The Carnival Is Over!

The Carnival Is Over!                                                                         01 April 2022

For the past week, ending 01 April 2022, Dubai Land Department recorded a total of 2,135 real estate and properties transactions, with a gross value of US$ 2.23 billion. A total of 247plots were sold for US$ 395 million, with 1,423 apartments and villas selling for US$ 842 million. The top three transfers for apartments and villas were all apartments – one was sold for US$ 120 million in Marsa Dubai, a second sold for US$ 83 million in Burj Khalifa, and the third sold for US$ 75 million in Business Bay. The top three land transactions were for a plot of land in Palm Jumeirah, worth US$ 76 million, a plot in Hadaeq Sheikh Mohammed bin Rashid for US$ 8 million, and land for US$ 8 million in Al Warqaa 3.  The most popular locations in terms of volume and value were Al Hebiah Fifth, with 121 transactions, totalling US$ 72 million, followed by Al Merkadh, with 29 sales transactions, worth US$ 19 million, and Hadaeq Sheikh Mohammed bin Rashid, with 15 sales transactions, worth US$ 61 million. Mortgaged properties for the week totalled US$ 921 million, with the highest being for land in Nad Al Shiba First at US$ 87 million. 79 properties were granted between first-degree relatives worth US$ 79 million.

Danube Properties managed to sell 100% of the 300-unit inventory of Pearlz, along with a number of retail and recreational facilities, with a development value exceeding US$ 82 million in one day. It had also recently delivered its ambitious project ‘Lawnz’ to 1k plus property buyers.

This week saw the launch of the Elysian Mansions development, part of the four-year Tilal Al Ghaf project, which will include more than 6.5k freehold homes, ranging from apartments and town houses to larger, luxury villas. At the centre of the development – which will comprise four walkable neighbourhoods, with about 355k sq mt of landscaped open areas, 18 km of walkable trails and 11 km of cycling paths – will be Lagoon Al Ghaf, a 70k sq mt swimmable lagoon with a 120 mt private beach accessible to mansion owners only.. Developed by Majid Al Futtaim, and located close to Dubai Sports City, this initial project comprise ninety-two 5 B/R – 6 B/R “organic-luxe homes inspired by nature”,  with prices ranging from US$ 4.9 million to US$ 9.5 million. These ultra-prime villas come with multiple entertaining areas, spa and wellness spaces, a sky suite with roof terrace, an internal lift and an underground glass-encased car gallery, with a capacity for six to eight vehicles.

On 24 February, STR estimate that record 132k hotel rooms were sold in the emirate and that Expo 2020 was the main driver behind the figure; this could well be broken again this week as the global event closes after a successful six-month season. It is expected that occupancy during the summer months will return to their pre-pandemic levels, whilst the FIFA World Cup in Qatar will inevitably boost demand as many fans will use Dubai as a base (despite the high transport prices). As long as global travel restrictions continue to ease, there is no doubt that Dubai tourism outlook is optimistic and will continue to be one of the busiest global tourist locations.

Following double-digit price rises over the past two months, there is more of the same for April. From today, 01 April, petrol costs jumped to new seven-year highs, on the back of surging global oil prices, allied with tightening supply, as Brent started the week on US$ 100. Super 98, Special 95 and diesel rose by US$ 0.051 (15.79%) to US$ 1.019, by US$ 0.079 (16.02%), to US$ 0.986, and by US$ 0.226 (15.78%) to US$ 1.095. This is the first time that Super 98 and diesel have exceeded the US$ 1.00 mark.

Tributes to the late Easa Saleh Al Gurg, who died on Thursday, have been led by HH Sheikh Mohammed bin Rashid who noted that Al Gurg “was one of the most important men of our national economy.”  He was among the group of visionary people who helped to oversee the rise of Dubai and the modern-day UAE and founded a huge conglomerate spanning twenty-seven companies in retail, building and construction, industrial and property. He started his adult life in the 1950s, with the British Bank in Dubai, before building up his business interests; he was appointed UAE’s ambassador to the UK from 1991 to 2009, and was awarded the Order of Zayed II, by the late Sheikh Zayed bin Sultan Al Nahyan, in 1997.  Apart from his major business and diplomatic works, he also created the Al Gurg Charity Foundation which, inter alia, awarded numerous foundation scholarships to help young students.

The UAE and Israel have now agreed on a Comprehensive Economic Partnership Agreement that it hopes will deepen trade and investment ties, accelerate growth and lead to a new era of peace, stability, and prosperity in the ME. Only six months after the signing of the Abraham Accords last September, talks have been concluded and the agreed text is now being finalised ahead of an expected formal signing, probably after the holy month of Ramadan which is expected to start on Sunday. The benefits of the UAE-Israel CEPA will substantially reduce or remove tariffs on a wide range of goods, enhance market access for services, promote investment flows, create jobs, promote new skills, enhance climate action and deepen cooperation on strategic projects.

It seems that Grant Shapps is no stranger to controversy and has previous form, having to step down, in 2015, as minister of state due to allegations of bullying within the Conservative Party. It had been claimed that, in his previous role as party co-chairman, he had ignored repeated allegations of bullying, involving a party youth organiser, who later took his own life; his father noted the day before Shapps resigned that whoever else is involved in this – clearly these senior members of the party have been telling lies … If they had behaved responsibly … none of these events would have happened; my son would still be alive and many activists wouldn’t have been intimidated and harassed”.

In May 2008, Shapps was cited as one of several shadow ministers who had received cash from firms linked to their portfolios.; all donors had been introduced by Michael Gove. The Commissioner exonerated all shadow ministers indicating that they were permitted to receive donations from organisations covered by their briefs as long as the person has a company in the UK or lives in the UK! He also founded a web publishing business, How To Corp Limited, involved in business publications and software, and allegedly appeared to use at least three people, under the names of Michael Green, Corinne Stockheath and Sebastian Fox, for testimonials. In 2012. He denied having used any pseudonym after entering parliament and, in 2014, threatened legal action against a constituent who had stated that he had. In February 2015 he told LBC Radio “Let me get this absolutely clear … I don’t have a second job and have never had a second job while being an MP. End of story.” However, in March 2015, he admitted to having had a second job while being an MP and practising business under a pseudonym. In his admission, he stated that he had “over-firmly denied” having a second job.  Under the name Michael Green, Shapps had offered customers a “a get-rich-scheme” costing US$ 497 and promised them a “toolkit” that would earn them US$ 20k in twenty days, provided they followed its instructions in an e-book; they included advising the user to create their own toolkit and recruit 100 “Joint Venture Partners” to resell it for a share of the profits.

In August 2018, the FT reported a “secret pay deal” between Shapps and OpenBrix, a British blockchain property portal company, alleging that he would have received a payment in cryptocurrency tokens with a future value of up to US$ 920k. The then chairman of the all-party parliamentary group on blockchain, which he actually had initiated, resigned from OpenBrix as well as his chairmanship from the group. Shapps maintained that he had confirmed with the standards commissioner that he was not required to register the interest. Then in September 2019, the now Secretary of State for Transport oversaw Thomas Cook Group fell into administration, leaving more than 150k UK tourists in need of repatriation.

This week, the same Grant Shapps has given the boss of P&O Ferries “one final opportunity” to reemploy sacked staff on their previous salaries. With his past history, it is laughable that he had the gall to post that “a reversal at this point may also go some way in starting to repair your firm’s reputation”.

Dubai Municipality estimated that the emirate imported 7.9 million tonnes of food last year, with nearly 287k food shipments and over 1.7 million food products, driven by various measures to ensure strong quality control of foodstuff and to enhance the stability of food imports; on a quarterly basis the total weights imported were 1.9 million tonnes, (Q1), 2.3m, 1.81m and 1.83m. The municipality closely monitors the internal and external conditions that impact food safety in Dubai, ensuring the emirate’s leading position in the food safety map at regional and international levels. The municipality networks closely with both federal and local entities to support local and national goals to strengthen food supply chains.

Dubai Electricity and Water Authority’s Initial Public Offering opened for subscription on Thursday, with the subscription period running until 02 April for retail investors and until 05 April for qualified investors. A price range has been set at between US$ 0.61 and US$ 0.67, equitable to a market value of US$ 30.6 billion and US$ 33.8 billion. Initially a total of 3.25 billion shares, or 6.5% of the utility’s existing shares, was offered, but due to such demand this was subsequently increased to 17.0% of its share capital, (8.5 billion ordinary shares); this would see DEWA raising between US$ 5.2 billion to US$ 5.7 billion from the IPO. It does seem that the retail sector will be hugely oversubscribed and could have done with a bigger share than the 325 million of the 8.5 billion shares on offer., DEWA’s debut on the DFM is slated for 12 April.

The M Glory Group has invested US$ 409 million in its new electric vehicle manufacturing hub, located in Dubai Industrial City. When at full capacity, it will be rolling out 55k vehicles annually, to meet an increasing rising demand for green mobility to reduce global carbon emissions. It will be one of the largest such facilities in the region and provide employment for more than 1k and will export not only to the GCC but also to the likes of Egypt, Kenya, Mali, Senegal and Tanzania.

in 2020, Gulf Navigation made a loss of US$ 77 million but managed to make a US$ 17 million profit last year, driven by lower operating and finance costs. The Dubai-based maritime and shipping company posted declines in operating costs by 31.5% to US$ 27 million and finance costs, 13.0% lower at US$ 11 million. Last year, the company restructured its debt which “reflected positively on the company’s results by benefitting from the reduction of debt provisions”, with loans of US$ 82 million being restructured and refinanced under “new and flexible term.

Following a 2020 profit of US$ 55 million, Union Properties sank to a net loss of US$ 263 million, despite a 6.0% rise in revenue to US$ 109 million, after it rectified the value of its property portfolio that “had been inflated in prior years”; there was no surprise to see that the new board changed the company’s independent valuer. The Dubai developer, now in the throes of a major restructuring process, booked a US$ 302 million loss in 2021 following a US$ 203 million gain the previous year. The accounts also showed a US$ 42 million impairment charge, relating to investments in quoted funds and quoted equities, which are “suspected to have been misappropriated by the company’s former officials”. UP shares fell 4.12% on the news to US$ 0.063 and have fallen 28.0% YTD.

The DFM opened on Monday, 28 March 62 points (1.8%) higher on the previous week gained 125 points (3.7%) to close on Friday 01 April, at 3,537. Emaar Properties, US$ 0.17 higher the previous four weeks, was US$ 0.11 higher at US$ 1.63. Emirates NBD, DIB and DFM started the previous week on US$ 3.92, US$ 1.65 and US$ 0.64 and closed on US$ 4.09, US$ 1.69 and US$ 0.67. On 01 April, trading was at 92 million shares, with a value of US$ 60 million, compared to 127 million shares, with a value of US$ 92 million, on 25 March 2022.

For the month of March, the bourse had opened on 3,208 and, having closed the month on 3527, was 319 points (9.9%) higher. Emaar traded US$ 0.25 higher from its 01 March 2022 opening figure of US$ 1.38, to close the month at US$ 1.63. Three other bellwether stocks, Emirates NBD, DIB and DFM started the month on US$ 3.90, US$ 1.66 and US$ 0.63 and closed on 31 March 2022 on US$ 4.09, US$ 1.68 and US$ 0.66 respectively. The bourse had opened the year on 3,196 and, having closed March on 3,527, was 331 points (10.4%) higher, YTD. Emaar traded US$ 0.30 higher from its 01 January 2022 opening figure of US$ 1.33, to close March at US$ 1.63. Three other bellwether stocks, Emirates NBD, DIB and DFM started the year on US$ 3.69, US$ 1.47 and US$ 0.72 and closed on 31 March on US$ 4.09, US$ 1.68 and US$ 0.66 respectively.

By Friday 01 April 2022, Brent, US$ 4.75 (9.3%) higher the previous week, had lost US$ 13.26 (11.8%), to close on US$ 99.42 Gold, US$ 39 (3.7%) higher the previous week, shed US$ 29 (1.5%), to close Friday 01 April on US$ 1,929.  

Brent started the year on US$ 77.68 and gained US$ 22.37 (28.8%), to close 31 March on US$ 100.05. Meanwhile, the yellow metal opened January trading at US$ 1,831 and has gained US$ 112 (6.1%) during 2022, to close on US$ 1,943. For the month, Brent opened at US$ 99.23 and closed on 31 March, US$ 0.82 (0.8%) higher, on US$ 100.05. Meanwhile, gold opened March on US$ 1,921 and gained US$ 22 (1.1%) to close at US$ 1,943 on 31 March.

According to Dr Sultan Al Jaber, the UAE’s Minister of Industry and Advanced Technology, global oil markets face tighter supply in the short term, because of several factors including the long-term underinvestment into the oil and gas sector has left markets more exposed. Although geopolitical situations are in play, in a highly sensitive energy market, at the base of the current volatility in oil prices is a deeper, underlying structural issue. He reiterated that “we have a responsibility to inject a dose of realism into the planning for energy transition,” and ““let’s invest in new and future energies but let’s not defund the current energy system … before a new one can take its place.” The minister noted that annual energy investment into oil and gas was up to US$ 200 billion below where it needs to be and that is just to keep up with demand over the next eight years; last year, sector investment, at US$ 341 billion, was 23% lower than pre-pandemic levels He also warned that “put simply, we can’t, and must not unplug the current energy system before we have built a new one.”

Further to Opec+ announcing earlier in the week that it would be adding another 432k bpd of crude to the market in May, the Biden administration announced yesterday that it would be releasing a further one million bpd for the next six months from its strategic petroleum reserve to tackle soaring inflation and gasoline prices. This is the third time the country has tapped into its SPR in the past six months, with the last time being  60 million barrels in November.

The International Energy Agency said its members have agreed to release more oil from emergency reserves to offset the market turmoil caused by Russia’s war in Ukraine. Details of the new emergency stock release will be announced early next week. The agreement follows last month’s action, taken by IEA members, where they pledged to release 62.7 million barrels of oil from emergency stocks. The IEA commented that Russia’s war in Ukraine continues to put significant strain on global oil markets, which continues to raise concerns about the global energy security.

With Ronin Network, owned by Vietnamese parent company Sky Mavis, announcing that it had US$ 615 million stolen, there could be a million people having lost in the second largest crypto hack in history. It says a hacker transferred US$ 540 million (now valued at US$ 615 million) worth of cryptocurrency to themselves six days ago, but the company only noticed on Tuesday when a customer was unable to withdraw their funds. The platform, which powers the popular mobile game Axie Infinity, with players fighting cartoon pets called Axies to earn cryptocurrency, like Ethereum, and collect the game’s non-fungible tokens (NFTs). It is thought that some may have lost their “life savings” after saving up digital coins from playing the game. Over the past twelve months, it has been estimated that a raft of mass crypto heists has netted over US$ 2 billion.

After fourteen years of being the majority shareholder in the NatWest Group, the UK government’s stake in the troubled bank has fallen below 50%, to 48.1%, as it divested US$ 1.58 billion worth of shares to NatWest. Since the government bailed out the bank at the height of GFC, for US$ 59.3 billion, the plan was always to return the bank to private ownership; initially it held 57% but this was extended to top 84%. During the crisis, the government also bailed out Lloyds Bank, acquiring a 43% stake, and managed to divest this by 2017.

As the rouble continues to struggle, Vladimir Putin has announced that “unfriendly” foreign countries must start paying for gas in roubles or supplies will be cut as from today, 01 April. Foreign buyers of Russian gas will need to open an account at Russia’s Gazprombank and transfer euros or US dollars into it in order to pay for gas exported from Friday onwards. However, it appears that the payments for that gas will not be paid by European buyers until mid-May. As the EU relies heavily on Russia – 40% of its gas and 30% of its coal emanates from there – it has not placed bans on oil or gas, unlike US and Canada. It has been estimated that Russia currently gets US$ 443 million per day from gas sales to the bloc and it has no way of rerouting this supply to other markets.

With a general election just weeks ahead, there is no wonder that the Morrison government gave money back to the voters in this week’s Australian budget Those six million Ozzies, on some form of government payments, will receive a one-off US$ 187 (AUD 250) “cost of living payment” this month; it will be exempt from taxation and will not count as income support for the purposes of any income-support payment. Another cost-of-living tax offset sees the phasing out the so-called Low and Middle Income Tax Offset, first introduced in 2019, but it will increase the payment for everyone, by US$ 315 (AUD 420), for its last year, (2021-2022), of operation. LMITO has resulted in annual tax cuts worth between US$ 191, (AUD 255) and US$ 809, (US$ 1,080), depending on taxable income, to people earning below US$ 94k, (US$ 126k)a year. Much-larger tax cuts are still planned to go ahead from July 2024, which will clearly benefit higher-income earners, and which will be permanent. Many thought that LMITO had a longer shelf life but the fact that it was costing the government over US$ 5.2 billion (AUD 7 billion) a year saw its early demise.

Whilst lower paid Australians will be paying more tax next fiscal year (July 2022 to June 2023), high-income earners will be preparing to receive large and permanent income tax cuts because a few years ago, the government legislated large changes for personal income taxes in the then future. From July 1, 2024,  the government’s so-called “stage three” tax cuts will:

  • increase the income at which the top 45% tax bracket begins from US$ 135k, (AUD 180k), to US$ AUD 150k)
  • abolish the 37% marginal tax rate
  • lower the 32.5% marginal tax rate to 30%, leaving all earnings between US$ 34k, (AUD 45k) and US$ 150k, (AUD 200k), facing a marginal tax rate of 30%

It is estimated that the changes will see around 95% of taxpayers facing a marginal tax rate of no more than 30% from 2024-25, but the Liberal government has no qualms at giving the largest tax cuts to the highest-income earners– those earning more than US$ 150k, (which will include federal politicians), who will be eligible to a permanent tax cut of US$ 7k (AUD 9k). Meanwhile, people earning less than US$ 34k, (AUD 45k), will get nothing at all from the stage three tax cuts, and middle-income earners will get little. It seems that ScotMo must be confident that this move will not cost him his job at next month’s election.

The budget also saw a 50% cut in fuel excise from US$ 0.33, (AUD 0.44), to US$ 0.17 (AUD 0.22), on every litre of petrol or fuel, which will run for the next six months; this will save the average family with two cars US$ 525 (AUD 700) over the next half year but cost the government US$ 2.3 billion (AUD 3.0 billion).

As widely expected, Expo 2020 proved a welcome lifeline for Dubai’s tourism, aviation and hospitality sectors recovering from the pandemic, as it was one of the main drivers enhancing visitor numbers. Consequently, leisure and business travel, hotel occupancy rates, room revenue and footfall at shopping malls all moved higher. According to Sheikh Ahmed bin Saeed Al Maktoum, Emirates group chairman, the airline posted improved load factors and strong travel demand “due to a combination of factors, including the UAE’s successful management of Covid-19, which was critical to many countries quickly easing travel restrictions to and from Dubai and building traveller confidence”. He also noted that the airline had seen “an increase in first-time visitors to Dubai among our customers during the past months, which shows the pull of Expo 2020 and strong traveller interest in Dubai.” Expo 2020 was a key factor in DXB recording its busiest fourth quarter since the onset of the pandemic, with 11.8 million passenger traffic. STR estimates that the hotel occupancy, for the week ending 12 March, at 85%, was the highest in the world for a fourth consecutive week; the average global rate stood at 50.8%. The pandemic-delayed Expo 2020 in the United Arab Emirates closed yesterday after eight years of anticipation, over US$ 7 billion in investment, 240 million labour hours and one hundred and eighty-three days of festivities. By last Saturday, the world fair had attracted 21 million visitors, about 70% of which have been from the UAE, and 2.8 million were children under the age of 18. Even though the Expo 2020 site will soon welcome back visitors, (as early as by October), and  will be transformed into a futuristic city, under the guise of District 2020, where people will live, work and play, for now The Carnival Is Over!

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