Reasons To Be Cheerful

There was a 6.0% increase in the number of Dubai realty transactions to 69k last year, with the value 4.0% higher at US$ 77.8 billion, reflecting the continued growth in the sector. Of the total transactions, the biggest contributor was the sale of land, buildings and units accounting for 49k, valued at US$ 31.1 billion – with mortgages for the same three totalling 15.7k at US$ 37.7 billion. The top five investing nationalities remained unchanged- UAE – US$ 6.9 billion, India – US$ 4.2 billion, KSA – US$ 1.9 billion, UK – US$ 1.6 billion and Pakistan – US$ 1.4 billion. The leading three sales locations were Palm Jumeirah (731 transactions for US$ 3.3 billion), Business Bay (769 – US$ 4.9 billion) and Dubai Marina (1,127 – US$ 1.0 billion).

Dubai’s latest mega plan was unveiled this week – Knooz Al Sharq City in the heart of Dubai. The US$ 1.9 billion mixed use community development, extending over an area of 20 million sq ft, will combine various historic Islamic architectural styles. Surrounded by a giant wall, with seven main gates, it will have old-style housing, shops, markets and museums, as well as traditional hotels called caravansaries.

Azizi Developments announced that it would deliver seven of its Al Furjan projects in H1, including Roy Mediterranean and Montreal by next month. Five other developments – Plaza, Azizi Star hotel, Samia, Farishta, and Shaista – will be released in Q2. The Dubai-based property developer estimates the total value of these projects to be US$ 490 million.

Following an agreement between Nakheel and the AccorHotels, the 252-key, 16-floor hotel in Jumeirah Village Circle will be Ibis-branded when it opens in 2021. This property is just one of 17 projects in the Dubai developer’s ambitious hospitality expansion programme.

Later this quarter, the Gevora Hotel, on SZR, will become the tallest hotel in the world taking over the mantle from its neighbour JW Marriott Marquis. With 75 floors and 528 guest rooms, the dry hotel will be one metre higher at 356 mt.

The Dubai Land Department is trying to follow the success of the DSF (Dubai Shopping Festival) by organising the DPF – the Dubai Property Festival. The three-day event in April will include auctions, from both developers and investors, and perhaps special price discounts and the waiver of some bank fees. It will be open to any developer – as long as they are backed with an escrow account – and the general public.

DP World is expected to spend US$ 3 billion in capital expenditure over the next three years as it extends its global reach and looks for worthwhile international investments. The company expects to benefit from global trade moving upwards last year and will see its gross container volumes surge by 10%.

2017 was another record year for Emirates, with the airline flying over 59 million passengers on 191k flights and carrying 2.5 million tonnes of freight, travelling a total of a staggering 886 million km. It also served 63 million meals on flights out of Dubai and moved over 35 million pieces of luggage. Its current fleet of 269 aircraft now flies to 156 destinations; it also has a further 243 planes on order.

Dubai International Airport passenger traffic touched nearly 7 million in November – a 5.6% increase, year on year – to bring its YTD total to 80.4 million, 5.8% higher than in 2016.

After acquiring Dublin-based lessor AWAS last August, Dubai Aerospace Enterprise now has 383 aircraft in its US$ 14 billion portfolio, making it one of largest global aircraft lessors. Last June, the government-controlled company issued a US$ 2.3 billion benchmark bond in the US.

Following this week’s Cabinet Decision No. (59) of 2017 on Designated Zones, the following Dubai free zones have been added – JAFZA, Dubai Cars and Automotive Zone (DUCAMZ), Dubai Textile City, Al Quoz Free Zone area, Al Qusais Free Zone area, Dubai Aviation City and DAFZA.

Abraaj Capital is reportedly planning to offer stakes in its healthcare/hospital portfolio in either the New York or London stock exchange. Hermes has been appointed as the IPO’s book runner.

There are reports that Dubai Investments is targeting to acquire Union Properties’ 50% stake in Emirates District Cooling (Emicool), so as to take up full ownership of the district cooling entity. If that were to happen, it is highly likely that the company would be in line for an IPO. No financial details have been made available but it is expected that a sale could be agreed by early next week. Meanwhile the developer has bought a “strategic” 5.68% stake in Egypt’s Palm Hills Development for US$ 3.6 million.

Troubled Dubai contractor, Drake & Scull International, is hoping to finalise its US$ 272 million restructuring programme this year and will soon start discussions with its bondholders, holding US$ 119 million of debt. In Q4, it had already agreed with nine of its main lenders to refinance US$ 153 million of corporate debt over a longer repayment period. In Q3, the company posted an US$ 87 million loss.

December’s Emirates NBD’s PMI rose 0.7, month on month, to 57.7, recording its highest level in nearly three years – a welcome indicator to show that the country’s non-oil private sector is on the up. The data points to marked improvements in export growth, new orders and production. However, over the year both wage growth and employment have been sluggish.

A senior Ministry official estimates that the country’s economy will grow by 3.9% this year – slightly higher than the IMF’s figure of 3.4% October forecast – and up on 2016’s 3.0% rise. The improvement comes on the back of higher oil revenues, global growth and the UAE’s concerted efforts to diversify its revenue stream away from oil dependency.

Amlak Finance, via its Amlak Nasr City for Real Estate Investment unit, has signed an agreement with Marseilia Group for a mixed-use development in Nasr City District, Cairo. It will include not only the “usual” residential units, shopping mall and hotel but also dedicated areas for social activities. The Dubai-based real estate financier is also targeting 10k job opportunities for Egyptian youths.

As part of its ongoing expansion strategy, NMC Health has bought the remaining shares it does not own in Dubai (49% in Fakih IVF facility for US$ 205 million) and in Saudi Arabia (30% in As Salama hospital). Last month, the London-listed healthcare company indicated plans to spend US$ 800 million in the region.

Naeem Holding, listed on the Egyptian Exchange (EGX), now has a dual listing on the Dubai Financial Market up to a limit of 33.3% of its US$ 218.5 million capital.

The DFM opened on Sunday (07 January), at 3464 and nudged 31 points higher (0.9%) by Thursday, 11 January, to close at 3495. Emaar Properties was down US$ 0.06 at US$ 1.96, with Arabtec up US$ 0.08 at US$ 0.75.  Volumes were lower at 180 million shares traded on Thursday, valued at US$ 65 million (compared to 389 million shares worth US$ 161 million the previous Thursday – 04 January).

By Thursday, Brent Crude traded US$ 3.29 (1.7%) higher at US$ 69.26, with gold heading the same direction – up US$ 1 to US$ 1,322 by 11 January 2018.

It is reported that Aston Martin may go public, with estimates of a US$ 6.8 billion IPO. If that happened, the Kuwait-backed car company, which delivered 5k vehicles in 2017, whilst raking in nearly US$ 1.2 billion in revenue and expected profit of nearly US$ 250 million, could be valued at about the same as Italian rival, Ferrari, which has a stock market value of US$ 21.4 billion.

Even though Samsung Electronics – the jewel in the beleaguered South Korean’s company’s crown – posted record Q4 profits of US$ 14.1 billion, its share value has fallen over 10% since its November high. The 64% improvement in the bottom line figure disappointed analysts’ forecasts of US$ 14.8 billion. The world’s biggest chip maker was also hurt by a stronger won and hampered by the corruption scandal within the Samsung Group, expanding Chinese competition and a slowdown in the chip boom.

The Saudi “purge” continues unabated with eleven princes facing trial after being arrested for protesting the end of state subsidies for their utility bills and claiming compensation for a relative convicted and subsequently executed for murder. This is just part of a push by the “new” regime to diversify the Kingdom from its oil-dependent economy which has already seen the November arrest of over 200 high profile Saudis and the introduction of austerity measures, one of which was the 127% hike in fuel prices earlier in the month.

Despite an impressive 45% hike in 2017 global sukuk issues to US$ 97.9 billion, S&P forecast a possible 28% dip this year. The ratings agency cites factors such as increased geopolitical risks and tighter liquidity for the expected decline.

Having underestimated both the last two years’ global growth levels, the World Bank expects a stronger 2018 with growth levels of 3.1%. In an upbeat assessment, it reckons that the recovery is broad-based and more positive than its June assessment, particularly with regard to the eurozone.

UK supermarkets had better than expected sales over the Christmas period as consumer spend was nearly US$ 1.4 billion higher at US$ 39.3 billion. Tesco was the biggest winner with a 3.1% hike in sales, whilst the other three majors – Asda, Morrisons and Sainsbury’s – trailed but still posted 2% gains. These four were dwarfed by the two newcomers – Aldi and Lidl – that both posted revenue increases near to 17%. Non-food stores fared badly which saw them record their worst fall since the GFC.

The eurozone is still struggling with low inflation levels recording a 0.1% December fall to 1.4% – still some way off the ECB’s 2.0% target. Core inflation – excluding energy, food, alcohol and tobacco – remained unchanged at 0.9%. On an annual basis, there was a marked decline in energy prices (from 4.7% to 3.0%).

China reported a 1.8% Decmber CPI increase, marginally up on the 1.7% November reading. Over the month, inflation was 0.3% higher and year on year producer prices were 4.9% to the good. Chinese authorities confirmed that 2017 growth was better than most analysts’ expectations, coming in at 6.9%. Furthermore the Central Bank reported a month on month US$ 20.7 billion increase in its reserves to US$ 3.14 trillion, up US$ 129 billion (0.9%) for the year, not only helped by the growth spurt but also the government strengthening its grip on outflows. This includes a US$ 50k cap on how much foreign currency a Chinese citizen can convert each year. The yuan benefitted from the weak dollar last year, climbing 6.8% higher (a little lower than the overall 8.5% decline against a basket of major currencies).

It seems that US authorities are reluctant to see local tech companies dealing directly with overseas interests particularly from China. Last week, a proposed US$ 1.2 billion sale of Moneygram to the digital payments arm of Alibaba was blocked. Now Huawei, the world’s number three smartphone brand behind Apple and Samsung, is having problems obtaining a US carrier to sell its Mate 10 Pro smartphone, with AR&T, with security concerns the main issue. Five years ago, a US Congressional committee recommended that Huawei (and ZTE) should be barred from any future US mergers and acquisitions.

Once again some UK economic data continues to confound critics as latest figures see the monthly industrial output growth double to 0.4% – its eighth straight month of expansion – and manufacturing output posting a similar increase, up from 0.3% a month earlier. On an annual basis, growth is at 2.5% and 3.5% respectively. The FTSE 100 closed Thursday at a record high 7764, whilst sterling edged inexorably higher to close at 1.372 to the US$. Even those pundits who forecast that the UK economy, along with the pound, would fall off a cliff in 2017 should now have Reasons To Be Cheerful!

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