Two of a Kind, Working on a Full House.                                                    25 March 2022

For the past week, ending 25 March 2022, Dubai Land Department recorded a total of 2,461 real estate and properties transactions, with a gross value of US$ 1.85 billion. A total of 330 plots were sold for US$ 450 million, with 1,653 apartments and villas selling for US$ 933 million. The top three transfers for apartments and villas were all apartments – one was sold for US$ 125 million in Marsa Dubai, a second sold for US$ 121 million in Burj Khalifa, and the third sold for US$ 76 million in Business Bay The top two land transactions were for a plot of land in Nadd Hessa, worth US$ 52 million, and one in Palm Jumeirah for US$ 25 million. The most popular locations in terms of volume and value were Al Hebiah Fifth, with 164 transactions, totalling US$ 91 million, followed by Merkadh, with 25 sales transactions, worth US$ 24 million, and Wadi Al Safa 5, with 26 sales transactions, worth US$ 31 million. Mortgaged properties for the week totalled US$ 420 million, with the highest being for land in Al Qusais First at US$ 87 million. 124 properties were granted between first-degree relatives worth US$ 57 million.

The latest S&P Global Ratings report notes that Dubai property prices and rents will continue to increase this year, in line with the trend of 2021, driven by the emirate’s “strong economy”. It forecast that this year there would be “moderate increases in prices and rents as well as strong sales”, which will encourage developers to launch new developments. To those who think prices have already peaked, they should bear in mind that current prices are still up to 30% below those recorded in 2014. S&P also advanced the notion that “high oil prices will remain an important positive factor for investor sentiment in the GCC region,” and “geopolitical tensions could highlight Dubai’s reputation as a haven and provide a boost to demand.” The report also indicated that “the addition of about 30k units over 2022 should moderate price and rent increases,” and it expected a slower growth in mortgage transaction volume as rates begin to move higher.

Damac’s latest contribution to the Dubai property market is the twin tower, Safa One scheme, located by Safa Park.  The project is designed to replicate a masterpiece necklace, based on a design by Fawaz Gruosi, the founder of Swiss jeweller de Grisogono. The project will have lush garden terraces and hanging gardens, an artificial beach and swimming pool. The higher Tower A will have an urban tropical island with cascading waterfalls and plentiful plants. 1 -3 B/R apartments will be available on the luxury levels, while super luxury levels will feature 2 – 5 B/R apartments, with prices starting at US$ 454k.

Pearlz introduces Dubai’s first real estate launch of 2022 – and its second project in five months by Danube Properties after their US$ 129 million Skyz project in Arjan last October. The latest US$ 82 million project, located in Al Furjan area close to Ibn Battuta Mall, will comprise 1k residential units, as well as a number of retail and recreational facilities. The Pearlz development will bring the developer’s portfolio to over 8k, (with nearly 4.6k, with a sales value of US$ 989 million so far delivered), and a development value of US$ 1.44 billion.

Dubai International Airport (DXB) is gearing up for the peak holiday rush, with an estimated 1.4 million passengers expected to pass through over the next two weekends – 25–28 March and 07-09 April, as schools close for their spring holidays. The authorities are urging passengers to use Dubai Metro to avoid congestion, on the roads in and out of the airport, as well as to use Smart Gates whenever possible.

In line with the Government Procurement Programme, Emirati entrepreneurs and national enterprises in Dubai won contracts worth US$ 251 million, (3.0% higher than in the previous year), from sixty-nine various local and federal government entities, semi-government bodies and private businesses in 2021. Under the directives of HH Sheikh Mohammed bin Rashid Al Maktoum, any government body, or entity in which the government has at least a 25% stake, are required to allocate 10% of their purchasing to Emirati companies that are members of Dubai SME. Since 2002, GPP has secured over 16.9k procurement contracts for 362 Emirati companies, with those in the commercial sector accounting for 83% of the contracts, the professional sector, with 13%, and 4% to industrial firms.

Last year, HH Sheikh Mohmmed bin Rashid Al Maktoum announced his intention for Dubai to attract 100k coders, and this week, ten initiatives were launched to empower 15k coders in the UAE over the next six months. Launched by Coders HQ, in partnership with global tech companies, the scheme is open to expats and citizens, with the double aim of creating a large community of trained coders in the country and providing programmers with optimal job opportunities in the market. It is estimated that there are already 63k digital skilled professionals in the country.

Dubai’s Crown Prince, HH Sheikh Hamdan bin Mohammed bin Rashid, has directed the establishment of a specialised entity, focused on ensuring fair trade and consumer rights protection. The directive is aimed at enhancing sustainable economic growth in Dubai and to make it a more attractive global fair trade destination, providing increased growth opportunities for the emirate’s business community. He also commented that “the trade sector is the backbone of our economy. Today, Dubai is a base for global, regional and local companies to tap opportunities in the world’s most attractive and fastest-growing markets, and we continue to strengthen our position as a global leader in supporting businesses to enhance their success and innovation.”

Following a roasting in the UK media, after terminating 800 staff, P&O Ferries has shared details of its redundancy payments of over US$ 48 million, claiming its settlement with its workers is believed to be “the largest compensation package in the British Marine Sector.” The Dubai-owned company, which claimed that it risked collapsing into administration without the cuts, noted that more than forty staff would get severance packages of more than US$ 132k (GBP 100k) each, some employees are set to get 91 weeks’ pay as well as the chance of new employment, and no employee will receive less than US$ 20k, (GBP 15k). Unions claim that some of those laid off will be replaced by Indian seafarers on US$ 2.39 an hour. On Tuesday, the ferry operator responded to UK ministers explaining its conduct, details of which have yet to be released. It was also reported that the UK government was reviewing all of its contracts with P&O Ferries, and its owner DP World, including a US$ 33 million subsidy to DP World to help develop London Gateway as a freeport. There is not too much press coverage on the investments that DP World has made in the UK – only last September, it agreed to invest a further US$ 395 million in the new fourth berth at London Gateway logistics hub to strengthen UK’s supply chain, bringing its total investment in the country over the past decade to over US$ 2.63 billion – a little more than the US$ 33 million UK subsidy! It sees that prime minister, Boris Johnson, and some of his ministers, may have been wrong assenting that the sudden sacking of the 800 employees could cost the company fines “running into millions of pounds” if found guilty of breaking UK employment law However, addressing a committee of MPs yesterday, P&O’s boss, Peter Hebblethwaite, apologised for the distress caused by the cuts, but said they were necessary to save the business which has been loss-making.

In the final throes of completing its administration process, NMC Health has divested its final international asset by selling its 53% stake in Saudi Medical Care Group. In 2019, the UAE-based hospital operator formed a JV with Hassana Investment Company and contributed five of its private hospital assets and an additional cash injection for its 53% stake. There were no details available as to the buyer and the value of the deal. In 2020, it was found that NMC Health had hidden US$ 4.0 billion of debt in it books and had inflated its cash position, resulting in the company going into administration. At the time, April 2020, it was one of the biggest privately-owned healthcare groups in the UAE, with two hundred healthcare units in seventeen countries.

Shuaa Capital has acquired a majority stake in locally based financial comparison website Souqalmal, but price and investment size have not been made public. The financing by the Dubai-based investment bank, with assets under management of almost US$ 14 billion, will be used to execute an ambitious growth plan over the next two years. Other shareholders in the business are Riyad Capital and UK comparison website GoCompare. It is estimated the UAE is the MENA’s biggest country when it comes to the number of deals and funding, with Emirates-based start-ups raising US$ 1.17 billion across 155 transactions last year. Souqalmal’s founder, Ambareen Musa, will continue as chief executive and oversee the expansion of its services.

Yesterday, DEWA’s IPO opened for subscriptions, with a price range of between US$ 0.613 and US$ 0.676, equating to a market cap of between US$ 30.63 billion and US$ 33.76 billion, making it the largest company on the bourse by market cap. The IPO subscription will be open until 02 April for retail investors and 05 April for qualified investors, with a total of 6.5% of the utility’s existing shares, (3.25 billion), on offer. If all goes to plan, trading will start on the DFM on 12 April.

At this week’s virtual AGM, DFM shareholders approved a 3% cash dividend, equivalent to US$ 65 million, the 2021 accounts, and the Fatwa and Shariah Supervisory board’s report. It also reappointed PricewaterhouseCoopers as the external auditors for the fiscal year 2022. The AGM approved the sale of 4.2 million treasury shares allocated to the company at the time of its IPO for employees’ stock option program.

At another virtual AGM, Amanat Holdings shareholders approved the consolidated financial statements for 2021, and to distribute a cash dividend of US$ 0.016 per share. This figure equates to a total dividend pay-out of US$ 41 million, equating to 6% of the firm’s share capital and 53% of profit attributable to equity holders. Last year, its profit skyrocketed twenty-eight-fold to US$ 77 million.

The DFM opened on Monday, 21 March 79 points (2.3%) lower on the previous fortnight, gained 62 points (1.8%) to close on Friday 25 March, at 3,412. Emaar Properties, US$ 0.12 higher the previous three weeks, was US$ 0.05 higher at US$ 1.52. Emirates NBD, DIB and DFM started the previous week on US$ 3.76, US$ 1.64 and US$ 0.63 and closed on US$ 3.92, US$ 1.65 and US$ 0.64. On 25 March, trading was at 127 million shares, with a value of US$ 92 million, compared to 275 million shares, with a value of US$ 505 million, on 25 March 2022.

By Friday 25 March 2022, Brent, US$ 10.08 (9.3%) lower the previous fortnight, had gained US$ 4.75 (4.4%), to close on US$ 112.68. Gold, US$ 73 (3.7%) lower the previous week, gained US$ 39 (2.0%), to close Friday 25 March on US$ 1,958.  

Helped by near record high prices, the world’s largest oil-exporting company saw 2021 profits more than double last year from US$ 49 billion to US$ 110 billion. Saudi Aramco’s results were also helped by the consolidation of Sabic’s full-year results and stronger refining and chemicals margins. 2021 capex was 18% higher on the year, to US$ 31.9 billion, with 2022 guidance ranging between US$ 40 billion to US$ 50 billion. The world’s third largest company, behind Apple and Microsoft, believes that “substantial new investment is required to meet demand growth, against a broader decline in upstream investment across the industry globally. Its share value rose 3.6%, on the news, to US$ 11.56, as Aramco maintained its 2021 dividend at US$ 75 billion, as well as issuing one bonus share for every ten shares held.

Despite an eight-month delay after local authority licensing problems, Elon Musk has finally opened a huge electric car “gigafactory” near Berlin which is Tesla’s first European hub. Built at a cost US$ 5.3 billion, the plant will produce 500k vehicles every year and employ some 12k, at full capacity. Last year, VW sold 450k battery-electric vehicles worldwide, and has a 25% market share in Europe’s electric vehicle market, compared to Tesla’s 13%. This week, the US car maker delivered its first thirty German-made Model Y Performance cars, with a 514 km range and at a cost of US$ 70k.

Another fatal crash puts Boeing under the spotlight yet again. On Monday, a seven-year-old China Eastern Airlines Boeing 737-800 crashed in southern China with 132 people onboard, and to date it is not yet known what caused the accident. The airline has grounded all its 737-800s, whilst the Indian regulator has placed the country’s fleet of Boeing 737 planes under “enhanced surveillance”; in the country, SpiceJet, Vistara and Air India Express all have Boeing 737 aircraft in their fleets. It is estimated that there are over 4.2k Boeing 737-800 passenger planes in service, of which some 25% are to be found in China; they have been in production for over twenty years. This comes as the US plane maker is still trying to recover from two fatal crashes involving its 737 MAX aircraft which claimed the lives of 346 passengers and crew. Boeing’s share price fell by 3.5% in New York on Monday, whilst China Eastern Airlines’ share price fell by more than 6% in Shanghai on Tuesday.

In 2021, global music revenues grew at the fastest rate this century, surging 18.5% to US$ 25.9 billion, with a breakup indicating that streaming, (with paid subscribers 18.1% higher at 523 million) now accounts for 65% of total revenues, followed by CDs, vinyl/cassettes, (19%) and downloads 4%, with the 11% balance attributable to a mix of royalty payments and licensing music to films, TV shows and adverts. Sales of CDs increased for the first time this millennium, and vinyl revenues were up by 51%. South Korean band BTS were the biggest-selling act for the second year running, followed by Taylor Swift was the year’s second best-seller, the same position she held last year, while Adele, who had the most popular record overall, selling 4.7 million copies came third. The UK music industry, the third biggest in the world behind the US and Japan, grew at a slightly slower rate than the global average, with revenues up 12.8% to US$ 1.72 billion.

Not since 1969 has the number of Americans applying for unemployment benefits has been as low, with the US job market continuing to show strength in the midst of rising costs and an ongoing coronavirus pandemic. For the week ending 19 March, jobless claims fell 28k to 187k, with a total of 1.35 million Americans collecting jobless aid. Last month, 678k new jobs were added, as the unemployment rate dipped 0.2% to 3.8%.

Having raised its benchmark lending rate by 25 bp last week, Federal Reserve Chairman Jerome Powell has confirmed that it is prepared to raise interest rates by bigger steps if needed to contain “much too high” inflation. That seems to point to the Fed being prepared “to move more aggressively by raising the federal funds rate by more than 25 basis points” to damp down inflationary pressures, if so needed. Inflation, now at its highest level in four decades, will continue to move northwards as the Ukrainian crisis worsens, and the US economy gets further hit by supply chain problems. The Fed chief is keen “to restoring price stability while preserving a strong labour market,” but there is always a chance that this strategy may push the economy into a recession.

February government borrowing was higher than expected as the gap between spending and tax receipts reached US$ 17.4 billion, as surging inflation resulted in interest payments being more than 50% higher; the expected figure was a lot less at US$ 10.7 billion. So far this fiscal year, interest payments on government debt have rocketed by 78.7% to US$ 88.8 billion, partly as a result of higher coupons being paid on the US$ 662.5 billion of inflation-linked gilts it has issued; on the flip side, inflation has helped propel tax receipts higher. For the first eleven months of the fiscal year (in the UK the fiscal year ends in March), borrowing at US$ 183.4 billion, was less than half the figure compared to a year earlier, when large scale public economic support was the order of the day; the figure is also US$ 34.3 billion below the last official OBR forecast, allowing the Chancellor, Rishi Sunak, some wiggle room. Meanwhile, public debt of US$ 3.0 trillion is 94.7% of GDP – its highest level in nearly sixty years.

It is reported that Russian President Vladimir Putin wants “unfriendly” countries to buy its oil and gas with roubles, whilst it seems that “friendly” countries, such as China and Turkey, could be allowed to pay in Bitcoin or in their local currencies. The move is seen as a means to boost the Russian currency, which has lost over 20% in value YTD, and has also seen the cost of living rise to almost 20%, as a consequence of sanctions imposed by the UK, US and the EU, following the invasion of Ukraine.

Meanwhile in an attempt to reduce Europe’s dependence on Russian energy supplies, the EU and US have agreed to the US to provide the EU with extra gas, equivalent to around 10% of the gas it currently gets from Russia, which supplies almost 40% of current EU needs; and with other countries also agreeing further supplies to the EU, it is estimated that this extra 15 billion cu mt will equate to 24% of the gas currently imported from Russia. The ultimate aim is to lift this annual figure to about 50 billion cu mt to the EU, and according to EC President Ursula von der Leyen, in a meeting this week with Joe Biden, this “is  replacing one-third already of the Russian gas going to Europe today.” The US President noted that the long-term benefits of the deal would outweigh the short-term pain that reducing Russian gas supplies would cause. To the outsider, it seems that certain countries are already feathering their own nest and may have forgotten that, in the short-term, their focus must be on saving the Ukraine.

It has to be Australia where the Perth Casino Royal Commission concluded that “Crown Resorts has been found unsuitable to hold a gaming licence in Western Australia”, and that there had been failings and “numerous deficiencies” by both Crown and state regulators. The 1k page report contained fifty-nine recommendations and identified a series of failures by Crown Resorts, including:

• facilitating money laundering through what were identified as the Riverbank accounts
• failing to have an effective anti-money laundering program
• permitting junkets with links to criminals to operate at the Perth casino
• failing to minimise casino gambling-related harm
• failing to be open and accountable in communications with the Gaming and Wagering Commission.

The Commission noted that the Crown’s corporate and governance structure, as well as the Perth casino’s risk management, gambling-related harm and money laundering programs, all required attention. Furthermore, it also found that the regulatory framework to manage Crown was “anachronistic” and was designed “without the experience or understanding of modern casino gaming operations and the risks which they pose to the public”. The Commission found that neither the WA’s gaming regulator, the Gaming and Wagering Commission, and the Department of Local Government, Sport and Cultural organisation had “an adequate or accurate understanding of its role in casino regulation” With the poacher, unsuitable to hold a gaming licence in Western Australia, and the gamekeeper, apparently unfit to regulate the industry, it seems Two of a Kind, Working on a Full House.