It’s A Man’s Man’s Man’s World. 26 December 2019
The past twelve months to 30 November witnessed a record 44.6k real estate transactions and, despite all the gloom and doom in the market, this number represents the highest number of transactions in the history of Dubai real estate. For the first eleven months of 2019, a total of 36.8k residential properties have been sold in the emirate – a sure sign of improving market momentum after four years in the doldrums; sales for the period came in at US$ 20.9 billion. If the trend continues into December, this year could be the best in a decade; this looks a distinct possibility particularly because November sales of 4.8k were 5.5% higher month on month, with total deals worth over US$ 2.5 billion. There are several factors pushing the market forward including favourable property prices, an-over supply, low interest rates, enhanced payment plans offered by developers, trying to improve cash flow (rather than profit margins) to get rid of surplus inventory, and recent government reforms to reduce on-costs.
The week, MAG Development broke ground on its upcoming US$ 544 million, 5.1k unit, MAG City project, it revealed that it is planning to list on the Dubai bourse. According to its CEO, Sar Haffar, ‘since it is in a preparation phase, I cannot commit to the date. It is going to take a bit more than a year’. The actual development, with 8k sq mt of retail space and 84k sq mt of public parks, is slated for a 2022 completion; China National Chemical Engineering Group Company has been awarded the contract for the construction of phase one.
A relative newcomer to the sector sees the opening of the 114-key The Lemon Tree Dubai Hotel on Al Wasl Road in Jumeirah, which also includes a wellness centre. The US$ 27 million property enters Dubai’s growing three-star mid-range sector and it is the sixteen-year old Group’s first regional foray. Lemon Tree Hotels (LTH) is India’s largest chain in the mid-priced hotels sector and operates 78 hotels in 46 destinations, with 7.9k rooms and over 8k employees.
This week finally saw the opening of the Address Sky View Hotel, a twin tower property, connected by a floating sky bridge, with 169 hotel rooms and 551 apartments. One of its stand-out features is a 70 mt long infinity pool, some 220 mt from ground level; it also boasts a glass slide which takes guests down, outside, from the 53rd floor to the Sky Views observation deck, and an adventure walk around the rim of the building (secured by a harness).
The same developer is in the UK news, with reports that Atkins, the British firm involved in the design and construction of The Address Downtown hotel, is being sued for negligence following the 2015 New Year’s Eve fire. At the time, the cause of the fire was down to an electrical short circuit on a spotlight, for which the developer submitted a US$ 339 million insurance claim, “revolving alleged negligence in the specification, testing and installation of the building cladding which is claimed to have exacerbated the fire, thereby increasing the damage to the building”.
Despite strong rumours to the contrary, Emaar Properties denied reports it was in the market to sell the observation deck of Burj Khalifa – At The Top. However, the developer “is currently considering a structured transaction wherein financing is being raised against the cashflows of At The Top business”. It is estimated that the facility generates around US$ 170 million a year and could be valued as high as US$ 1 billion.
November saw Dubai’s Department of Economic Development issue over 3.8k new licences of which 70.4% and 27.7% were for professional and commercial purposes respectively, with the balance taken for tourism and industrial. It is estimated that combined, they added over 10.8k to the emirate’s workforce. During the month, the agency dealt with more than 28.9k business registration and licensing transactions.
It is hard to believe that Dubai Duty Free celebrated its 36th anniversary last week and, for the occasion, held a three-day sale, with a 25% discount on a wide range of merchandise. Total revenue generated came to over US$ 57 million, with US$ 30.6 million being sold on the last of the three days, 20 December; there were 359k transactions. The three most popular sales items were cosmetics, perfumes and watches, with sales figures of US$ 15 million, US$ 10 million and US$ 9 million.
DP World is to invest US$ 500 million, as it has been awarded a 30-year build-operate-transfer, BOT, concession by the Saudi Ports Authority, Mawani. It is for the management and development of the Jeddah South Container Terminal, the country’s largest port with current volumes in excess of six million TEUs, as well as handling 60% of Saudi Arabia’s sea imports. The money will be spent on infrastructure to improve Jeddah Islamic Port’s ability to serve ultra-large container carriers, ULCC’s.
A recent RTA auction, of ninety number plates, managed to raise US$ 5.4 million, with the three biggest sellers being S70 – US$ 519k, AA99 US$ 496k and H333 US$ 264k.
As part of its 2017-2021 plan, the UAE Ministry of Infrastructure Development is to spend over US$ 2.7 billion on thirty-six projects, including security, education, health and services, along with federal roads and maintenance projects. A big portion will be spent on implementing and maintaining government buildings which will include six new health care centres, five government buildings, four schools and four road implementation projects.
Dubai’s Department of Economic Development’s Q3 survey shows that the consumer confidence index dipped 2 to 137, quarter on quarter, and by 3 YTD. The main drivers for the marginal decline appear to be a soft labour market – leading to insufficient work opportunities and no salary increases – and a global economic slowdown with the knock-on local effect of falling energy revenue. Consequently, consumer spending has been reduced, with respondents watching their dirhams, cutting back on recreational activities, taking cheaper holidays and delaying technology upgrades.
The UAE Central Bank has warned consumers about the rise in the number of scams that use its name to elicit private information about personal and bank account information. The Central Bank urges “the public to avoid responding to such calls, messages, and opening any hyperlink that may be attached, which may provide exposure to a malicious website and inform authorities immediately.” It reiterated that it ‘never conducts phone calls (unless a consumer complaint has been logged through the right channels with a reference number) or uses social media to contact individuals or businesses.”
It is reported that Limitless – a sister company of Nakheel and involved in planning large scale, mixed-use communities and waterfront developments – has lost a court case to Deyaar Development. The dispute, relating to the purchase of land, sees Limitless ordered to pay US$ 112 million and also the cancellation of a sales and purchase agreement. Furthermore, it was also forced to pay fees as well as compensation of US$ 17 million.
The bourse opened on Sunday 22 December and, having risen 90 points (1.6%) the previous three weeks was 4 points off at 2765 by 26 December 2019. Emaar Properties, up US$ 0.02 last week, shed US$ 0.01 to close on US$ 1.10, whilst Arabtec, up US$ 0.06, the previous three weeks, lost US$ 0.02 to close at US$ 0.35. Thursday 19 December saw continuing dismal trading of 169 million shares, worth US$ 37 million, (compared to 131 million shares, at a value of US$ 38 million, on 19 December).
By Thursday, 26 December, Brent, US$ 2.57 (4.0%) higher the previous two weeks, gained a further US$ 1.38 (2.1%) to US$ 66.54. Gold, up US$ 12 (0.8%) the previous week, was US$ 31 (2.1%) higher, closing on Thursday 26 December on US$ 1,515.
Having divested himself of most of the stock he held in the company he founded, it seems that Uber’s co-founder, 43-year old Travis Kalanick, is finally to step down from the nine-member board. Since September, he has liquidated over US$ 2.5 billion, equating to over 90% of his earlier stake in the company and will now spend more time with his latest creation, City Storage Systems – a start-up, establishing kitchens for use by delivery-only restaurants. Many Uber investors will be glad to see the back of the co-founder who had been involved in a series of damaging controversies.
Boeing has finally faced reality and realised that its embattled chief executive, Dennis Muilenburg, had become such a liability that he had to be removed from office. He has been the unsuccessful voice of the plane-maker, following two fatal crashes that has forced the grounding of its top-selling 737 MAX since March. He has been replaced by board chairman David Calhoun, as chief executive and president, with the company finally admitting the need to “restore confidence” and “repair relationships with regulators, customers and all other stakeholders”. Only last week, Boeing temporarily shut down MAX production and was not sure when the plane would return to the skies. Whether Boeing’s new leadership will keep their promise that it will “operate with a renewed commitment to full transparency, including effective and proactive communication with the [Federal Aviation Administration], other global regulators, and its customers,” remains to be seen.
According to Tencent, the MENA (Middle East and Northern Africa) games market will jump 25% by 2021 to US$ 6.0 billion from its estimated US$ 4.8 billion for 2019. The local sector is in in nascent stage, accounting for only 3.2% of the US$ 148.8 billion global market this year. In a market overview, The Future of the Games Industry & Ecosystem whitepaper indicated that the way people consume media is changing and that technological enhancements are boosting the evolution of how people now use entertainment. It also looks at the future prospects for the video games sector, including the rise of mobile gaming and cross platform gaming, the growth of eSports in the region, and the potential of games to bring positive benefits for economic and social development.
There is no doubt that the likes of Black Friday, Cyber Monday and e-commerce in general have seen a marked reduction in the traditional Boxing Day sales shopping. In the UK, it is expected that 2019 could see the biggest annual decline in a decade, which has been hit further by bad weather. Forecasts indicate that sales will be 5.1% lower than last year, with total spend of US$ 4.8 billion – and that four in ten of UK adults will still spend US$ 241.
Boxing Day is set to differ in Australia, with a record spend at retail outlets following what could well have been the worst Christmas shopping season since the GFC, driven by the mix of drought and bush fires, along with the creeping menace of e-commerce which now accounts for over 7% of total sales.. Boxing Day spend is expected to top US$ 1.8 billion as the Aussie tradition is being kept alive. From Boxing Day to 15 January, Australians are expected to spend more than US$ 13.3 billion.
There has been little surprise that a white male has been appointed as the 121st governor of the Bank of England, a decision made by the UK government; the role has been given to Andrew Bailey, currently heading up the Financial Conduct Authority. This comes when the likes of Christine Madeleine Lagarde and Kristalina Georgieva are now in control of the European Central Bank and the IMF respectively. Dame Minouche Shafik – a former deputy governor of the Bank and a director of the London School of Economics – was a frontrunner for the governor’s job. Does the Bank of England have a woman problem? Maybe there is – with only one woman serving on the nine-strong (with eight white males) Monetary Policy Committee which sets and announces policy eight times a year; less than a third of senior positions are filled by females.
With the Bank of England set to start monitoring Lloyd’s of London, their lack of diversity (as noted above) may worry a few in the insurance set-up. It seems that as the Lloyd’s whistleblowing hotline was out of service for sixteen months, about 1k staff members had no way to anonymously report issues such as sexual harassment or bullying. Ever since Bloomberg Businessweek published a critical article reporting that female workers had faced inappropriate comments as well as physical attacks from male colleagues, the 330-year old market has been trying to clean up its act. A later internal report indicated that 8% of employees had witnessed sexual harassment over the past twelve months. In the upper echelons of the UK financial sector, It’s A Man’s Man’s Man’s World.