Hooray! Hooray! It’s A Holi-Holiday!                                                           27 May 2021

Six months ago, many property consultancies were predicting a flat 2021 for Dubai realty, with prices edging lower, and how wrong they have been! According to Property Monitor, April Dubai property prices rose 2.5% – the largest single-month increase since March 2014 – to US$ 244 per sq ft; the report also noted that over the past six months, average prices have climbed by 9.5%, with the caveat that this strong performance is not uniform across all communities. It is expected that prices will stabilise in 2021 and that the strong double-digit increases recorded in some communities are likely to slow in momentum “as the recovery switches to a more sustainable pace across Dubai as a whole”. April saw 4.9k property deals – 167% higher on the year and 6.0% on the month. In all, ninety transactions were for above US$ 2.72 million (AED 10 million), growing by 6.7% month on month. YTD, Palm Jumeirah has witnessed 81 villa transactions in deals of more than US$ 2.72 million.

In the first four months of the year, DLD registered 25,455 real estate transactions, (up 51% year on year), valued at US$ 25.1 billion, 72% higher on the year. Over that four-month period, 8.7k new investors entered this market, representing 65% of the total number of real estate investors registered, with a growth of 54%, compared to the same period in 2020. It was also noted that the total value of real estate investments increased by US$ 9.8 billion. During that period, 188k Ejari contracts were recorded – 58% of which were new contracts and the balance renewed contracts. April villa sales saw the top five locations for villa sales being Hadaeq Sheikh Mohammed Bin Rashid, Palm Jumeirah, Wadi Al Safa 5, Wadi Al Safa 7, and Al Yelayiss 2, with apartment sales led Dubai Marina, Burj Khalifa, Palm Jumeirah, Business Bay, and Al Thanyah Fifth.

The latest Asteco report affirms that the Dubai property sector is moving higher, indicating that during Q1, average villa and apartment prices came in 6% and 3% higher on the quarter, with villa prices up 3% on an annual basis. Some locations, including Arabian Ranches, Meadows and Springs jumped 9% on average over the quarter, with Dubai Hills posting a massive 145% climb on year-to-year sales of secondary villas. Apartment sales in certain locations were slightly higher than the 3% average, including Jumeirah Village and Dubai Sports City, both up 5%. Although average rentals for both villas and apartments moved slightly north in Q1 – at 4% and 1% – year on year prices are still 2% and 10% lower. Furthermore, the absence of any large-scale villa development being handed over in Q1, and only 2k apartments, has led to a relative supply shortage.

Various factors come into play to support this recent upsurge including government economic support measures and initiatives, along with the expansion of the ten-year golden visa scheme and more attractive visa terms for both retirees and those working remotely. As in other global locations, there is a marked ‘race to space’ move to upgrade to larger units and mortgage rates are at historic lows; these two elements are also important drivers.

Nakheel also announced that it had sold one of the few remaining beachfront plots, at 17.9k sq mt, on Palm Jumeirah’s West Crescent to a JV between Select Group and Emirates Strategic Investments Company; the JV already owns a 47.5k sq mt plot, adjacent to its latest purchase. It is planning to develop branded luxury homes and a boutique hotel. Other projects built by Select Group include Jumeirah Living Marina Gate in Dubai Marina and 15 Northside in Business Bay.

Seagate Shipyard has launched the first unit of its floating sea resort Neptune, becoming the first environment-friendly floating house in the world; it was bought for US$ 5.45 million (AED 20 million) by Dubai-based businessman Balvinder Sahani. Spanning 900 sq mt, the two-storey building comes with 4 B/R and a glass swimming pool among other features; units use solar energy and smart technologies to treat wastewater. Utilising special hydraulic engines, the units can be safely moved between locations, with the first floating house being launched from Ras Al Khaimah before proceeding to its home base in Jumeirah. The UAE-based ship and vessel manufacturing firm confirmed that the US$ 237 million project, comprising a 156-room luxury hotel, and encircled by twelve residential floating boats, will be completed by Q1 2023.

Dubai Economy reported that there was an 18.8%, year on year, growth to 15.5k in new business licences in Q1, highlighting the emirate’s resilience during the pandemic and its ability to attract new firms. Most of the new permits were for professional activities, (59% at 8.9k) and for commercial (41% at 6.3k). The two most popular locations were Bur Dubai and Deira, with 8.2k and 7.2k licences. In Q1, there were 99.9k business registration and licensing transactions completed, an 8% growth.

‘Dubai Raffles’, an integrated digital platform, will be the vehicle for all future raffle draws and other promotional campaigns in Dubai. It will be welcomed by Dubai businesses, as this will actually manage the whole process without them having to develop their own systems or printing paper coupons; it can also supervise, manage and conduct digitally, with no paper coupons or contact required. In future, it seems that companies will be able to manage promotional raffles and Scratch & Win on ‘Dubai Raffles’, through a dashboard, whilst consumers will be able to track all the promotional draws in which they have entered. According to Sami Al Qamzi, Director General of Dubai Economy, “Dubai Raffles is a value-added service that will further enhance ease of business and support retailers in their business development”. This could be the start of something big for the Dubai economy.

The General Budget Committee met this week to discuss the draft federal budget for 2022-2026, whilst looking into the procedures taken by the Ministry of Finance to draft the federal budget of 2022, pursuant to the Federal Law No 26 of 2019 on general budget and relevant decisions. The MoF was directed to complete all measures needed for planning the draft five-year budget, as per the approved strategic objectives, in line with the UAE’s next 50-year vision.

According to the ‘E-Commerce Sector in the UAE 2020 insights’ report, the country’s e-commerce sector emerged as the fastest-growing economic segment in the ME. The report focused on several indicators in terms of value sales, supported by rising digital connectivity, infrastructure and substantial growth in consumer electronics, apparel and footwear. It also found that the UAE and Saudi Arabia accounted for 75% of ME e-commerce sales, attributable to their relatively high purchasing power, expanded usage of social media, and smartphone penetration rates compared to those of their neighbours. Some analysts see this as an ideal opportunity for the UAE to expand its operations, capture the untapped potential of cross-border e-commerce and enhance its hub status on the global-commerce stage. Latest forecasts point to UAE store-based retail growing by a 1% CAGR, over the 2019-2024 period, whilst e-commerce is forecast to grow by a 19% CAGR.

flydubai has requested all its employees, who had been sent on unpaid leave, to resume work from next Monday. It was reported that, at the beginning of the pandemic, some employees were given the option of being paid out, and take up the redundancy scheme, or go on unpaid leave; 97% took the second choice. The budget airline is confident that UAE’s massive vaccination drive will help their business, as an increasing number of countries open their borders, with flydubai opening up new destinations almost every week.

Although due for delivery by 2023, Emirates has confirmed that it is unsure that it will receive its first Boeing 777x jetliner before 2024. Its president, Tim Clark, commented that “we will not accept a plane unless it is performing 100% to contract, in the same way they expect us to pay 100% to contract at delivery,” and that he has yet to see any data on the aircraft’s engine performance capabilities, despite the plane undergoing test flights since last year and Boeing already having built eleven of them. Emirates is the biggest customer, (with a 126-plane order), for the revamped jet, which Boeing reckons will fly commercially for the first time in 2023, three years later than originally planned.

The launch of the DMCC Crypto Centre has been announced which it is hoped will be a local hub and comprehensive ecosystem for businesses operating in the cryptographic and blockchain sectors. The world’s biggest free zone on commodities trade and enterprise will appeal to the whole spectrum of crypto related businesses, from companies developing blockchain-enabled trading platforms to those trading in crypto assets. Any start-up or entrepreneur, in any way associated with cryptocurrency, will benefit by a presence in the Crypto Centre which will offer co-working spaces to crypto entrepreneurs and SMEs and a range of incubator and accelerator programmes; in addition, the centre will also house a leading crypto advisory practice led by CV Labs, the entity behind the Swiss government-backed Crypto Valley. The federal Securities and Commodities Authority will regulate activities conducted within the Free Zone that include the exchange of crypto assets.

The bourse opened on Sunday 23 May, having gained 126 points (4.8%) the previous three weeks, gained a further 65 points (2.4%), to close on 2,816 by Thursday 27 May. Emaar Properties, US$ 0.08 higher the previous three weeks, remained flat to close at US$ 1.10. Emirates NBD and Damac started the previous week on US$ 3.50 and US$ 0.37 and both closed higher at US$ 3.68 and US$ 0.38.

By Thursday, 27 May, Brent, US$ 3.24 (4.7%) lower the previous three weeks gained US$ 4.32 (6.6%) to close on US$ 69.64. Gold, up US$ 106 (6.0%) the previous three weeks, gained a further US$ 18 (1.0%) by Thursday 27 May to close on US$ 1,894.

The ECB President has commented that it is still too early to discuss winding down its US$ 2.25 trillion emergency bond purchase scheme – a sign to the markets that Christine Lagarde is unlikely to slow down the ECB’s Pandemic Emergency Purchase Programme at their next meeting on 10 June. She added that “we are committed to preserving favourable financing conditions, using the PEPP envelope, and to do so until at least March 2022,” and “it’s far too early and it’s actually unnecessary to debate longer-term issues”.

The US Q1 economy grew at 6.4%, compared to 4.3% in the previous quarter, attributable to the impressive Biden vaccine programme and trillions of dollars in government assistance; these have allowed thousands of businesses to reopen and millions of people to go back to work. All economic indicators headed north, at speed, including consumer spending, (11.3% to the good), business investment and residential construction (up 12.7%). However, US exports dipped at an annual 2.9% rate, with imports heading in the other direction. There are expectations that Q2 expansion could be in double-digit figures, as consumer spending, which accounts for 67% of the US economy, continues to gather momentum. There is every chance that the economy will recoup all of the output lost during the recession by the end of Q2.

As more businesses open and there is an increasing number of vaccinations, applications for US state unemployment insurance have fallen for a fourth consecutive week, with claims decreasing 38k to 406k in the week ending 22 May. With hopes that more Americans will socialise and travel, hiring numbers will inevitably continue to head north There is concern in some states that the continuation of federal unemployment benefit programmes is making it more difficult for employers to hire workers and so they have pulled out of federal unemployment benefit programmes.

After China’s National Development and Reform Commission issued a warning to commodity companies to maintain “normal market orders” and stop pushing up prices, they did decline; China, the world’s factory, and the biggest global user of raw materials, has seen monthly exports and imports 32% higher to US$ 264 billion and 43% higher respectively. In recent months, they had indeed skyrocketed, with global prices for many of the raw materials needed for industries – including copper, coal, steel and iron ore – moving higher, as lockdowns and other measures to curb the spread of Covid-19 had been eased. It was reported that the NDRC “collectively summoned” key Chinese companies, in steel, iron and aluminium, to discuss the continuous and drastic increase of a handful of commodities. Two other drivers in the sudden fall in commodities, have been attributed to The White House saying it had cut back its infrastructure bill from US$ 2.25 trillion to US$ 1.70 trillion and stalled factory production in India after its latest serious lockdown.

It has been estimated that iron ore has helped Australia shave off US$ 38.7 billion from the country’s budget deficit and earlier in the month it was trading at
US$ 240 a tonne, more than double the price it was twelve months earlier. Last time it had such a boom period was ten years ago when it was worth US$ 190 a tonne. The commodity is the country’s single largest export and Treasury predicts the value of that market will increase from US$ 79.6 billion last year to $105.1 billion this financial year; that being the case, both the federal and state governments will benefit by increased royalties and tax revenue, with miners increasing profits (particularly if their costs are as low as US$ 15 a tonne). Meanwhile, China’s steel production reached a record high in April – up 16% compared to a year earlier – as its economy continues to be driven by high-rise and infrastructure construction. However, as the Vale mine in Brazil – the biggest in the world -returns to some of normalcy, after two major dam disasters in 2015 and 2019, the Chinese authorities may continue to show their displeasure with Australian “diplomacy” by moving some orders from Australia to South America.

In a move that could see taxes on imports phased out completely, within fifteen years, the UK and Australia are in the last round of negotiations on a trade agreement. There had been a split reported earlier concerning UK beef and lamb farmers being undercut by larger Australian producers, but this was apparently resolved after Boris Johnson pushed for unity, even though the National Farmers’ Union has been concerned that freeing up the UK-Australian trade in meat will lead to hundreds of British cow and sheep breeders going out of business. Figures show that trade in meat last year was relatively small, with only 0.15% of Australian beef going to the UK and 14% of sheep meat imported into the UK originating from Australia. However, the UK is keen to get as many trade deals as possible under its belt and wants this approved prior to the next G7 meeting in Cornwall in June. Last year, bilateral trade totalled US$ 28.5 billion, with Australia’s main imports being cars, medicines and alcoholic drinks and their exports to the UK being gold, wine and lead.

Officials expect an agreement with New Zealand to quickly follow on similar terms. In addition, the UK government is also considering early trade deals with India and Canada, with talks in Ottawa beginning soon. Currently, it is drawing up an approach to the six member countries of the GCC, with International Trade Secretary, Liz Truss, commenting that “the Gulf is a definite target and we are working on the approach to [the] Gulf,” and “we are in discussions with the GCC and I hope that we’ll be able to say more about that soon.” British trade with GCC members was worth US$ 63.9 billion in 2019 and was the country’s fourth largest market after the EU, US and China.

With its economy slowly reopening as lockdown restrictions are eased, UK government borrowing in April fell by a third to US$ 44.9 billion, compared to the same month last year, but still the second highest April deficit on record. Borrowing – the difference between spending and tax income – for the fiscal year to March was at US$ 426.1 billion, the highest annual return since World War II; this has resulted in government debt growing to US$ 3.08 trillion, equating to 98.5% of GDP.

The VisitBritain agency estimates that 2021 UK tourism spending by holidaymakers this year will be 43.9% lower, at US$ 72.8 billion, than the level of 2019; of that total, spending by foreign tourists will be down 78.2% at only US$ 8.8 billion. The agency puts the economic cost of Covid on the tourism sector at US$ 82.2 billion, as last year, the domestic tourism industry shrank by about two-thirds, with coronavirus restrictions forcing the cancellation or postponement of millions of people’s travel plans. The Johnson government has poured in an estimated US$ 35.4 billion into the sector, including the furlough scheme, the VAT cut for hospitality businesses and the business rates holiday. This year, the UK tourism sector will be praying for fine weather so that the millions, who cannot go overseas for a holiday, will spend the money at UK resorts and travel destinations. Hooray! Hooray! It’s A Holi-Holiday!