Different Drum

Following a visit by HH Sheikh Mohammed bin Rashid Al Maktoum, it has been announced that the emirate’s latest tourist attraction – the Dubai Frame – will open on 31 December. Located in Zabeel Park, it has two 150 mt high structures, linked by a 93 mt wide bridge from which there are views of “old” Dubai (including Deira and Karama) and “new” Dubai (such as Burj Khalifa and Emirates Towers) from different vantage points.

The importance of the hospitality sector to Dubai’s economy cannot be underestimated, with STR reporting that the emirate accounts for 30.3% (29.2k keys) of all hotel rooms in development in the MENA region. With 95 hotels in the pipeline and the government’s policy to boost travel and tourism, the World Travel and Tourism Council’s forecast that the sector will top US$ 70 billion over the next decade looks a distinct possibility. Furthermore, the 12.4% contribution that the sector currently contributes to the country’s GDP is set to increase.

The Dubai Shopping Festival, running from 26 December to 27 January, started with a massive twelve-hour Super Sale on Tuesday that saw shopping centres packed and the resultant gridlock around many malls. There where discounts of between 25% – 90% offered on goods for sale at hundreds of shops in MoE, and five City Centres – Al Shindagha, Barsha, Deira, Me’aisem and Mirdiff.

Away from the retail side, Damac Properties is offering a new Tesla car to its buyers of selected property ranges from their portfolio during the 31-day extravaganza. Since its inception, the property developer has become synonymous with such promotional “giveaways” that in the past have included yachts, a jet and even a private Caribbean island.

Arabtec has been awarded a US$ 279 million Dubai Properties’ contract for construction work of villas and townhouses. The phases of La Quinta and Amaranta, located off Emirates Road, are expected to be completed by Q2 2020.

The region’s first Banyan Tree Residences is to be built at a cost of US$ 68 million in Dubai on a large island overlooking the Emirates and Montgomerie golf courses. The 110k sq ft, 32-storey project, housing 244 residences (ranging from 1- 4 B/R) and three full-floor penthouses, will be completed by Q3 2019. The developer, Sweid & Sweid, has appointed Civilco Civil Engineering & Contracting as lead contractor.

As part of its US$ 774 million portfolio, Danube Properties has awarded five separate construction contracts in 2017 totalling US$ 104 million, including its US$ 60 million, 599-unit Miraclz Tower at Arkan due for completion within two years. Another contract of US$ 61 million has been signed for the main construction of the Resortz project; slated for completion by Q2 2019, it will house 419 apartments and 25 retail outlets.

The 25-year old UAE-based Rotana is planning a further 14 hotels next year to add to its current portfolio of 38 properties, with a further 48 under various stages of development. Six of the hotels opening next year will be in the UAE with the remaining nine set for Iran, Iraq, Saudi Arabia (3), Tanzania and Turkey (2).

According to the OECD, the UAE is officially the world’s largest developmental aid donor relative to its national income, donating 1.21% of its GDP, equivalent to US$ 4.3 billion. Only two other countries recorded aid of over 1% of their GDP – Norway (1.12%) and Luxembourg (1.0%).

November consumer prices in the UAE rose 1.73%, year on year, driven by price hikes in food/beverages (1.9%), tobacco (70% – because of the October introduction of excise duty) and transportation – 3.5%.

UAE fuel prices will be higher in January with Special 95 up US$ 0.022 (3.9%) to US$ 0.600 per litre, as diesel prices jump 5.9% to US$ 0.635. Special 95 started the year at US$ 0.490, so has risen 16.9% in 2017 – almost in synch with Brent crude which is up 16.4% from its 01 January opening of US$ 56.82.

Launched last March, Emirates NBD REIT has bought a shopping centre in Silicon Oasis from Souq Extra in a US$ 57 million deal. Rental income from the 42 retail outlets, comprising 36k sq ft gross leasable area, is guaranteed for two years. It has already bought The Edge office building in DIC, South View School in Remraam Community and Uninest student accommodation in Dubailand.

Troubled developer, Union Properties, is planning a 100% IPO later next year involving its facilities management unit, ServeU. The money raised will be used to boost its investment portfolio  and operations, coming after a turbulent 2017 that has seen extensive board and senior management changes and losses of US$ 627 million (after a US$ 763 million write down in the value of assets) in Q2 and US$ 12 million in Q3.

Abraaj Group is reportedly in preliminary discussions to acquire a minority stake in Turkish drug maker, Sanovel Ilac Sanayi & Ticaret. The Dubai-based private equity firm, which manages a US$ 13.6 billion portfolio of assets, has a dedicated US$ 536 million fund specifically for Turkish investments; so far this year, it has made two outlays in the country – a 21% stake in logistics company Netlog Lojistik Hizmetleri and a minority share in online travel agent Biletall.com.

The DFM opened on Sunday (24 December), at 3365 and was 5 points up by Thursday, 28 December, to close at 3370. Emaar Properties was US$ 0.05 lower at US$ 1.89, with Arabtec up US$ 0.01 at US$ 0.65.  Volumes nudged higher at 572 million shares traded on Thursday, valued at US$ 206 million (compared to 431 million shares traded at US$ 131 million the previous Thursday – 21 December). As the bourse will open next week on 02 January, Thursday was the last trading day of 2017. From its 01 January opening, and having gained 12.06% in the previous year, the DFM had a lacklustre year, shedding 4.56% in value reflected by a US$ 0.05 fall in Emaar shares; because of a mid-year capital restructuring programme, Arabtec’s value was US$ 0.29 higher from its January opening of US$ 0.36.

By Thursday, Brent Crude traded US$ 2.08 (3.3%) higher at US$ 64.78, with gold heading the same direction – up 1.0% to US$ 1,270 by 28 December 2017.

The booming equity markets have been the catalyst for a 23% surge, equating to US$ 1 trillion, in the Bloomberg Billionaires Index – a ranking of the world’s richest 500 people. The biggest winner appears to be Amazon’s Jeff Bezos, who saw his fortune jump over 52% to US$ 99.6 billion, replacing Bill Gates, with only US$ 91.3 billion.

The owner of the Volvo Car Group, Geely Holding, is set to spend US$ 3.3 billion to buy an 8.2% stake in the truck maker, AB Volvo. The Chinese company has no plans to combine the two Swedish companies, which were hived off some twenty years ago. It does hope to benefit because AB Volvo owns 45% of Dongfeng Commercial Vehicles, a major Chinese truck maker, and also has a significant construction equipment business in the country. Geely also owns the company that makes Lotus and London’s black cabs.

Despite well documented delivery delays on its car models – and a large number of back orders and only a relatively few deliveries – Tesla has announced plans for an electric pick-up model; this comes after founder Elon Musk indicated that the open-backed truck would be on the same lines as Model Y, a yet to be detailed car, but probably based on Tesla’s original Model 3. The company also has plans for a sports car range and a line in articulated lorries. However, despite all the hype, the fact is that the company has problems – it is still making losses and it may have to find extra funds in 2018 to finance operations.

Uber has agreed to sell a 20% stake in the company to a consortium led by Japan’s SoftBank for a reported US$ 9.6 billion. It has been a troubled year for the ride-hailing company beset by various scandals – and these have had a negative impact on its valuation that has seemingly fallen 30.5% to US$ 48 billion during the course of 2017. It is expected that this latest sale of shares will benefit the company, after numerous setbacks, and see the share value move north again.

In the run up to Christmas, there was some good news and bad news for Apple’s chief executive, Tim Cook, who has seen the company’s market value more than triple since he took over the reins from Steve Jobs in 2011; his 2017 remuneration has jumped 74% to US$ 102 million. However, the tech giant is facing at least eight class actions in the US, after admitting that it had developed software to slow down its old iPhones. Although it owned up to “downclocking” older models and apologised for any slowdown, it has refuted claims that it “intentionally degraded” the user experience”, with the aim of encouraging customers to upgrade to newer models.

Having filed for bankruptcy in September, Toys “R” Us Inc is set to close over one hundred  of its 879 US shops, with Christmas sales 15% lower than in 2016. Any decline in the retailer’s business has a knock-on effect on its major suppliers and subsequently Mattel Inc (the maker of Barbie and Fisher-Price) and Hasbro have been badly hit with their share values declining this week by 4.5% and 3.2% respectively. In the UK, 26 stores are expected to close, with the company focusing more on the smaller distribution units and on-line sales.

This year will not be a good year for many South Korean companies none moreso than Hyundai that is looking at a  67% slump in 2017 profit to US$ 44 million, driven by a raft of drivers including the lacklustre performance of Hyundai Heavy Metals. The world’s largest shipbuilder by sales announced plans to raise US$ 1.2 billion through a new share issue which in turn will dilute the value for existing shareholders. Consequently its share value fell by more than 25% which in turn saw the main stock market down 29%.  Slowing global demand and increased Chinese competition are two factors that have led to a global industry slump.

Foxy Bingo owner GVC is to acquire leading bookmaker, Ladbroke Coral, in a cash and share deal, valued at US$ 5.2 billion; GVC will own 53.5% of the new entity. This comes a year after Ladbrokes was involved in a US$ 3.0 billion merger with Gala Coral.

More of the same news from the UK – with Q3 average weekly wages up 2.3%, year on year but still not keeping up with the November inflation rate of 3.1%. Meanwhile consumer spending over the period – at 1% – was at its lowest rate in over five years. The fact that household expenditure has exceeded income over the past four quarters indicates that savings are being used to fund this expenditure. However, Q3’s 0.4% growth was better than the two previous quarters’ 0.3% and was a slap in the face for all the doomsayers who had forecast that the economy would fall off a cliff after Brexit and also that sterling would be on parity with the greenback.

Boxing Day sales in the UK have continued the same trend of recent times – shopping centres and High Streets witnessed shop visits down 4.5%, whilst internet sales were expected to grow by more than last year’s 6.2%. Two other reasons cited were the fact that Black Friday sales have become increasingly important, changing traditional shopping habits, and many retailers have started discounting around that time in late November rather than waiting for Boxing Day – as in the past.

In the first day of trading after the Christmas break, the FTSE 100 hit record highs during Wednesday trading to reach 7,633 before closing the day at 7,621 – 6.9% higher YTD from its 01 January opening of 7,142. The latest rally comes on the back of rising commodity prices, especially copper, that has seen gains for mining companies, and a general upturn in global trade.

With news that revenue from the recently introduced GST has slowed, the Indian government is looking to borrow US$ 7.8 billion to cover any shortfall and maintain spending at current rates. Asia’s third largest economy, at US$ 2.3 trillion, is targeting a budget deficit of 3.2% of GDP (its lowest level in a decade) by March year end but Prime Minister’s Narendra Modi has a problem. Normally he would just cut back on spending to meet the target but because of a slowing economy, not helped by last year’s withdrawal of high denominated bank notes, he is concerned not to slow expenditure any further, so as not to stymie growth.

Bitcoin, created anonymously in 2009, continues to confound those critics who proclaim its bubble has been well and truly deflated. The fact is that as of today, 28 December, its value stands at US$ 14.6k, compared to just US$ 1 k at the beginning of the year. In 2016, it was the world’s best performing currency for the second year in a row, having increased by 120%. It has always traded with volatility – in 2013 it increased tenfold to US$ 1.15k in just two months but the following year sank to under US$ 0.4k, following a major hack. Even then the same doomsayers were sure that bitcoin was dead and buried. Maybe they are the same people who, last January, predicted oil at US$ 20 and sterling trading at parity with the greenback! It’s about time they started beating to a Different Drum!

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