Look Away

Ithra 13 is to launch a major upgrade in Dubai’s historic gold and jewellery business location, the Deira Gold Souq. Situated between the existing Gold Souq and the Creek’ “District 13” will be a major project for Deira, part of Dubai that seems to have missed out on much of the emirate’s recent redevelopment investment. It will be interesting to see whether customers return to Dubai’s customary gold base and oldest cultural district, rather than buying in the many malls and hypermarkets.

Deyaar will launch its latest project at next week’s three-day Cityscape 2018, opening on 02 October. Located in Dubai Science Park, the 18-storey Bella Rose will house a range of studio, 1-2 B/R units and be completed by the end of next year. No cost details were available but studio apartments will start at US$ 123k.

Although Emaar will not be attending this year’s Cityscape, Dubai-based master developer Nakheel will be there. It will showcase several new projects including a beachfront development at its new Deira Islands waterfront city, Dragon Towers, a twin-building high-rise apartment complex at Dragon City, and a collection of Jumeirah Park townhouses – each with a private pool. The developer estimates that since its 2002 inception, it has sold 42k land plots or residential units, valued at US$ 31.9 billion and currently has more than US$ 15.8 billion worth of projects in progress.

There are reports that Nakheel is in the market for a US$ 1.1 billion loan to finance construction of a new mall in Deira, estimated to cost around US$ 1.7 billion. It is likely that the developer will issue sukuk, probably early next year. United Engineering Construction Company has won the tender to build the mall, slated to be the largest in the ME.

An agreement between Lulu Group and The Waterfront Market will see the retail giant opening a 55k sq ft hypermarket in Deira’s new retail area, overlooking the Deira Islands; the Waterfront Market is a wholly owned subsidiary of Ithra Dubai and is the region’s the largest facility for fresh food.

Ali Mousa & Sons Contracting has been awarded a US$ 150 million Nakheel construction contract for its 37-storey Dragon Towers; the project, housing 1-2 B/R units along with ground/first floor retail, is slated for completion by 2021 and is a focal point of the US$ 194 million development.

The Radisson Hotel Group will introduce its new brand to the region in mid-2019, with the opening of Radisson Red hotel in Silicon Oasis. Mainly known for its luxury properties, this will meet the growing trend for innovative mid-scale properties, catering for guests to connect in a flexible and fun environment. There are already branded hotels in Europe, South Africa and the Americas and the plan is for 200 hotels to be opened or in development by 2022.

Wyndham Hotels & Resorts, the New York-listed hospitality company, expects to grow its regional portfolio of hotel rooms by 30 per cent by 2022 from 10,500 rooms today, to capitalise on rising demand in the mid-scale sector.

Dubai’s latest golf course will probably open next month to the public.  The Dubai Hills Golf Club, a JV between Emaar Properties and Meraas, is a par 72 championship course, featuring a series of valleys and wadis along with a network of lakes.

A sign of the times sees El Chiringuito, at  Rixos the Palm, closing down “effective immediately”, less than two years since its opening. Operating company, The Crystal Group, has terminated its franchise agreement with the venue operator citing ‘unforeseen circumstances’ during the renovation of the hotel. However, it could be yet another casualty of an oversupply of such venues in the emirate, allied with a fall in consumer spending habits.

Beside Group has been bought by Saudi based investment group Taj Holding for an undisclosed fee. The Dubai-based fashion retailer has a number of international brands in its portfolio, including Diesel, Fred Perry Pinko and Scotch & Soda.

A MasterCard report ranks Dubai as the highest international overnight visitor spend destination last year, as well as being the fourth most-visited city in the world. Tourists to the emirate shelled out US$ 29.7 billion which equates to a daily US$ 537, well ahead of Paris (US$ 301) and Singapore (US$ 286). For the third year in a row, Dubai was the fourth most visited city with 15.8 million, behind Bangkok, London and Paris with numbers of 20.0 million, 19.8 million and 17.4 million respectively. In H1, the emirate has reported flat numbers of 8.1 million visitors but is still aiming for 20 million visitors in 2020.

With its latest opening of five solar-powered service stations, ENOC is well on the way to expand its 122-unit network by 40% over the next two years. The five stations, all located in newly established residential communities, have been built in compliance with Dubai Municipality’s ‘green build’ regulations.

Following the January liquidation of the UK’s Carillion, its shares in UAE-based facilities management company, Emrill, have been acquired by the other two stakeholders – Emaar Properties and Al Futtaim Real Estate Investment. It will remain as an independently operated joint venture company.

Dubai-based DP World’s Indian arm, Hindustan Infralog Pvt Ltd, has paid US$ 783 million to the Jawaharlal Nehru Port Trust-Special Economic Zone to lease a 44-acre plot for sixty years. This will no doubt boost the freezone’s industrialisation policy that will generate jobs and expand cargo revenue to the benefit of all stakeholders.

With DP World issuing four new debt listings – a US$ 1.0 billion sukuk and three conventional bonds, totalling US$ 2.3 billion – the Dubai-based port operator now becomes Nasdaq Dubai’s largest debt issuer, with a sum of US$ 6.75 billion. The local bourse is still the world’s largest centre for sukuk listings, with a value of US$ 58.9 billion.

The High Court of England and Wales  has again ruled in favour of DP World by ordering the continuation of an injunction over Djibouti port operator Port de Djibouti. This rules that the Dubai port operator can continue, without any interference, with the management of the joint venture company, Doraleh Container Terminal.

Despite press reports indicating a possible tie-up with Deyaar, Union Properties has reiterated that it is “not considering any merger”, and that any possible future plans would be revealed in accordance with laws and regulations.

By the end of the year, overseas visitors may be able to reclaim VAT paid on goods bought during their stay in the country. The FTA (Federal Tax Authority) is urging participating retailers and shops to register for the tax refund scheme; for them to qualify, there are certain conditions that have to be met.

Q2 expat remittances from the UAE totalled US$ 12.1 billion, with 55.2% sent to just three countries – India (US$ 4.8 billion), Pakistan and Philippines accounting for 39.6%, 8.5% and 7.1% of the total. The uptick, 8.8% higher compared to the same period in 2017, in these countries has been driven by their currencies falling on the back of a strengthening greenback. Not surprisingly, because of banks traditionally charging more, currency exchanges handle over 78% of total transactions.

YTD gross bank assets in the UAE grew by 3.9% to US$ 763.0 billion by the end of August, with gross credit 3.4% higher at US$ 445.0 billion. Over the same period, expansions were seen in domestic loans received by the private sector, up 3.4% to US$ 306.0 billion, and credit provided to individuals by 0.4% to US$ 924 million. These figures indicate a marked improvement in the solvency of the country’s financial institutions.

As widely expected, the US Federal Reserve hiked rates by 0.25%, to a range of 2%-2.25%, on Wednesday – its eighth rate rise since 2015 – with similar gradual rises on the horizon. In line with this news, the UAE Central Bank followed suit, lifting its repo rate by 0.25% as well as raising interest rates on the issuance of its certificates of deposit.

Target Engineering, a subsidiary of Arabtec Holding, has been awarded a US$ 872 million ADNOC contract with Spain’s Tecnicas Reunidas. The four and a half year contract is to construct gas processing trains, supporting utilities and off-site facilities for phase II of its Gas Development Expansion project.

Careem, itself rumoured to be an Uber acquisition target, has bought the three-year old Indian bus shuttle service app Commut, for an undisclosed amount. The Dubai-based ride-hailing firm plans to move into the mass transport sector, by introducing bus services across 100 cities. However it will leave local shuttle service provider Shuttl to manage and operate Commut’s customers and drivers whilst it will take over Commut’s talent and technology. Careem has also been recently expanding into other services, including food and package delivery.

It is reported that TPG is in discussions to combine the Abraaj Group’s US$ 1 billion healthcare assets with its Rise Fund. The US private equity fund is keen to consolidate resources so as to optimise their “shared commitment to accessible, affordable, quality health care” in sub-Saharan Africa and South Asia. It is also reported that the much-troubled firm has been asked to vacate its DIFC offices by the end of the month, as its lease has expired and there has been no tenancy renewal.

The DFM opened Sunday, 23 September, on 2764, and, after several weeks’ declines, gained a welcome 62 points (2.2%) to close on Thursday at 2826. Emaar Properties moved US$ 0.04 higher to US$ 1.35, with Arabtec flat at US$ 0.52. Thursday 27 September saw volumes dropping, with trades of 171 million shares, valued at US$ 94 million, compared to a week earlier (236 million shares at US$ 76 million).

By Thursday, 27 September, Brent continued its recent upward movement, trading US$ 3.02 (3.9%) higher to US$ 81.72; gold fell away, losing US$ 24 (2.0%) to US$ 1,187.

Michael Kors has acquired the 40-year old Versace fashion brand in a US$ 2.1 billion deal. The Italian fashion house, still 80% family-owned, had the sold the other 20% to US private equity group Blackstone in 2014. Last year, the US fashion group bought the luxury shoemaker for US$ 1.2 billion.

The latest in a very long list of struggling UK retailers to issue a profits warning is womenswear chain Bonmarché, reducing its full year profit forecast by 31.2% to US$ 7 million; its shares dropped more than 20% on the news. The Wakefield-based chain, established in 1982 and with 300 stores, has blamed weak consumer demand and the warm weather for its problems.  Last week, menswear chain, Moss Bros, issued a profits warning, also citing the summer’s hot weather as a factor for poor trading.

Last month, FW Evans Cycles reported trading problems on the back of rising costs and challenging trading conditions. Now the country’s biggest bike retailer, Halfords, is one of a number of parties considering a takeover that would secure the 97-year old company’s future. There is an urgent US$ 13 million cash requirement to see the embattled retailer, owned by private equity firm ECI Partners since 2015, through the next few trading months.

The name of the game in the insurance sector is consolidation, with the latest seeing the UK’s Jardine Lloyd Thompson taken over by Marsh & McLennan in a US$ 6.4 billion deal.

Rupert Murdoch’s Fox lost out to rival Comcast after the UK Takeover Panel had ordered the two companies to participate in a blind auction.  The US cable giant’s bid, at over US$ 39.0 billion, equating to US$ 22.65 a share, was about 10% higher than Fox’s. Both bids were higher than their July offers by Comcast (US$ 34.1 billion) and Fox’s. Until then, it seemed highly likely that Fox would take over the 61% of Sky it did not already own but by Wednesday, it agreed to sell its 39% stake in Sky plc, the owner of Sky News.

Deliveroo is seen to be a target for Uber Technologies who want to enhance food-delivery business in Europe. The London-based firm has business in two hundred cities, over four continents, but is little known in the US. With no acquisition price available, the bid will have to be in excess of US$ 2.0 billion which was the figure of the food-delivery company’s last valuation price; last year, it raised US$ 480 million from investors, including Fidelity Investments and T. Rowe Price Group Inc.

In a bid to stave-off an imminent economic collapse, the IMF has brought forward an increased three-year US$ 57.1 billion rescue package for Argentina. Most of the money will be made available over the next fifteen months, with most of it earmarked to support the budget deficit. The bail-out plan, one of the biggest in IMF’s history, is subject to the Argentine Congress approving the 2019 budget and the Macri government cutting back on spending and delivering a balanced budget next year.

S&P Global Ratings confirmed no change in China’s A+, with ‘stable’ outlook, as the government continues its efforts to rein in credit growth (and the shadow banking sector) and cut back on public investment. Despite the current spat with the US over sanctions, it seems highly likely that the country’s future growth will continue at levels of over 6.0%, at least for the next three years.

US house prices continue their upwards spiral and, although easing to a monthly 0.2% hike in July, climbed 6.4% on an annualised basis, compared to a 6.0% rise last year. Double-digit growth was seen in Las Vegas, Seattle and San Francisco, where prices rose by13.7%, 12.1% and 10.8% respectively.

Despite the ever-growing criticism of his antics, Donald Trump continues to defy his critics and delivers what he promised prior to becoming the 45th President – a booming economy, despite the ongoing trade dispute with China. This month, US consumer confidence has hit an 18-year high with the Conference Board’s index reaching 138.4, 3.7 higher, month on month. With the labour market tightening, as the 3.9% jobless rate indicates at or near full employment, and the resultant boost in household wealth, the short-term outlook for the economy is positive, with Q3 estimates above  3.0% mark; but the nagging doubt remains – what will happen when the impact of tariffs cuts in?

UK government spending in August surprisingly jumped to US$ 8.9 billion, (compared to US$ 5.7 billion a year earlier), driven by subdued tax receipts (only 1.6% up on last year) and a 5.4% increase in expenditure. Despite the increase, the US$ 23.3 billion YTD borrowing figure is 30.5% lower and gives the Chancellor room to spend more on the NHS and other public services in his late October budget. The current public sector net debt, excluding public sector banks, totals US$ 2.34 trillion, equating to 84.3% of GDP.

August UK retail sales were higher 0.3% higher, month on month, and 2.0%, quarter on quarter, as all segments – except food (down 0.6%), clothing (1.9% lower) and petrol – moved higher. The surprising rise in sales saw strong growth figures of 4.5% and 2.8% in household goods stores and other non-food outlets respectively. On-line spending continued to grow, as a proportion of total retail spending, and is now at a record high of 18.2%.

Eurozone private sector grew at the second-weakest pace in almost two years, as the September composite fell to 54.2. With export orders failing to expand for the first time since June 2013, this led to weaker growth in the manufacturing sector. However, the services PMI nudged 0.1 higher, month on month, to 54.7. These figures seem to point that the bloc’s momentum may have slowed, driven by factors such as Brexit worries, rising political uncertainty and waning global demand.

Italy’s banking structure is showing signs of strain. Two problems bubbling under the surface are the US$ 580 billion Italian bank debt, owed to the ECB, and the US$ 200 billion in NPLs (non-performing loans). Furthermore, financial markets will surely be rattled with the Italian populist parties coercing the government to provide more funds as per their election promises which include an additional US$ 12 billion for a so-called citizen’s income that will “cancel poverty.” This sets the budget deficit at 2.4% of output which goes against EU requirements that the country should improve its budget balance so as to reduce its debt mountain. This should have resulted in a much tougher budget, with a headline deficit more in line with 1.6%. As Brussels is more concerned with Brexit, the Italians will probably escape scot free with bending the rules again. Look Away.

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