Boulevard project will comprise 16 apartment blocks, 2 hotels and 2 serviced apartment complexes and should be completed within three years.

Damac Properties is expected to hand over 450 villas and 900 apartments in its Akoya development next month. Late last year, 479 golf-view apartments were delivered. During Cityscape Global, the developer announced five new developments – a new phase of Akoya Imagine, Akoya Cuatro Villas, The Residences at Aykon City, Aykon Hotel & Hotel Apartments at Aykon City and Villas at Akoya.

The 109-unit Azizi Yasmine became the first of 17 projects in Al Furjan completed by Azizi Developers, with a further four buildings, 750 units, due for handover in Q4. With three other projects on Palm Jumeirah, its 20-project portfolio has an estimated development value of US$ 2.0 billion. It is now launching six 15-storey residential buildings – five in Dubai Healthcare City and one in Downtown Jebel Ali area over the next six months.

Abu Dhabi-owned Bloom Properties is entering the “affordable” housing market sector by building twin towers, with 686 apartments in JVC. Aimed at mid-market buyers, starting prices are at US$ 98k, with owners due to move in by early 2019. In the same market range, Nshama has launched 2k units, with prices starting at US$ 167k, whilst Danube is a recent entrant offering studio flats at US$ 117k.

Sobha is planning a third large residential community, in addition to their current US$ 4 billion Sobha Hartland and US$ 10 billion Mohammed Bin Rashid Al Maktoum City – District One. The developer is introducing what seems to be a new category into the sector – “affordable luxury”; that being the case, the location is likely to be further out of the metropolis than the other two developments.

It is thought that the tender for the US$ 272 million Mohammed bin Rashid Library, located in Al Jaddaf, will be awarded to one of six bidders in Q4. The 66k sq mt building will hold more than 2 million e-books (making it the top global electronic collection), 1.5 million volumes and 1.5 million audio books.

Dubai Wholesale City – slated to become the largest wholesale hub in the world – has started accepting applications from interested entities. The US$ 8.1 billion project, covering 550 million sq ft, is set to enhance Dubai’s position as a world class trading hub in a sector that is currently valued at US$ 4.3 trillion.

MAF opened its 20th mall this week – My City Centre Al Barsha houses 20 shops. The mall owner expects the current sales slowdown (particularly at the luxury end) to continue into 2017 before rebounding. In June, the company revealed plans to invest US$ 8.2 billion in the UAE, most of which will take place before 2020.

DP World has won a 30-year concession to manage and develop Berbera seaport – its second operation in the Republic of Somaliland, in addition to Djibouti. The initial investment, in a JV with the government, is estimated at US$ 435 million.

Gulf Navigation Holding has apparently signed a new agreement with a major creditor, Nordic American Tankers, to fully settle a long-standing debt. The new management of the Dubai-based company is keen to settle all historical outstandings, so as to start afresh.

Reports from Bloomberg indicate that investors, Tiger Global Management and South Africa’s Naspers Ltd, are planning to sell a 30% stake in the online retailer for an estimated US$ 360 million. This comes six months after the 11-year old company secured US$ 275 million from several investors.

It is reported that Dubai Financial Group LLC, part of Dubai Holding LLC, may be planning to sell its 12% share in Bank Muscat SAOG that could be worth up to US$ 300 million. Funds could be used to repay the French creditor, Natixis SA, under a 2-year old restructuring agreement.

The UAE cabinet has approved the final draft of the federal bankruptcy law that will prove to be a boon for both businesses and the economy. The long awaited legislation will allow struggling companies the chance of restructuring failing businesses and will see the possible end of jailing proprietors for bounced cheques. There have been reports that some SME owners were departing the country, when loans and debts could not be repaid, leaving banks picking up the US$ 1.4 billion tab for unsettled loans.

Despite a slight two-notch drop in August to 55.7, the Emirates NBD PMI indicated that Dubai’s private sector is still holding up well. The monthly survey showed that both new orders and business confidence had improved, with three major components – wholesale/retail (55.5), travel/tourism (54.7) and construction (52.6) – all in healthy territory.

According to a recent report, H1 earnings from UAE listed companies fell 8%, with total earnings of US$ 32.8 billion, driven down by lower oil prices and subsequent weaker growth. Unsurprisingly, the main drag sectors were commodities, construction and realty.

The Eid Al Adha break will see the public sector off for the whole of next week, whilst the private sector will have three days’ holiday from this Sunday (11 September). The DFM will only be open for one trading day next week – Thursday.

The DFM opened on Sunday at 3512 and nudged 7 points higher to close the week on 3519 by Thursday (08 September 2016). Volumes, on the last day of trading, were down at 222 million shares, valued at US$ 71 million, (cf 421 million shares for US$ 147 million, the previous Thursday). Bellwether stock, Emaar Properties, was up US$ 0.02 to US$ 1.95, with Arabtec higher by US$ 0.01 to US$ 0.41.

Brent crude bounced back this week, surging US$ 4.54 to US$ 49.99; gold performed likewise, up US$ 24 – to US$ 1,341 at Thursday’s (08 September 2016) close. The main driver for the jump in oil prices was recent talks between Alexander Novak and Khalid al-Falih in which Russia and Saudi Arabia discussed ways to stabilise the market.

BHP Billiton has hived off 50% of its West Australian Scarborough area gas fields to Woodside Petroleum for a reported US$ 400 million. The company has been badly hit by the oil price slump and had delayed development of this project.

Enbridge Inc is set to acquire the Houston-based Spectra Energy Corp for US$ 28 billion, in an all-stock deal, that will result in the continent’s largest energy pipeline and storage company; the Canadian entity will be paying a 12% premium on the early September market price. This follows a March deal that saw TransCanada Corp buy Columbia Pipeline Group for US$10.2 billion.

Following its unsuccessful May bid for Monsanto, Bayer has upped the ante by 4.5% to US$ 127.5 per share, which values the seed company at US$ 65 billion (compared to its recent market value of US$ 47 billion). If the deal were to go through, the new entity would be world’s biggest agricultural supplier and its very size may raise competition concerns with US regulators.

FTSE 100 tech firm, Micro Focus is to spend US$ 8.8 billion to acquire HP’s software arm following the recent US$ 32.4 billion deal that saw Japan’s Softbank take over ARM Holdings.

The shipping industry has been thrown into chaos with South Korea’s Hanjin, which has been haemorrhaging money for years, filing for bankruptcy. It is estimated that the country’s biggest shipping company, and world’s seventh-largest container shipper, has some 540k containers, with fully laden ships remaining at sea in a state of limbo. The 2008 recession and sluggish global economy have seen weaker trade and overcapacity resulting in historically low shipping rates that in some cases would struggle just to pay for the fuel. There is no end in sight to the deadlock and the knock-on effect could hit retailers, as cargo remains in containers and inaccessible on the high seas. The government may have to offer long-term, low interest funding to keep the company afloat, so it can rescue an estimated US$ 14 billion worth of stranded cargo.

Three Vietnamese airlines are set to buy 40 aircraft, valued at US$ 6.5 billion, from Airbus; they include 20 A321s at US$ 2.4 billion, 10 A350s (US$ 3.1 billion) and 10 A320s worth just under US$ 1 billion.

UK retailer, M&S, has retrenched 500 of its HO staff in London, as it continues to cut costs in the wake of an on-going sales slump. Latest quarterly figures indicated a 9.0% fall in like-for-like clothing sales with total group turnover down 0.4%. It is little wonder then that the present company’s share value, of US$ 7.4 billion, has fallen by more than 33% over the past year.

MasterCard, the world’s second largest credit and debit card provider after Visa, is facing a US$ 18.6 billion legal claim for anti-competitive card fees for 16 years ending 2008. The case is being brought to the European Court of Justice by a group of UK consumers.

According to Christine Lagarde the world is under threat from a “low-growth trap” – slowing investment, sluggish productivity, rising debt levels, weak demand, increasing gap between the rich and poor and eroding labour skills. The IMF MD is concerned that growth over the past five years has been a lot slower than the 3.7% average recorded over the period 1990 – 2007.

The weaker than expected US job numbers of 151k (with unemployment of 7.8 million remaining at 4.9%) would appear to preclude any chance of the Fed raising rates later this month; a December hike is now more likely – after the Trump election. The figure was well down on the preceding month’s 275k and the yearly average of 204k.

With Wednesday’s announcement that June quarterly expansion was 0.5%, (and an annual 3.3% rate), Australia celebrated 25 years of continuous growth. It also recorded a stunning 4.5% hike in quarterly public demand.

On the flip side, the lucky country posted record high foreign debt levels, import values rose 2.75% and the current account deficit saw a 4.0% quarterly jump to US$ 11.8 billion. Australian factory activity has fallen to its lowest level in a year, as the latest PMI showed 46.9 – the 9.5 monthly drop saw an abrupt end to 12 months of growth in the sector. The main drag factor was a sharp slowdown in the food and beverage sector, whilst two other indices dropped below 50 – textiles/clothing and machinery/equipment.

After 18 months of the ECB buying government debt, totalling US$ 1.12 trillion, the jury is still out whether the strategy has helped or hindered the eurozone economy. Two major indicators offer little evidence – inflation levels are still flirting around zero (cf the 2.0% target) and bank lending remains slow moving. Meanwhile the 19-country bloc was hit with more disappointing news – the IHS Markit PMI fell 0.3 to 52.9 in August, its lowest level in 19 months, as German output fell to a 15-month low. There is no doubt that more action is required to kick-start the faltering economy.

The Japanese have not taken kindly to the UK Brexit vote warning that many of their companies – including the likes of Daiwa, Honda, Mitsubishi, Nissan and Nomura – will leave the country. It is estimated that 50% of Japanese European investment is based in the UK. If the bloc’s trading and investment laws become no longer applicable, then many companies will close down and move to the continent, mindful of the possibility of being charged twice for trade tariffs. Prime Minister May must be hoping that the Chinese president, Xi Jinping, shows more patience than Prime Minister Abe.

Following a US$ 2 billion fall a month earlier, Chinese August forex reserves fell by US$ 16 billion to US$ 3.19 trillion as the country spent money on defending the Yuan against capital outflows. Q2 growth was 0.2% lower at 6.7% from the same period in 2015,   as the world’s largest country is in the throes of a major restructuring programme to a consumer-spending nation, rather than depending on cheap exports and top-heavy government investment.

Formula 1 is set for new ownership with the acceptance of Liberty Media’s offer of US$ 8.5 billion. The US company, backed by John Malone, has appointed Chase Carey, a director of Sky plc, as F1’s new chairman. US private equity firm, CVC Capital Partners, will divest its 35% stake holding, whilst Bernie Ecclestone and his family trust, Bambino Holdings, are set for a US$ 1.1 billion bonanza pay-out. The octogenarian, however, will remain as F1’s Chief Executive – a sure sign that the man still prefers Livin’ On The Edge!

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