Happy Birthday!

Cluttons reckon that 80k residential units cloud be added to the Dubai property portfolio over the next three years and is one of the few consultancies that consider that this may not result in an oversupply situation. In line with what this blog has been expounding for some time, it expects the emirate’s population to increase by 441k over the same timeframe which pro rata equates to the requirement for an additional 105k units.

In Q3, the consultancy estimates that residential prices declined 1.9%, with villa prices down 2.8% and apartments lower at 1.3%. The sector recorded drops of 1.5% in Q2 and 5.6% over the past twelve months.

fäm Properties reports that there has been a US$ 8.2 billion (78%) increase in the value of Dubai land sales over the past five years, now at US$ 18.5 billion so far this year, compared to US$ 10.4 billion in 2012. Probably the best performing location has been Business Bay that has witnessed value growth from just US$ 131 million in 2012 to its current YTD level of US$ 900 million (and area-wise from 731k sq ft to 2.5 million sq ft).

Lootah Real Estate has broken ground on its The Gardens project in JVC. Covering an area of 244k sq ft, the twin residential buildings will house 217 units and should be completed by Q3 2019.

As part of its US$ 1.4 billion hospitality expansion plans, Nakheel has opened its tenth community club in Al Furjan. Located next to Al Furjan Pavilion, the facility will host a 150-seat restaurant, a swimming pool and fully equipped gym.

MMS Global has announced that The Art of Living Mall will open in September 2018. The specialised homeware mall, the first in the region, is being built on 162k sq mt of land in Um Suqeim Road and will host over 100 outlets. Apart from the “homeware” stores, it will also feature art exhibitions, restaurants, cafes and a gym.

Both parties have rejected claims, following rumours of a possible Spinneys takeover by Majid Al Futtaim. Spinneys did announce expansion plans which will see a 29.5% increase in its regional outlets to 79 and create 2k new jobs. The supermarket chain will also build a new US$ 48 million HQ in Dubai which will also feature a flagship store and an on-site cookery school.

A new fun golf concept is Dubai-bound for 2019 with the introduction of Topgolf. In partnership with Dubai Golf, the US company will open its venue at the Emirates Golf Club. The 60k sq ft, three-level building will see guests in hitting bays, using micro chipped balls that instantly score themselves, whilst indicating the accuracy and distance of shots. This is all carried out in a climate-controlled, family-friendly environment that utilises play, food and music.

Yet another leisure pursuit has arrived in Dubai with XDubai introducing its XLine in Dubai Marina. Not for the faint-hearted, the 1 km long zipline has a 16 degree incline and travels at 80kph.

There is every chance that Emirates may consider the introduction of a premium economy class on some of its flights. Some analysts consider that the airline has been missing out on an important revenue segment.

Damac confirmed plans that it hopes to work on Croatian projects – including Dalmatia, Dubrovnik and Istria – as it continues to expand its overseas business. The Dubai-based developer is searching for the right local partners.

Dubai Investments expect work to start early next year on its Riyadh Investments Park, whilst other projects in Angola and Kenya will be implemented later in 2018. The US$ 534 million Saudi project is in collaboration with two Saudi partners, one of which is providing the land whilst the remaining two stakeholders will contribute funding and management.

Dubai-based ASGC has won two Emaar Misr contracts in Cairo – phases 1 and 2 of the new Uptown Cairo project Levana, and the Crescent project in Mivida. The former involves construction of 121 villas and infrastructure work and the latter thirteen fully-finished apartment buildings with 5k residential units.

With revenue rising 17.3%, year on year, to US$ 926 million, GEMS Education posted an impressive 22.9% hike in its EBITDA (earnings before interest, taxes, depreciation and amortisation) to US$ 262 million. Revenue per student, among its 47 schools, jumped 6.6% to US$ 8.1k, whilst enrolments were 9.4% higher at 114k students, although capacity fell from 90% to 87%. Over the past four years, the company has invested over US$ 1 billion in capital expenditure, of which US$ 343 million was expended this year.

Dubai-based Audacia Capital has paid US$ 108 million for two headquarter office properties – the ASICS EMEA and Benelux HQ and the Danone Netherlands Global headquarters – under construction near to Schiphol Airport in the Netherlands.

In what could be construed as a highly controversial and political move, the UAE has been included on an EU blacklist of 17 global tax havens. It is thought and hoped that it will have a negligible impact on the local banking sector and that sense will prevail in Brussels.

November’s Emirates NBD’s quarterly purchase managers index indicates that there has been a marked increase in buying activity in Dubai’s non-oil private sector. The headline PMI was up at 57 and indicators point to strong growth in Q4 which will be further boosted with increased sales activity prior to the introduction of VAT on 01 January 2018. On the flip side, there are still a lot of discounts on offer, to stimulate demand, that may stifle new business growth.

It was no surprise to see Dubai finally makes it into the top 30 of JLL’s latest Global Cities Ranking, coming in at 27th. Encompassing 300 cities, the study covers the attractiveness of its commercial real estate offering.

Following its October launch in Dubai, the US$ 1 billion e-commerce company Noon has signed an agreement with the Saudi electronics giant, United Electronics Company (eXtra), as its exclusive partner for a range of consumer electronics and home appliance items. Noon has its head office in Riyadh.

Emirates REIT debut sukuk was 2.5 times oversubscribed; with a 5.125% profit rate and a five year tenure, the US$ 400 million raised, with a credit spread of 291 bp, will be used to refinance existing debt and replace amortising loans with bullet funding.

Acquiring an additional 66.7% stake in Brazil’s Empresa Brasileira de Terminais Portuários, DP World now owns 100% of Embraport The facility, to be known as DP World Santos, is Brazil’s largest multi-modal port terminal with an annual 1.2 million TEU capacity (20’ equivalent units). The Dubai operator already has a big presence in Latin America including operations in Argentina, Dominican Republic, Ecuador, Peru and Suriname.

Abraaj has made an initial investment in an 111MW Mexican natural gas-fired power plant in Chihuahua – the first phase of what will be a 500 MW platform that the Dubai investment firm is planning for the country. The Mexican government is targeting clean energy generation to reach 35% by 2024.

The DFM opened the shortened week on Monday (03 December), at 3420 and was 27 points off to close on Thursday, 07 December, at 3393. Volumes were lower this week, with trading of 302 million shares, valued at US$ 154 million, (cf 345 million shares for US$ 217 million, on Wednesday, 29 November). Emaar Properties was US$ 0.04 higher at US$ 2.06, with Arabtec bucking its recent downward trend, climbing US$ 0.04 to US$ 0.65.

By Thursday, Brent Crude was 0.7 % higher closing at US$ 63.40, with gold down 2.0% to US$ 1,278 by 07 December 2017.

HotStats’ October returns give mainly good news for the regional hospitality sector. GOPPAR (total gross operating profit), RevPAR (revenue per available room) and occupancy headed north – by 1.9%, 4.1% to US$ 208 and 4.8% to 68.5% – whilst average room rates cane in lower, down 3.1% to US$ 178.

Coincidentally, Australia’s major banks “voluntarily” agreed to a formal investigation into the financial services sector minutes before PM Malcolm Turnbull announced a US$ 57 million royal commission. It seems that the Big 4 – ANZ, CBA, NAB and Westpac – have finally realised that they had lost their customers’ trust and confidence by their sometimes shonky behaviour. The one year enquiry will look into how financial institutions have dealt with cases of misconduct, cultural and governance issues – and no doubt their findings will prove interesting reading.

The US healthcare sector will be reshaped if the US$ 69 billion bid by pharmacy chain CVS to acquire health insurer, Aetna, is approved by shareholders and regulators. However, it must be remembered that two years ago, Aetna’s US$ 34 billion bid for Humana fell foul of federal judges over antitrust concerns. This comes at a time when there are reports that Amazon may enter the pharmaceutical market.

The US Commerce Department has revised the country’s Q3 economic growth upwards from 3.0% to 3.3% – compared to Q2’s 3.1%. Positive economic data continues to exude from the US – this time, Q3 labour productivity was up 3.0%, with output 4.1% higher as hours worked only rose by 1.1%.

Moody’s maintained Japan’s credit rating at A1, with “stable” outlook. The agency forecasts that the country’s 2018 growth will be 0.4% weaker at 1.1% and even drop to just 1.0% thereafter. There could be an affordability problem in relation to its rather high debt level which, because of its 2016 stimulus package, continues to expand and could be at a worrying 220% of GDP by the end of the decade.

Despite all its apparent woes and tribulations, November’s IHS Markit/CIPS manufacturing PMI was 2.0 higher at 58.2 – its highest level in over four years – driven by a boost in the global economy and to a lesser extent soft sterling. Other positive indicators include a marked uptick in demand for investment goods, such as plant and machinery, and recruitment levels reaching 2014 levels. However, the UK economy continues to be stymied by a sluggish services sector and high inflation levels, outscoring insipid wage increases. Q3 growth was 0.4%, whilst the pound moved as high as US$ 1.35 during the week, and the FTSE 100, in line with many other global bourses, continued to defy gravity.

In line with recent data, UK construction activity in November continues to improve with the IHS Markit/CIPS Construction PMI posting a 2.3 points month on month hike to 53.1, driven by a boost in homebuilding activity; however, commercial work and civil engineering were lower.

Abu Dhabi Crown Prince Sheikh Mohamed bin Zayed has given the country’s motorists a welcome birthday present – a 50% discount on all traffic and impoundment fines outstanding as on the 46th National Day, 02 December. The country has come a long way since 1971 and has every reason to celebrate a Happy Birthday!

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

1 Response to Happy Birthday!

  1. Peter Cooper says:

    Agree with you on the Dubai property supply/demand debate. All it takes is faster than expected growth (oil prices continue to recover say) and a few hiccups in supply and you have higher rentals and house prices… it has happened many times before, in Dubai and elsewhere!

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 )

Facebook photo

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

Connecting to %s