Don’t Leave Your Mark On Me

Don’t Leave Your Mark On Me                                  20 June 2019

Wasl Properties has announced the release of the first building of its Wasl Port Views development in Dubai; it comprises 270 apartments (1 B/R, 2 B/R and 3 B/R) with rents of US$ 24k, US$ 26k and US$ 33k respectively. The whole development, due to be completed next year, will consist of 1.5k residential units, covering 941k sq ft and ten buildings, as well as two hotels with a total of 449 rooms and 84 serviced apartments.

Having handed over 727 homes in its Ghalia development, its first certified Sharia-compliant luxury furnished apartments, Damac is preparing to hand over more than 1.5k units in the coming months. Next week, the Dubai-based developer will launch its premium living Zada range of 1 B/R apartments in Business Bay, with prices starting at US$ 191k. At the end of Q1, Damac estimated that it had handed over 25.1k units, with a further development portfolio of over 30k units and 10k serviced apartments and hotel villas at various stages of progress and planning.

As indicated in earlier blogs, OYO is on an aggressive regional expansion plan, forecasting that by next year, it will have 12k rooms under management in 150 hotels across the UAE. The India-based global hospitality chain has already racked up 100k guests and 1.7k rooms in 80 plus hotels and homes in the country since its launch last year. OYO – backed by several named investors such as SoftBank Vision Fund, Sequoia Capital and China Lodging Group – is working closely with asset owners to accommodate this burgeoning demand of which 25% emanate from India and China.

There is every chance that the Dubai Cricket Stadium could become a regional centre for drone enthusiasts if plans between Airscope and Dubai Sports City materialise. If official approval is granted by Dubai Civil Aviation Authority, then a drone park, with automated air gates and a mix of loops, could soon be in operation by the end of Q3. The stadium, which recently celebrated its 10th anniversary, with matches between Pakistan and Australia, will still be used for its original purpose.

Seed Group, an association of diversified companies owned by Sheikh Saeed bin Ahmed Al Maktoum, has invested in Urent – the first regional peer-to-peer vehicle sharing platform. It will link the private vehicle owner with a potential renter and has been licensed by the Roads and Transport Authority, with its official launch being next week.

May’s seasonally adjusted Emirates NBD Dubai Economy Tracker Index points to the fact that Dubai’s private sector non-oil economy increased at its strongest rate for nine years. Month on month, the index was 0.6 higher at 58.5 showing sharper growth of total activity and new business but the increase in output and new work was mainly attributable to the 13th consecutive month of reduced selling prices, as firms continue to discount in a market that in some cases seems to be in a race to the bottom; this was most notable in the construction and wholesale/retail sectors. The other problem is the fact that the job creation long-term trend remains weak. The three key sectors – wholesale/retail, travel/tourism and construction – had May returns of 61.9, 59.5 and 54.6 respectively.

There was good news from the Department of Economic Development indicating an almost 50% hike in new licences in May at 2.6k which created a total of 8.4k jobs. Of that total, 54.7% were professional, 42.7% commercial, 1.8% related to tourism and 0.8% industry. Real estate, leasing and business services accounted for 35.0% of the new licences issued, followed by trade and repair services at 28.6%.

Renwick Haddow, who duped a reported 150 UAE investors among many others, has admitted to US authorities his role in a sophisticated criminal enterprise selling non-existent office space and operating a fake Bitcoin trading platform. The UK citizen, behind the US$ 50 million scam, could now face forty years in a US jail but the chances of the UAE investors reclaiming their US$ 15 million losses seem remote. The serial fraudster was involved in other dubious business practices, including a milk line, glow in the dark plastics, a hotel ownership plan and even an attempt to buy the world’s oldest newspaper, UK-based The Observer. (It is unlikely that he was the man who has been trying to sell Italian suits, from the back of his car, to UAE residents for the past twenty years).

In a bid to attract more companies, JLT residents are being offered a 40% discount to register a new company by the DMCC. The free zone is hopeful that the offer will attract entrepreneurs and ambitious freelancers to move to JLT which is already home to over 100k. It is estimated that the DMCC, which has 15k member companies, contributes up to 10% to Dubai’s GDP.

As du aims to support 5G connectivity in the UAE, the telecoms operator is expanding its 2019 capex budget by 25% to US$ 409 million, with next year’s allocation to be even higher. With ten data centres currently operating in the country, it plans three more and is set to increase its number of 5G towers by almost six-fold to 700 by year end. Evidently, a large number of smaller antennas or mini towers are required, as 5G waves do not travel long distances, compared with 4G. To take advantage of the new technology – with 5G more than 100 times faster than the current 4G platform – du is currently selling Chinese ZTE 5G smartphones but will receive its first shipments of Huawei handsets and Samsung’s first 5G offering within a month. Safety issues have been allayed, at least in the short-term, as the current roll-out is only on 3.5 Gigahertz and 2.6GHz bandwidths, which are considered safe by regulators. Security concerns are another matter.

Dubai Aerospace Enterprise has announced that it has entered into a purchase and leaseback agreement for three factory new Boeing 777 freighter aircraft with Russia’s cargo airline AirBridgeCargo. DAE, with fifteen owned and committed Boeing 777 freighters, is the world’s largest lessor of 777F aircraft.

It is reported that Tell Group, a boutique investment firm founded by former UBS Group banker Yassine Bouhara, is offering US$ 25 million to transfer the management of seven Abraaj funds to a new entity – 20% owned by Tell and 80% by Abraaj’s unsecured creditors. It seems that Air Arabia and a Kuwaiti pension fund are among the list of unsecured creditors and would become shareholders in the new company, through a debt-for-equity swap. Not surprisingly, it seems that Abraaj management would not be involved in the new firm.

The bourse opened on Sunday 16 June at 2633 and having closed 58 points (2.2%) to the good over the previous three weeks’ trading, gained a further 26 points (1.0%) to 2659 by 20 June 2019. Emaar Properties closed US$ 0.04 lower at US$ 1.18, with Arabtec flat at US$ 0.41. Thursday 20 June had seen wafer thin trading again of 181 million shares worth US$ 92 million, (compared to 176 million shares, at a value of US$ 56 million on 13 June).

By Thursday, 20 June, Brent, having traded down US$ 10.95 (15.1%) the previous three weeks was US$ 3.05 (5.0%) higher at US$ 64.45. Gold, up US$ 47 (3.9%) the previous two weeks, rocketed US$ 53 (3.9%) to US$ 1,397, driven by increasing tensions in the Gulf, and at almost its highest level in five years.

As widely expected, Facebook has finally entered the world of cryptocurrency with its own digital money, Libra. There is no doubt that the world’s biggest social network will help crypto currency become more mainstream and will prove a major boost for existing platforms such as the oft-maligned Bitcoin which will shortly top US$ 10k. The blockchain-based Libra will also have 28 members including Mastercard, Visa, Stripe, Kiva, PayPal, Lyft and Uber, with a Geneva-based eponymous nonprofit association overseeing and maintaining a real-world asset reserve to keep its value stable. Calibra is being built into Facebook’s Messenger and WhatsApp which will allow all users to send Libra as easily as they send a message.

Monsoon Accessorize is restructuring its troubled UK High Street chain of 258 leased stores by asking for rent cuts on 135 stores after a period of “difficult” trading; in return, they are offering them up to US$ 13 million if it trades profitably in the future. Under a Company Voluntary Arrangement, which allows companies to continue trading while reaching agreement with creditors, no stores are to be closed and none of the 4.4k labour force are expected to lose their jobs. If the creditors agree to the scheme, the Group’s owner, Peter Allen, has agreed to a US$ 15 million emergency loan, along with a US$ 24 million interest-free loan.

It seems all but inevitable that the ECB will soon cut interest rates and may well resume its three-year US$ 3 trillion stimulus programme which ended last December. Both these measures would see a fall in the euro and has led to Donald Trump questioning whether the European Central Bank President Mario Draghi is manipulating the currency. As the bloc’s current economic outlook continues to head south, with lingering softness, any improvement in exports and manufacturing are unlikely.

Consequently, Draghi has indicated that “In the absence of improvement, such that the sustained return of inflation to our aim is threatened, additional stimulus will be required” and that “the APP [asset purchase programme] still has considerable headroom.” Another problem is the ECB target inflation rate of “below, but close to 2%” is still some way off, as the May euro area inflation slowed sharply to 1.2%, its lowest level in over a year – and core price growth eased below 1% to 0.8%. The Eurozone trade surplus declined to a 5-month low in April, as the 2.5% decline in exports exceeded the 0.9% fall in imports. On an annual basis, imports increased by 6.6%, outpacing exports which posted a 5.2% hike. Month on month, its trade surplus fell 17.7% to US$ 17.4 billion and its current account surplus by 15.3% to US$ 23.8 billion.

Driven by lower air travel and falling car prices, UK’s inflation rate finally reached the Bank of England’s 2.0% target. May core inflation – that excludes energy, food, alcoholic beverages and tobacco – slowed to the weakest in more than two years to 1.7%. There is always the danger that a weak sterling may push inflation higher in the coming months, but this could be offset by firms unwinding historically-high stock levels caused by the premature and subsequently delayed 31 March Brexit deadline. Month-on-month, output prices rose 0.3%, the same rate as seen in April, whilst input price inflation eased sharply to 1.3% from 4.5% a month earlier – its lowest since June 2016.

As UK Chancellor Philip Hammond was giving his last Mansion House Speech on Thursday, he was disrupted by some forty lady climate change protesters. Greenpeace later confirmed that forty activists had “gate-crashed” the Chancellor’s speech. Apart from being a major marketing coup, highlighting the world’s environmental problems, it did seem that the “invasion” still did little to increase the ratio of women to men at the event. More so, it showed the other side of a politician – in this case Mark Field, a Foreign Officer Minister of State – that the public will rarely see and does not want to see again. Don’t Leave Your Mark On Me.

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