Is This The World We Created?

       Is This The World We Created? 23 January 2020 .

According to Valustrat, the average value of Dubai properties declined 10.4% last year, with larger 15% falls noted in Discovery Gardens and Dubai Production City and single digit declines in four of the twenty-six locations surveyed – villas in the Meadows, Palm Jumeirah and Emirates Hills, as well as apartments in Dubai Sports City. (Strangely, last week’s blog noted that another consultancy indicated that there were price falls of 23.0% and 24.3% in Discovery Gardens and the Meadows respectively – a marked and worrying variance between the two studies). Residential rents were 9.1% lower, year on year, and 3.8% in Q4; the average annual Dubai residential rent was almost US$ 24k ($23,951) – apartments at US$ 18.5k and villas at US$ 57.5k. Valustrat noted that in 2019, “cash sale volumes of ready homes grew 29.7% and off-plan sales jumped 68.3%,” with investor demand boosted by attractive prices, fewer off-plan launches and delayed project completions. It estimated that last year 19.5k apartments and 5.1k villas were completed, making a total of 24.6k residential units.

Azizi Developments confirmed that it has already sold 81% of its inventory, across all 54 ongoing projects in Dubai, whilst projects such as Aliyah in Dubai Healthcare City and Plaza in Al Furjan have seen 90% of units sold prior to completion. To date, the developer has sold 12k units, and delivered 14 projects across Palm Jumeirah, Dubai Healthcare City and Al Furjan, valued at a total of over US$ 680 million.

Emaar’s latest Chinese foray sees the developer signing a MoU with Chinese giant Xiaomi to launch ‘Emaar Smart Home’, The latest smart home technology, powered by AI, will be launched in an exclusive set of digitally enabled Emaar residential developments and will offer “connectivity, comfort and convenience for the customers of tomorrow, today;” it will be controlled and monitored through Xiaomi’s Mi Home app.

According to Knight Frank’s latest Global Residential Cities Index, Dubai was ranked 146th out of 150 countries surveyed, with an annual 7.3% price drop in the twelve months to 30 September 2019 – and some 30% off since 2014. Budapest led the field with residential price rises of 24%. On average, the index rose 3.2% – its weakest annual rate since Q2 2015.

Emirates NBD is seeking to sell an undeveloped plot in the Dubai International Financial Centre, after becoming frustrated by the pace of assets sales under Al Jaber’s debt restructuring, according to people familiar with the matter and an enforcement letter sent by the bank; the land, valued in the region of US$ 70 million, was used as collateral for a loan which has yet to be paid off. In 2019, it was agreed that Al Jaber would raise up to US$ 445 million from asset sales, with other stakeholders pledging a further US$ 210 million. The Group, involved in sectors such as in construction, engineering and shipping, ran into trouble following the 2008 GFC; last year, the company agreed to restructure about US$ 1.5 billion. Lenders, including Abu Dhabi Commercial Bank and First Abu Dhabi Bank, have already recouped some money by forcing through the sale of the Al Jaber family-owned, 42-storey Shangri-La hotel in Dubai. operated by Hong Kong’s Shangri-La Group, which sold for US$ 191 million.

It is reported that the 800 MW phase 3 of the Mohammed bin Rashid Al Maktoum Solar Park will become operational in April.  By 2030, and costing US$ 13.6 billion, it will become the world’s largest single-site solar park, with a capacity of 5k MW. The first two phases became operational in 2018, with phases 1 and 2 having capacities of 200 MW and 300 MW.

Fajr Capital has divested its major minority share in Brunei’s largest bank, Bank Islam Brunei Darussalam to Brunei Investment Agency. The Dubai-based asset management company acquired its share in 2010, with the aim of transforming Brunei’s largest bank into a world-class financial services institution. Over the recent past, Fajr has exited its stakes in GEMS Education and National Petroleum Services.

In an interesting move, Mohammed Al Shaibani, CEO of Investment Corp of Dubai and director general of the city’s ruler’s court, has taken over as chairman of developer Nakheel. The current incumbent Ali Lootah, who had been in the position for the past decade, resigned this week after having steered the state-owned developer through a US$ 10.5 billion debt restructuring during his tenure. Al Shaibani is also joined by three other new board members – former Nakheel chairman Sultan bin Sulayem, Khalifa Al Daboos, and Issam Galadari. Nakheel, currently with billions of dirhams of projects and infrastructure development in progress, posted a 2018 US$ 1.2 billion profit, down 22.8%, year on year.

With banks having to follow what some might consider tight regulations when it comes to residential lending, it seems that some private developers are becoming de facto mortgage providers. As an example, Pantheon is offering ten-year plans for its Jumeirah Village Circle project, due to be delivered by mid-year. Their rates appear to be lower than traditional banks on a 30:70 payment plan, (30% to be paid, usually in instalments, by handover). Likewise, Samana has been offering 50% finance for its soon-to-launch project in Dubai Studio City. These come at a time when the UAE Central Bank has withdrawn the 20% upper limit on banks’ exposure to the real estate sector.

Next month, Meydan will host The Girlgamer Esports Festival World Finals a first for the ME area. The Government of Dubai Media Office is supporting the event as part of its strategy to drive the development of the region’s esports industry and to put Dubai firmly on the global map for competitive esports. The event, with a US$ 100k prize pool, is to be organised by Galaxy Racer Esports, in partnership with Evoloop and presented by Grow uP eSports. Nine of the world’s best all-female gaming teams will be participating, with Team Dignitas favourites to win for the third year in a row.

This week, Dubai Government professional employees have been awarded a pay rise of between 9% – 16%, under a new salary scheme that will also introduce flexible working hours, telework and part-time employment, as well as specifying a minimum wage for Emirati graduates. Furthermore, Sheikh Hamdan bin Mohammed, the Crown Prince, also approved the formation of a career-grade placement committee, to be chaired by Abdulla Al Falasi, which will approve the career-grade placement lists based on the grades and salaries.

Dubai welcomed a record 16.73 million international overnight visitors – a 5.1% increase in tourism volumes. Its top six source markets were India, Saudi Arabia, UK, Oman, China and Russia — delivering over seven million visitors; the top nine countries each attracted more than 500k visitors, as India retained its top position with over two million.

Following directives by the Crown Prince, Sheikh Hamdan bin Mohammed, camping will be allowed on Dubai beaches, designated for this purpose; on-line permits, from Dubai Municipality, will be required but there will be no charges. It has been more than a decade since beaches became no-go areas for camping enthusiasts and caravan owners.  Further good news on the waterfront was that all Dubai public beaches have attained the international accreditation of the Blue Flag programme,

Shuaa Capital reported that that one of its offshore units has finalised a deal to manage an investment portfolio of assets worth US$ 400 million which increases its total to US$ 13.4 billion. Last August, the Dubai-based investment bank completed a merger with Abu Dhabi Financial Group and this helped it post a Q3 profit, helped by a US$ 8 million contribution from its new owner.

DP World continues its recent acquisition foray, with buying a 44% share in Swissterminal Holding, a container terminal operator in Switzerland;  no details were made available except that the founders, the Mayer family, remain the majority shareholders.  The Swiss company operates three terminals, connected to Europe’s major container ports in Rotterdam and Antwerp, along with other ports. Last year, the port operator bought the likes of UK transport and logistics company P&O Ferries, Indian rail logistics company Kribhco Infrastructure and Chilean ports operator Puertos y Logistica; it currently has 150 operations in more than fifty countries.

Dubai Aerospace Enterprise has signed a US$ 300 million, four-year unsecured loan with China Construction Bank (DIFC Branch) and China Construction Bank (Asia) Corporation Limited; this could rise by a further US$ 200 million, if required. The funds will be used to support DAE’s future financing needs. The Dubai-based leasing company serves 125 global airlines from its seven locations in Dubai, Dublin, Amman, Singapore and the US.

With the latest news from Boeing that the 737 Max is unlikely to get approval to fly until the middle of this year, it is reported that their second-biggest customer, flydubai, is considering leasing more jets. With a timeframe that may go into Q3, the Dubai airline is “looking at short to medium-term leasing options to add more capacity for the coming few months”. The grounding has already cost Boeing more than US$ 9.0 billion.

The bourse opened on Sunday 19 January and, 79 points (2.9%) up the previous week, was  a further 10 points (0.3%) higher to 2838 by 23 January 2020. Emaar Properties, having gained US$ 0.06 the previous week, was US$ 0.05 lower at US$ 1.12, whilst Arabtec, US$ 0.06 lower the previous four weeks, was down US$ 0.02 to US$ 0.31. Thursday 23 January saw the market trading only 106 million shares, worth US$ 49 million, (compared to 175 million shares, at a value of US$ 84 million, on 16 January).

By Thursday, 23 January, Brent, losing US$ 3.69 (5.4%) the previous fortnight, shed US$ 2.26 (3.5%) to close at US$ 62.34 Gold, up US$ 84 (5.8%) the previous five weeks, rose a further US$ 9 (0.6%), closing on Thursday 23 January at US$ 1,565.

2019 was a record year with a 5.8% increase, to US$ 7.4 billion, being spent on global transfers in men’s football. The FIFA report noted that although English clubs were the biggest single spender in the market, at over US$ 2.0 billion, the figure was down 22.1% on the year. Of the 18k global moves during the year, involving 15.5k players of 178 different nationalities, only 18.6% were permanent club-to-club transfers, whilst the most common type of transfer saw 64.3% of the total players out of contract. In terms of net value, Portugal generated the most with US$ 503 million, as England came in worst in that category with minus US$ 715 million.

There is still no news when Travelex’s main UK website will return to service, following a cyber-attack on New Year’s Eve; however, it seems that the system used by staff is back in operation. A gang of hackers, known as Dodinokibi, has since held its systems to ransom, and are demanding a US$ 6 million repayment to unlock digital files that it had earlier encrypted. Until the impasse is resolved, customers will be unable to order currency online, either from Travelex itself or through the network of banks that use its services.

Following a Deloitte investigation, troubled Ted Baker has confirmed that it had overstated the value of its stock by over US$ 75 million, somewhat higher than the US$ 33 million estimate made in December. The fashion retailer has yet to confirm how the stock discrepancy arose but with its former boss of over thirty years, Ray Kelvin, stepping down over misconduct claims; it has seen sales and H1 profits slump from a US$ 32 million profit to a US$ 30 million deficit. It seems that its auditors, KPMG, had uncovered mis-statements but concluded they were too small to affect the fashion label’s accounts.

As its share value has doubled over the past three months, Tesla has pushed its market value to over US$ 100 million and, in doing so, displaced Volkswagen as the world’s second most valuable carmaker behind Toyota, with a market value of US$ 230 million. The other three companies, making the top five list, are Volkswagen, GM and Honda with stock values of US$ 89.7 billion, US$ 49.9 billion and US$ 49.7 billion respectively. In 2018, Elon Musk’s company delivered more than 367k cars, 50% higher than a year earlier, but still miles behind Volkswagen and Toyota with their numbers of 11 million and 9 million for the first eleven months of 2019.

As a result of ongoing economic uncertainty, with slower than forecast rates of growth for its Evoque and Discovery Sport models, Jaguar Land Rover is cutting 12.5% of its Halewood plant payroll to 3.5k; this is part of the carmaker’s strategy to cut 4.5k global jobs in a bid to save US$ 3.3 billion to reverse recent losses. With this latest “fresh blow to the car industry”, the UK’s industry continues to experience severe challenges.

In the midst of a major financial crisis, South African Airways has reportedly cancelled nine of its total of thirty domestic and international flights. In December, the national airline was placed into bankruptcy protection and is expecting to receive a US$ 138 million government finance package to enable the airline to keep flying. It has not made a profit since 2012 and has been bedevilled by not only running an aging, expensive to run and inefficient fleet but also by high taxes, political interference and corruption scandals.

The fall-out from the 2018 Royal Commission on Banking continues unabated with the latest being the National Australia Bank’s superannuation trustees, (MLC and NULIS Nominees), being charged with a new class action for allegedly ripping off more than 330k clients by failing to move them into lower cost default products. It seems that the greedy financial institution left clients’ money in funds with higher fees and lower returns – obviously failing to act in their clients’ best interests The Commission had earlier castigated the trustees’ parent company NAB for repeated breaches of superannuation laws. It is reported that the trustees failed to transfer US$ 4.5 billion of clients’ retirement funds to the low cost default MySuper in a timely fashion, leaving them in “idling in products” with higher fees and commissions to financial advisers that are outlawed.

AMP is another company in trouble because it reported that it has delayed returning money to clients it “stole” in the fees-for-no-service scandal. The wealth manager has written to former clients informing them their refunded fees had been placed in new AMP superannuation accounts, including its Eligible Rollover Fund, which according to Super Consumers Australia has underperformed to comparable funds; although this does not charge entry and exit fees, it does have administration and investment fees. The Australian company has been forced to refund hundreds of millions of dollars following revelations at the royal commission. Despite this, last year they wrote to clients advising then they were owed money, because of these irregularities, and instead of asking them where they would like the money sent, AMP opened a new super account in their name.

Despite her fall from grace, Isabel dos Santos is still Africa’s richest woman  and now it seems that the daughter of Jose Eduardo dos Santos, the former president of Angola,, has made her fortune by exploiting her own country and corruption; her father had a dictatorial grip on the country for 38 years until his 2017 retirement – enough time to plunder the oil-rich country. His daughter was given enough slack to take basically what she wanted and had ready access to lucrative deals involving land, oil, diamonds and telecoms and was allowed to buy valuable state assets in a series of suspicious deals. In 2016, her father decreed that she be put in charge of the country’s struggling state oil company Sonangol. On the day she was fired by the new president, Joao Lourenço, she approved fifty invoices totalling US$ 58 million of suspicious payments to Matter Business Solutions, an off-shore company, run by her business manager and owned by a friend. It seems that they included two identical invoices for US$ 676k for exactly the same work on the same day.

This week also saw two other related events, the first was the sudden deathofNuno Ribeiro da Cunha,a banker implicated in the embezzlement and money-laundering case against Isabel dos Santos; he managed the account of oil firm Sonangol, formerly chaired by Ms Dos Santos, at the small Portuguese lender EuroBic. Earlier Angolan prosecutors named him as a suspect. It was also reported that a top PWC executive had left the firm after revelations of PwC links with Isabel Dos Santos, with the firm involved with auditing, consultancy and tax advice for her companies.

A recent World Economic Forum study has stressed the importance of countries Increasing their social mobility – defined as providing people with equal opportunities to raise their living standards, regardless of their socio-economic background. 82 economies were analysed and measured against five key criteria, including health, access to and quality of education, technology, work conditions and inclusive institutions. It considers that countries such as China, US, India, Japan and Germany, would stand to benefit most from upward social mobility. It states that if developed and emerging economies, that lag in four areas, (low wages, poor education, inadequate working conditions and lack of social protection), improved and lifted their social mobility score by just ten points, global GDP would jump by 4.4% by the end of the decade.

Latest figures from down under sees the top 1% of Australians (250k) having more than double the wealth (US$ 1.6 trillion) of the entire bottom 50%. The country has seen the number of billionaires decrease by seven to 36, year on year, but they grew their average wealth by an average US$ 460 million in 2019. (Globally, the wealthiest 1% of people have more than double the wealth of 6.9 billion people and the 2.2k billionaires have more wealth than 4.6 billion people). Oxfam note that the rich are getting richer and the poor poorer and that the richest 22 men in the world own more wealth than all the women in Africa, whilst half the world’s population have to survive on less than US$ 5.50 a day. The two most telling facts, in the Oxfam study, are that taxing an additional 0.5% of the wealth of the richest 1% over the next decade is equal to investments needed to create 117 million jobs in education, health, elderly care and other sectors to close care deficits. The other was that developing countries lose an estimated US$ 100 billion a year in tax revenue, as a result of tax avoidance by multinationals. Is This The World We Created?

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