Daydream Believer!

shinzoHH Sheikh Mohammed bin Rashid Al Maktoum has approved plans for a Dubai Street Museum that will showcase the history, cultural values and identity of the emirate. Both local and international artists, who will use many of Dubai’s buildings for their works, will carry out the five-year project.

Damac’s latest launch – the Italian-inspired Akoya Manarola – will comprise 3-bedroom villas, with starting prices of US$ 627k.

Nshama has announced that it expects to deliver 2k affordable housing units, equivalent to 40% of its current pipeline, in 2017. What impact this will have on the mid-tier market, from both a rental and buying perspective, remains to be seen.

Schon has launched a US$ 872 million development that will result in the introduction of 2.6k hotel rooms in Dubai Investment Park. It is expected that the 21 nine-storey buildings, including 52 restaurants and cafes along with a shopping mall, will be completed prior to Expo 2020. The developer has been beset with problems arising from its proposed 2005 Dubai Lagoon project which had been expected to see 4k apartments on a man-made lagoon. (To date, 200 apartments are awaiting utility connections and its first residents due to move in in Q1 2017).

Due to open in Q1 2017, near to Dubai Autodrome, First Avenue will have 70 retail and 15 dining outlets, along with a 4-star, 150 key Park Inn by Radisson. The developer, Saudi Arabia’s Al Tawfeeq for Development and Investment, has already signed up Carrefour as an anchor tenant for its US$ 136 million development.

Cayan Group is to introduce a Rotana-managed hotel apartment tower that will have more than 700 units comprising a range of studio – 3 bedroom residences. The Saudi-based group has established a US$ 272 million realty development fund, with Shuaa Capital, and has already developed Cayan Cantara tower, also located on Umm Suqeim Road. Construction will start next month, with Shapoorji Pallonji International appointed the main contractor.

Aswaaq, owned by the Investment Corporation of Dubai, is planning a further two supermarkets – in Nad al Sheba and Al Quoz2. Over the next five years, a further 50 supermarkets and stores are scheduled to open.

The new annual Dubai Land Department’s official 2017 rent index holds a few surprises with 1-bedroom rentals falling in Jumeirah Village (18.8%), Downtown (between 8.7% to 15.8%), Palm Jumeirah (3.3% to 16.7%), International City (7.9% to 11.0%) and Silicon Oasis (10.0%). It appears that the biggest “casualty” is Dubai Marina with rents down by as much as 22.0%, with Arjan bucking the trend with the biggest increase.

Its Chairman, Khalaf Ahmad Al Habtoor, has confirmed that Al Habtoor Holding has divested all of its shares in HLG Contracting. The company was established in 2007 when Al Habtoor Engineering, founded in 1970, merged with the Australian-controlled developer, Gulf Leighton.

Depa posted a US$ 8 million profit for the first nine months of 2016 (compared to a loss of US$ 2 million a year earlier) on flat revenue of US$ 322 million. The Dubai-based interiors contractor is slowly recovering from the regional slowdown in the construction industry.

Dubai International reported October passenger traffic, at 6.4 million, was 2.7% higher, compared to the same month in 2015, with the YTD figure of 69.4 million up 6.8%. Rather surprisingly, with the soft opening of DWC, cargo traffic still heads northwards with October recording a year on year hike of 9.5% to 236k tonnes, as YTD figures were up 2,8% to 2.1 million tonnes.

Flydubai launched its first double daily service outside of the GCC by opening up Bangkok. The budget airline, which operates the latest Boeing 737s, expects to tap into this burgeoning market with transit passengers from its current European routes and medical tourists – including the 150k from the UAE alone.

Dnata has bought 50% of a Toronto’s cargo and handling operations from GTA Aviation for an undisclosed price. Now the world’s fourth largest air services company, this was the Dubai’s company first foray into the Canadian market.

December petrol prices are heading south, after jumping 5.3% in November, with Special 95 now retailing 5.6% lower at US$ 0.460.

A new JV has been signed between Yoox Net-A-Porter Group, the luxury online fashion retailer, and the Mohamed Alabbar-controlled Symphony Investments which will hold a 40% stake. The JV will open a distribution centre in Dubai and will initially manage the group’s current regional on-line stores. This week, the Emaar chairman also announced that he will launch the first Arab social messaging app in Q1 2017 – as a potential competitor to WhatsApp.

It is reported that Saudi’s Public Investment Fund is to buy 50% in Adeptio, a Mohammed Alabbar company, which recently acquired a 67% stake in the Kuwait-based Americana for US$ 2.35 billion.

In a bid to tap into the “millenials” sector, the 47-year old Commercial Bank of Dubai is to launch a digital-only bank – CBD NOW. It aims to introduce simpler and more efficient practices for their customers who will be able to carry out all dealings via smartphone.

Takaful Emarat has seen its number of customers more than quadruple to 400k since 2013, with the main driver being the introduction of universal health cover in the emirate. Now the Dubai-listed Sharia-compliant insurer is planning local acquisitions to increase its market share, as intense competition between the country’s 61 insurance companies pushes profits southwards; indeed the 29 listed insurers moved into a loss scenario of US$ 29 million compared to a profit of US$ 234 million in 2014. This week, Union National Bank and Orient Insurance Company formed a Dubai-listed JV.

The DFM opened Sunday at 3324 and was 37 points higher to close the shortened week on 3361 by Wednesday (30 November 2016). Volumes, on the last day of trading, were marginally down at 916 million shares, valued at US$ 330 million, (cf 926 million shares for US$ 324 million, the previous Thursday). 30% of Wednesday’s trade was attributable to DXB Entertainments. Over the week, bellwether stocks, Emaar Properties regained the previous week’s loss, up US$ 0.05 to US$ 1.86, whilst Arabtec was down US$ 0.01 at US$ 0.35, despite the appointment of Australian, Hamish Tyrwhitt as its new Chief Executive.

After a 7% hike the previous seven days, this week saw even better news for Brent Crude, with a 10.2% surge to US$ 53.58. Gold headed in the other direction, down 7.7%, or US$ 98, to close on US$ 1,175 at Thursday’s (01 December 2016) close. For the month, Brent was up 10.2% (US$4.96) whilst the yellow metal shed US$ 98 to US$ 1,175 from its opening month balance of US$ 1,273.

The surge in oil prices was a direct result of OPEC’s Wednesday decision to cut the cartel’s daily supply by 1.2 million bpd, with a likely 600k bpd reduction by non-OPEC oil producers.

If gold is struggling, the same cannot be said of base metals, including zinc that has hit nine-year highs of US$ 2,970 per tonne (and 70% higher so far YTD) and lead up 9.8% in November and by 40% so far this year.

RBS, still 73% state-owned, was the main bank to fail a Bank of England stress test that sets to see whether the country’s top seven financial institutions would survive a global economic crash. The bank has subsequently submitted an updated version that sees it reducing many of its “higher-risk credit portfolios” and settling several lawsuits.

The WTO has given the US government just 90 days to stop a special tax exemption for Boeing that is being considered an illegal subsidy. The claim by the EU relates to a 2013 Washington state tax cut to the plane maker for manufacturing 777X wings locally; the world body considered this would distort global trade, as Boeing would be required to use local rather than imported materials.

The US trade deficit in October widened by US$ 5.5 billion to US$ 62.0 billion, month on month, as imports rose 1.1% to US$ 184.1 billion, with exports falling 2.7% to US$ 122.1 billion.

Despite the market’s apparent disdain of the Trump election, the US economy is on the rise with a Q3 growth rate of 3.2% – a welcome improvement on the 1.9% recorded in Q2. These figures for the world’s largest economy, together with inflation nudging higher and employment levels strengthening, point to an almost certain rate hike in mid-December. Two indicators to watch are consumer spending – up 2.8% – whilst business was down 4.8%.

With an economy that has contracted 25% since the GFC, Greece is still awaiting the final go ahead from the troika to release further bailout funds. It seems that the creditors are still not convinced that the Tsipras’ government – in relation to reforms to the labour markets and privatisation – is doing enough.

The Organisation for Economic Co-operation and Development has revised upwards its global economic growth forecasts to 3.3% next year and 3.6% in 2018. However, the 35-country OECD area will see less growth at 2.0% and 2.3% respectively – with the US growth at 2.3% and 3.0% and the faltering euro area at a modest 1.6% and 1.7%.

The latest voice raising concern about the property bubble in Australia is Bank of Queensland chairman, Roger Davis. In October, the Reserve Bank indicated that off plan sales were showing signs of over –supply on the back of tighter regulations for overseas purchasers and some valuations being lower than contract prices. Residential prices, especially in the eastern states, are in a bubble and when the economic climate changes then there could be major repercussions. Any increase in interest rates (which is inevitable) would be the main drag factor to start a housing meltdown but a further slowdown in economic growth, a fall in consumer confidence or a drop in disposable incomes will have adverse knock-on effects.

Two BRIC members came out with varying Q3 results. India’s economy expanded by 7.3% but this was slightly down on analysts’ 8% expectation. Meanwhile, Brazil slumped further into recession shedding 2.5% year on year with the good money on a third year of recession in 2017.

A leading indicator of Japan’s future economic prospects fell 0.6 to 100.3 in September. The country’s consumer prices fell for the eighth straight month in October to 0.4% year on year, on the back of sluggish consumer spending and low energy prices. For the past four years, Prime Minister Shinzo Abe has failed to pull his country out of a deflationary cycle spiraling downwards – and this despite an aggressive QE policy and negative interest rates. His 2.0% inflation target seems a distant pipedream and the days must be numbered for this Daydream Believer!

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