It’s Now Or Never

HH Sheikh Mohammed bin Rashid Al Maktoum has ordered Dubai Municipality to allocate 10k land plots – in Al Ruwayyah 3rd, Mushrif and Wadi Shabak – for Emirati families. The Dubai Ruler that it was part of his strategy to “promote the wellbeing and prosperity of Emirati citizens in Dubai”.

A Cavendish Maxwell report estimates that over the past twelve months, property prices and rents have fallen on average by up to 2% and 5% respectively. The rental market has been hit by a shrinkage in the number of tenants at the high end of the sector, with company redundancies and cut backs in housing allowances. It estimated that the Dubai property portfolio increased by 3.8k in Q1, as developers ensured that a tight grip in supply is maintained.

According to Luxhabitat, 7,050 apartments and 622 villas were transacted in Q1, covering both secondary residential and off plan markets, with the former posting a 14.9% quarter on quarter decline to US$ 2.3 billion; over the same period, off-plan sales dipped 28.0% to US$ 1.6 billion. In the prime residential sector, quarterly sales came in at US$ 1.4 billion, with off-plan sales a lot lower than secondary villa sales.

Omniyat has secured a US$ 40 million construction finance for its twin tower project, The Sterling, set to house 385 units.

Dubai hotels reported their first increase in average daily rates in March for almost a year – up 0.5% to US$ 205.Occupancy rates rose 0.6% to a credible 85.7%, as RevPAR (revenue per available room) dropped marginally by 0.1% to US$ 176. Supply continued to outstrip demand by a net 0.7%, as room numbers increased by 5.4% but paying guests rose by the lesser amount of 4.7%.

Al Futtaim has already started work on its new Jebel Ali Festival Plaza that will host 100 retail outlets, a hypermarket and a food court as well as being home to the emirate’s second Ikea. The lifestyle shopping destination, located inside wasl Gate, will be ready by the end of 2019, well in time to benefit from Expo 2020.

Known as Dubai’s first smart city project, the 150k sq mt mixed use development in Silicon Oasis should be completed within the next twelve months. Al Shirawi Interiors has started fit-out work in Silicon Park’s 19 buildings including its business centre, hotel and fitness centre. It will include street charging docks for smart devices, electric vehicle charging stations as well as smart pop-up furniture and digital play tables.

A year after a US$ 1 billion launch, noon is to introduce an online auction platform, in cooperation with both UAE and Saudi government entities. The online site, using the latest technology, will hope that it performs better than Souq.com which closed shortly after opening a similar functionality. Although not really established in the region, with only several small players, it will surely take off when considering over 30% of global e-commerce is accounted for by online auctions.

As demand for public transport increases, the RTA is to buy 316 multi-size buses for US$ 127 million that will see the fleet increase by 18.1% to 2.1k. The ultra-modern vehicles, including 143 Volvo buses for inter-city use, will have low-floor access, roomy seats, high-end interiors, as well as Wi-Fi.

It is reported that Qantas is to sell its catering division to dnata to raise money to spend on upgrading its premium lounges and long-haul routes. The acquisition will result in 1.2k employees transferring to the Dubai aviation-services company, a division of the Emirates Group. No financial information was made available but the deal, initially for ten years, includes Qantas’ subsidiaries, Q Catering Limited, which operates in four Australian cities, and Snap Fresh Pty Limited.

Spanish operator Parques Reunidos, which already runs over fifty animal parks and other leisure facilities worldwide, has been appointed to manage Dubai Safari, opened last December. The facility, which cost US$ 270 million, was built by Dubai Municipality to replace the ageing Dubai Zoo in Jumeirah.

Gems Education reported a 5.2 % hike in H1 profits to March at US$ 203 million on the back of a 9.5% jump in revenue to US$ 602 million. The region’s largest school provider expects to see a 5.5% increase in enrolments by August year end to 121k, allied with a 4.5% rise in average revenue per student to US$ 8.45k.

Two Dubai-based traders, Ryan Fernandez and Sydney Lemos, involved in the US$ 200 million Extential Group forex scam got more than their come-uppance this week. The court sentenced both to over 500 years in prison, with each year counting for one of their criminal cases. It is a pity that US and European courts do not follow the Dubai example where there too many senior bankers escaped incarceration, despite being involved in bigger frauds that ruined the lives of so many and brought the global economy to its knees.

The Central Bank reports that exports from the country’s 37 free zones rose by 6.6% last year to US$ 61.2 billion, equating to 19.5% of the UAE’s total exports.

According to Dubai-based BNC Network, the value of Expo-related projects is US$ 42.5 billion, with most of the money spent in three sectors – infrastructure (US$ 17.4 billion), housing (US$ 13.2 billion) and hotels/theme parks (US$ 11.0 billion). Big ticket items include the US$ 8.0 billion expansion to the Al Maktoum International Airport and US$ 2.9 billion on the metro Red Line extension.

The Jebel Ali Free Zone reported a 9.1% hike in the number of new companies last year, bringing its total active customer base to 7.5k; of that total, the three main source markets are the ME – 49%, Asia Pacific – 28% and Europe – 15%.

A landmark decision saw the UAE cabinet approving legislation to ensure equal pay between the sexes in the country – the Law on Equal Wages and Salaries for Men and Women. The approval will confirm the government’s commitment that females have equal opportunities as partners in the UAE’s development, as well as their rights being protected.

The March Emirates NBD Dubai Economy Tracker Index pointed to a slight easing, slipping 0.5 to 55.3. With margins becoming tighter, employment moved into contraction for the first time in thirteen months. Travel/tourism – at 56.7 – was a major player keeping the overall economy still in expansionary phase.

A Dubai-based company, launched last year by Jason Philip, has been taken to court by one of the world’s largest companies, China’s Alibaba, claiming that their use of the name of Alibabacoin off its cryptocurrency is illegally trading on the e-commerce giant’s name and reputation. The counterclaim is that the name Alibaba derives from the ME (and not China) and that the regional folklore character’s name is generic and should not be for the sole proprietorship of Jack Ma.

US-based investment bank, Houlihan Lokey Inc, has been hired by the Abraaj Group to assist in negotiations with investors relating to its US$ 1 billion Growth Markets Health Fund. Some stakeholders have raised concerns that the money raised was not being used for its stated purpose.

Amanat Holdings, a local investment company focused on the medical and educational sectors, is to look at projects outside of the GCC. Since its start-up on the Dubai bourse, the company has spent almost half of its US$ 681 million capital base on three local deals in the medical sector.

Dubai-based Depa Limited has been awarded a US$ 35 million contract to fit out a privately-owned super yacht in Europe. Work will be carried out by the company’s subsidiary, Vedder, which has already carved a reputation as one of the world’s leading interior fit-out service provider.

The DFM opened on Sunday (08 April), at 3083, and edged 11 points higher to 3094 by Thursday, 12 April. Emaar Properties, having lost 37.2% in market value since September 2016, reversed its downward trend to close US$ 0.06 higher at US$ 1.58, whilst Arabtec shed US$ 0.03 to close on US$ 0.59. Volumes traded higher at 176 million shares on Thursday, valued at US$ 77 million, (compared to 155 million shares worth US$ 69 million the previous Thursday – 05 April).

By Thursday, Brent Crude rose 5.4% over the week, gaining US$ 3.69 (5.4%) to US$ 68.33, with gold also on the up by US$ 14 to US$ 1,342by 12 April 2018.

Aramco is to join forces with three Indian companies to build a US$ 44 billion refinery complex at Ratnagiri on the sub-continent’s west coast. The Saudi oil giant will provide half of the oil to be processed at the new refinery.

Tesco posted impressive annual results ending 24 February, with profits 770% higher at US$ 1.8 billion with revenues 1.3% to the good at US$ 80.5 billion; 2017 figures were skewed buy one off costs and if these were taken out, underlying profits were still 28% higher at US$ 2.3 billion. It was no surprise to see its share value 7% higher on the day.

On the flip side, Shop Direct, which owns Littlewoods and Very.co.uk, is to close three sites in Greater Manchester which could result in the retrenchment of some 2k. The company is planning to consolidate and enhance operations at its new US$ 280 million warehouse in the East Midlands where 500 new placements will be needed.

The steep decline in the UK high street was brought out by figures from the Local Data Company that indicated that 5.9k high street stores closed in 2017 – an average of 16 per day! Meanwhile only 11 new stores opened every day equating to 4.1k, its lowest figure since 2010. This year appears to see no improvement, with more of the same on the horizon.

German industrial production posted its biggest decline since August 2015, falling 1.6%, month on month. The main driver behind the decline was down to weak construction activity. On an annual basis, the expansion fell to 2.6%, with a weaker growth forecast in the short-term. In February, Germany posted an unexpected fall in month on month exports by 3.2% to US$ 129 billion but was 2.4% higher than a year earlier. Meanwhile as imports were lower by 1.3% (compared to January), its trade surplus rose 6.4% to US$ 22.6 billion. The disappointing results in the first two months of the year were down to the weather, record high employment and low interest rates.

A report by the Congressional Budget Office estimates that the US will have an annual budget deficit in excess of US$ 1 trillion by 2020, warning that this has the potential to have “serious negative consequences”. The two drivers behind this caveat are the recently introduced tax cuts of US$ 1.5 trillion and higher public spending of US$ 1.3 trillion. It expects that the economy will grow by 3.3% this year but the deficit will be 20.9% higher at US$ 804 billion.

The US trade deficit widened in February – up 0.9% on the month to US$ 57.6 billion, as both exports and imports rose by US$ 3.5 billion to US$ 204.4 billion and US$ 4.4 billion to US$ 262 billion. There was a decrease in the services surplus and an increase in the goods deficit to US$ 34.7 billion. Interestingly, the Chinese trade gap shrank 2.3%, on the month. The President has been on record that he wants to see the US/Chinese trade deficit decline by US$ 100 billion.

Following the earlier tough stance taken by the Trump administration on China and its threat of wide-ranging sanctions, it seems that President Xi Jinping has taken a conciliatory stance. He has promised to cut automotive tariffs, with the German car industry the major beneficiary, and to improve intellectual property protection for overseas tech companies. Later in the week, the markets were buoyed by a softening of the rhetoric from the White House which noted that any penalties were not imminent and there would be plenty of time to work out a deal and avoid any trade war.

Last year, the US trade deficit with China was US$ 375 billion, as imports of US$ 506 billion far outweighed the US$ 130 billion figure for exports; this anomaly has been going on for years. There is no doubt that Donald Trump has many critics but there has to be agreement with Steve Bannon’s take on the President’s dealings with China. He reckons that “the elites in America have bailed out the Chinese regime for 25 years. Trump is the first leader to confront this – the first leader of either party to have the backs of the American workers”; it would be hard to disagree. He is also the first US president to try and sort out the 60 year-old Korean problems head on and not keep brushing it under the carpet; it is hard to disagree. Now because of the inactivity (and apparent ineptitude) of the previous incumbent five years ago, he has been landed with the Syrian problem head on; it is hard to disagree. For the world, these problems have to be sorted out immediately – It’s Now Or Never!

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