Passing The Buck/Someone Else To Blame!

Passing The Buck / Someone Else To Blame!                       03 June 2022

There were no statistics available, from the DLD, for the past week, ending 03 June 2022.

A Reuters report has estimated that Dubai house prices are set to mostly rise steadily over the next two years, driven by demand from foreign investors, with the caveat which cautioned that rising mortgage rates, and lack of affordable stock, could curb activity. On the plus side, the local real estate market will continue to benefit from the economic rebound, the uplift in the hospitality sector and the surging hike in energy prices. The latest data sees a median YTD rise of 7.5% in Dubai house prices, unchanged from the previous poll taken two months earlier. Dubai Land Department noted that Q1 sales transactions were the best seen in over a decade with many expecting growth to continue but at a slower rate of 4.5% and 3.0% over the next two years. It is noted that many analysts, excluding this one, still consider prices are still well below their last peak in mid-2014.

Some experts are looking at double-digit growth in rentals and this will have an impact, with the cost of living inevitably moving higher; areas highlighted for marked growth include Dubai Marina, Jumeirah Breach Residence, Jumeirah Lake Towers and Palm Jumeirah but interestingly more affordable locations such as Deira, Dubai Sports City and Jumeirah Village are also increasing at double-digit rates. A recent Asteco report indicated 20% – 25% rental increases in Dubai Marina, Palm Jumeirah, Jumeirah Beach Residence and Jumeirah Lake Towers, with Jumeirah Village (21%), Dubai Sports City (15%) and Deira (11%) having seen high annual hikes. In the past, most of the demand for the property has been witnessed in the mid-to-high-end segment but the trend is now heading towards affordable areas. CBRE noted that in the twelve months to 30 April, the average Dubai rental rise was 16.2% – with average apartment and villa rents increasing by 15.1% and 23.5%, respectively.

As expected, Damac Group has acquired de Grisogono, with its founder, Hussain Sajwani noting that it was “in line with our ambitions to expand our business into the luxury and high-end fashion realm, bidding for de Grisogono came to us naturally”; no financial deals were made available. It had already linked up with de Grisogono for its Safa One twin tower project in Dubai, designed to replicate a masterpiece necklace. The Swiss jeweller is known for its “Creation I” necklace, which featured the largest D flawless diamond in the world which fetched US$ 34 million at a 2017 auction. The Swiss jewellery brand filed for bankruptcy in 2020 and the latest deal confirms the Dubai-based developer’s strategy to expand its portfolio by adding distressed luxury assets and making them profitable. In 2019, it purchased Italian fashion house Roberto Cavalli.

Dubai-based Binghatti Developers will sell properties against cryptocurrencies, becoming the second developer in the emirate to accept this new form of payment this year, following Damac’s decision to do likewise in April. Binghatti noted that “we are going to accept cryptocurrencies — Bitcoin and Ethereum — either this week or the next for both existing and upcoming projects”, and that customers will be protected through a specific payment process where they will not be exposed to market volatility. The developer, which has delivered 5k units to date, expects to launch twelve projects and deliver around a further 3k by Q3 2023.

Dubai government-owned energy giant ENOC Group’s marine lubricants division has seen a 350% growth during the period 2019 – 2021. Over the years, it has grown from supplying just a local market to an international network covering 126 marine ports across twenty countries, supplying 1.7k vessels with lubricants. So far this year, it has added twenty new ports to its existing network. So far this year, it has added twenty new ports to its existing network.

Meraas repaid its five-year US$ 600 million Sukuk at maturity, after its issue in May 2017, with the payment following the settlement of a long-term credit facility of  US$ 1.1 billion, related to the Dubai Holding subsidiary’s acquisition of DXB Entertainment, the parent company of Dubai Parks and Resorts, in 2021. In its portfolio, Meraas carries more than eighty million sq ft of total developed land, 3.5k homes, 2k retail units, and 15 destinations. Some of its real-estate properties include Al Seef, Bluewaters, Boxpark, City Walk, Dubai Harbour, Jumeirah Bay, Kite Beach, La Mer, Last Exit, Pearl Jumeirah, The Beach and The Outlet Village.

In a process that used to take a lot of time, and stress, Dubai Municipality has introduced an app that has made it a lot easier for contracting companies and consultancies to obtain building permits. Now a contractor can carry out the process by utilising the UAE Pass digital identity and can request for a building permit, followed by a unified inspection, and ending by the execution and delivery of services. In future, all contractors and consultants will be able to conduct building permit transactions, with all licensing agencies, through a single window, instead of using multiple systems as was previously the case, and also to deal with the likes of Dubai Municipality, Dubai Development Authority and Trakhees, and Dubai Integrated Economic Zones Authority; it is also electronically linked with the Dubai Engineering Qualification System of the Municipality. The new system also carries links with service providers such as the Civil Defence, RTA, DEWA, and telecommunications operators.

The small number of not-for-profit schools, including DESC, Dubai College and JESS, has fallen by one with news that Jebel Ali School, founded in 1977, has been sold to local education provider, Taleem Group. The school’s landlord, Emirates REIT, confirmed that it had sold the property, that it had held since 2015 when it funded the development of the state-of-the-art school facility. It noted that Taleem had paid US$ 64 million which included the last market value of the property and the settlement of the school’s outstanding liabilities towards Emirates REIT. It is estimated that it will make 1.4 times its initial investment upon receipt of the full consideration. The school had had a long-standing dispute with its landlord. Parents have been advised that fees for the next school year will remain unchanged, in line with the fee freeze mandated by the Knowledge and Human Development Authority (KHDA), and that the school’s debenture policy will be changed. The new owners need to make a profit and it will be interesting to see what measures are taken so that an appropriate return on investment is made.

Following last week’s scare that one-way tickets from Dubai to Qatar for the World Cup matches could top US$ 1.9k, it came as a relief to many local fans, based in the emirate, that flydubai will be selling economy and business class tickets for US$ 258 and US$ 998 respectively; tickets will include hand baggage allowance, a snack on board and complimentary transportation between the airport and the stadia.  Fans must also register for their Hayya card (Fan ID), ahead of their flight, as this will be required for travel on all Match Day Shuttle flights and for entry to Qatar. For passengers who do not hold match day tickets, flydubai’s scheduled flights between Dubai International (DXB) and Hamad International Airport (DOH) will continue to operate during this period.

Brand Finance has ranked Emirates first regionally, and fourth globally, in a list of fifty of the world’s most valuable airline brands, behind the US trio of Delta, American Airlines and United; it values the brand at US$ 5.0 billion. Apart from acknowledging that the industry has returned to growth post-Covid, the report also evaluated airlines on the basis of their brand strength, in addition to the rate at which they are growing.

With energy prices soaring, it was no surprise to see the UAE fuel price committee announcing 13%+ increases in petrol and diesel prices for the month of June 2022, following minor price reductions a month earlier. Super 98 rose 13.4% to US$ 1.131, Special 95 – 13.5% to US$ 1.098, E-Plus – 91 13.8% to US$ 1.079 – and diesel – 0.1% to US$ 1.128. Petrol prices in the UAE have jumped over 56% since January 2022 due to an increase in global crude oil prices In the first five months of the year. Super 98 has jumped 56.6% from US$ 0.722 to US$ 1.131, Special 95 by 59.4% from US$ 0.689 to US$ 1.098 and diesel by 61.8% from US$ 0.697 to US$ 1.128.

Dubai Police has announced the arrest of a 52-year old UK national alleged to have been the mastermind in a massive US$ 1.7 billion dividend-tax fraud case in Denmark. Following the signing of a bilateral extradition treaty between Denmark and UAE in March 2022, it could result in the suspect being sent to the Scandinavian country to face prosecution. The local police had received an international arrest warrant from the Danish authorities, via the Ministry of Justice, and took action to arrest the suspect in coordination with the Dubai Public Prosecution. It is reported that the case against S.S. involves a scheme, in which foreign businesses pretended to own shares in Danish companies to claim tax refunds for which they were not eligible.

Last year, the Investment Corporation of Dubai posted a 24.5% surge in revenue to US$ 46.2 billion, as the net profit attributable to its owner climbed to US$ 1.50 billion, following a US$ 5.15 billion net loss in 2020. The main drivers behind this improvement were enhanced performances across all sectors, higher revenue, (helped by rallying crude prices, higher levels of activity in transport and strong momentum in other sectors as coronavirus-induced curbs were eased) and lower impairments mainly in the banking, hospitality and the property sectors. Its assets and liabilities at year end were US$ 51.50 billion and US$ 23.5 billion. ICD owns stakes in some of Dubai’s biggest and best-known names, including Emirates airline and Dubai’s biggest bank, Emirates NBD. It also owns the Emirates National Oil Corporation, holds a minority stake in developer Emaar Properties and in the Dubai Airport Free Zone and the World Trade Centre.

This week, Abdulla Bin Touq, federal Minister of Economy, and Orna Barbivay, Minister of Economy and Industry for the State of Israel, signed the UAE-Israel Comprehensive Economic Partnership Agreement; this was the second CEPA trade deal signed by the UAE, following a similar agreement signed last month with India. The UAE-Israel CEPA is expected to enhance bilateral trade to over US$ 10 billion by 2027 and add US$ 1.9 billion to the UAE’s GDP. It will see the lowering or eliminating tariffs on more than 96% of tariff lines and 99% value of trade, enhancing market access for exporters, attracting new investment, and creating opportunities in key industries, including energy, environment, and digital trade. The deal will also support service sectors such as hospitality, financial services, distribution, and construction and provide a platform for SMEs in both countries to expand internationally. Since the signing of the Abrahams Accord in September 2020, non-oil trade has surpassed US$ 2.5 billion.

A report by the International Congress and Convention Association has ranked Dubai as the top destination globally for meetings organised by international associations, covering both the number of association meetings and estimated participants at these events. Dubai was one of the first global destinations to resume in-person business events following the pandemic, in October 2020. The emirate was well represented at this week’s IMEX Frankfurt, the world’s leading meetings industry exhibition, with thirty-two co-exhibitors flying the flag for the emirate; they included the likes of Emirates, Jumeirah Group, Dubai World Trade Centre and Emaar Hospitality, as well as a wide range of other hotels, attractions and destination management companies.

Aramex has announced that it has obtained the necessary approvals to officially increase the Foreign Ownership Limit from 49% to 100%, making it the first entity trading on the DFM to allow full ownership of its free-floating shares by foreign investors. The company, a global provider of comprehensive logistics and transportation solutions, is a constituent of the FTSE Emerging Market Index and the MSCI Small Cap Emerging Market Index. This change to the foreign norm is expected to increase the stock’s weight in these indices which in turn will directly raise the amount of passive money from funds that track the FTSE and MSCI. Also, this week, Aramex has agreed to acquire Florida-based MyUS for a cash price of US$ 265 million, as part of its strategy to grow its e-commerce operations. It is expected that the deal will provide benefits for both parties including operational synergies, improved efficiencies, shared technology platforms and the opportunity to serve new markets.

The DFM opened on Monday, 30 May, 699 points (17.5%) down on the previous four weeks, regained 90 points (2.7%), to close on Friday 03 June, on 3,387. Emaar Properties, US$ 0.12 lower the previous week, gained US$ 0.09 to close on US$ 1.58. Dewa, Emirates NBD, DIB and DFM started the previous week on US$ 0.70, US$ 3.54, US$ 1.61 and US$ 0.62 and closed on US$ 0.69, US$ 3.77, US$ 1.62 and US$ 0.58. On 03 June, trading was at 75 million shares, with a value of US$ 42 million, compared to 93 million shares, with a value of US$ 67 million, on 27 May 2022.

For the month of May, the bourse had opened on 3,719 and, having closed the month on 3,347 was 372 points (10.0%) lower. Emaar traded US$ 0.18 lower from its 01 May 2022 opening figure of US$ 1.74, to close the month at US$ 1.56. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the month on US$ 0.77, US$ 4.16, US$ 1.76 and US$ 0.66 and closed on 31 May on US$ 0.69, US$ 3.58, US$ 1.62 and US$ 0.59 respectively. The bourse had opened the year on 3,196 and, having closed May on 3,347, was 151 points (4.7%) higher, YTD. Emaar traded US$ 0.23 higher from its 01 January 2022 opening figure of US$ 1.33, to close May at US$ 1.56. Four other bellwether stocks, Dewa, Emirates NBD, DIB and DFM started the year on US$ 0.00, US$ 3.69, US$ 1.47 and US$ 0.72 and closed on 31 May on US$ 0.69, US$ 3.58, US$ 1.,47 and US$ 0.72 respectively.

By Friday 03 June 2022, Brent, US$ 4.91 (4.5%) higher the previous fortnight, was up US$ 5.19 (4.5%), to close on US$ 120.26. Gold, US$ 41 (2.3%) higher the previous fortnight, gained US$ 3 (0.1%), to close Friday 03 June, on US$ 1,854.  

Brent started the year on US$ 77.68 and gained US$ 37.81 (48.7%), to close 31 May on US$ 115.49. Meanwhile, the yellow metal opened January trading at US$ 1,831 and has gained US$ 6 (0.3%) during 2022, to close on US$ 1,837. For the month, Brent opened at US$ 107.59 and closed on 31 May, US$ 115.49 (7.3%) higher. Meanwhile, gold opened May on US$ 1,897 and shed US$ 60 (3.2%) to close at US$ 1,837 on 31 May.

OPEC+ has agreed to raise output by 648k bpd from next month, noting that this action was the result of the recent reopening from lockdowns, in major global economic centres including cities in China, and that global refinery intake is expected to increase after seasonal maintenance.Oil climbed above the US$ 120 level on Monday and was trading at over US$ 115 by the end of the month, driven by the latest EU continued efforts to ban Russian energy supplies – to the extent that it will only be buying 10% of its supplies from that country come 31 December – and the prospect that there could be a Chinese economic uplift as Beijing eases pandemic-related restrictions. Furthermore, US inventories continue to head lower as demand grows faster than production.

After waiting over a month to unload its cargo, of 90k tonnes of Siberian light crude because it could not afford the US$ 75 million to pay for it, the state-run Ceylon Petroleum Corporation refinery has restarted operations after the shipment was acquired on credit from intermediary Coral Energy. It is reported that energy minister Kanchana Wijesekera had made an official request to the Russian ambassador for direct supplies of crude, coal, diesel and petrol despite US-led sanctions on Russian banks. Despite there being no interest in Sri Lanka’s oil tenders, as the refinery was already in arrears of US$ 735 million to suppliers, the country will call for fresh supply tenders in two weeks before this stock of Siberian light runs out. The country is in an economic meltdown, with the population facing continued shortages of fuel and other vital goods, record inflation and lengthy daily power outages. It can only be a matter of time before President Gotabaya Rajapaksa belatedly leaves office.

Marriott has joined McDonald’s, Starbucks and other companies to exit Russia, as Western economic sanctions tighten. The hotel chain has been in the country for the past twenty-five years, having closed its Moscow office and paused investment in Russia in March.  It concluded that newly announced US, UK and EU restrictions will make it impossible for Marriott to continue to operate or franchise hotels in the Russian market,” but that its twenty-two hotels in the country, owned by third parties, will remain open.

Tesla chief executive Elon Musk has made it patently clear that he expects staff to return to their office to work and that working from home is a thing of the past. In emails to employees, the Tesla CEO said staff must complete “40 hours in the office per week”, in contrast to many of the major tech firms in California. Musk retorted that “there are of course companies that don’t require this, but when was the last time they shipped a great new product? It’s been a while.”  There are some employees unhappy with this decision but the outspoken Tesla founder further commented that “if you don’t show up, we will assume you have resigned.” He further commented that “the more senior you are, the more visible must be your presence,” and “that is why I lived in the factory so much – so that those on the line could see me working alongside them. If I had not done that, Tesla would long ago have gone bankrupt.” Meanwhile, Tesla has reportedly called a halt to hiring and has warned that 10% of its salaried workforce may need to be cut, with a worried Elon Musk commenting he had a “super bad feeling” about the economy.

As is the case with its peers, fashion brand, Missguided, has been impacted by the trifecta of surging inflation, supply chain problems, and “softening” consumer confidence in an increasingly tough market. It had been reported that the retailer had appointed Teneo Financial Advisory as administrators to sell its business and assets after suppliers filed to shut it down over unpaid debts. The Manchester-based online retailer, launched in 2009, has planned to continue operating and trading while it looked for a buyer, and, although it appears that rivals were better, cheaper and faster, it was confident there is “a high level of interest from a number of strategic buyers”, including Boohoo, Asos and JD Sports, By the end of the week it was reported that Mike Ashley’s Fraser Group, which also owns Sports Direct and House of Fraser, had acquired the intellectual property of Missguided, and its sister brand Mennace, for US$ 25 million.

The thirty-three OECD countries posted a 9.2% April inflation rate, 0.4% higher than a month earlier, driven by a rise in the cost of services, (4.4% higher), and food, (up 11.5%), pushing up consumer prices; there was some relief to see a deceleration in energy prices to 32.5%, year-on-year – 1.2% lower than in March. Nine OECD countries recorded double-digit inflation rates, with the highest experienced in Turkey and Estonia, with inflation dipping in five OECD countries, including Italy, Spain, and the US.

In a bid to slow soaring inflation rates, currently at 17%, and to prevent the hryvnia, its currency, collapsing any further, Ukraine’s central bank has more than doubled its interest rate from 10% to 25% – the highest level for any European country. Since Russia’s February invasion, many businesses have had to close and major supply chains cut, with the knock-on effect of an economy contracting by at least 45% in 2022. It has been estimated that over US$ 100 billion of infrastructure damage has occurred in the first one hundred days of the invasion and that 4.5k civilians have died with more than fourteen million citizens having been forced to flee their homes. The war has seen Ukraine’s May budget deficit jump US$ 7.7 billion, month on month. Furthermore, about 50% of the world’s supply of neon gas comes from just two Ukrainian companies, with more than 18% of global barley exports, 16% of corn, and 12% of wheat, produced in Ukraine.

Of all European countries, it seems that Turkey – now known as Türkiye having this week changing its name at the UN – has the highest inflation rate of 73.5%, a twenty-four year high. The three main drivers have been the war in Ukraine, a weak currency and high energy prices. Over the year, food costs have skyrocketed by 92%, making basic goods unaffordable for many, despite government interventions.

With the unemployment rate of 3.6% remaining flat for the third consecutive month, the US added a higher-than-expected 390k new jobs to the national payroll; the increase was the slowest for a year. However, surging inflation and fast-rising prices are causing concern with companies like Walmart and Amazon indicating that, having hired too aggressively earlier in the year, they may have to slow, or even freeze, future recruitment plans, ahead of a possible economic downturn. Margins are also being hit, as it is getting more difficult for many firms to pass on extra production/supply costs to the end user.

The Nationwide Index for May saw house prices 11.2% higher on the year, down from 12.1% in April, indicating signs of the UK property market softening, as mortgage rates start to move off historic lows. It seems that there is a growing number of sellers cutting prices and the average time it takes to sell a home is increasing. With consumer spending declining, not helped by surging inflation rates almost touching 10%, higher energy/food prices and recently increased tax, there has been a drag on the housing sector. The slowdown would have been more noticeable if there had been more properties on the market, as the stock of available homes for sale remains low.

It does seem that UK and French administrations have something in common in the way that the French Interior Minister Gerald Darmanin and the UK’s blundering Minister of Transport Grant Shapps both play the same blame game. Last Saturday saw the French minister singling out British fans, falsely indicating that “thousands of British ‘supporters,’ without tickets or with fake tickets, forced the entrances and, sometimes, attacked the stewards.,” with his colleague, the Sports Minister, adding that had been “attempts to intrude and defraud” by Liverpool fans, with reports that there had been some 50k fraudulent tickets and a “massive, industrial-scale” counterfeiting operation in place. Within hours, UEFA had joined the French in their premature condemnation of Liverpool supporters, announcing an independent enquiry by the French government and UEFA – some enquiry that would have been with both judge and jury having already made their verdict. There is no doubt that the French failed in their run-up trial to next year’s Rugby World Cup and 2024’s Olympic Games and questions will have to be asked whether they will be able to cope with these two much bigger and longer events.

On the other side of La Manche is Transport Minister, Grant Shapps accusing airlines and operators of “seriously overselling flights and holidays”, noting a shortage in staffing capacity to deliver some of these trips. This week, it is reported that the Transport Secretary rejected a request by the aviation industry to allow them to recruit workers from overseas to solve the immediate problem of understaffing. For several months, there have been well publicised disruptions at UK’s major airports, even before the easing of the UK’s Covid travel restrictions in March, with the issue broadly attributed to the sector’s inability to staff up sufficiently following the pandemic. It is documented that the country had been subject to one of “the most restrictive travel regimes in the world”. Tim Alderslade, who heads up Airlines UK, commented that, “the sector has had only a matter of weeks to recover and prepare for one of the busiest summers we’ve seen in many years,” and “without the ability to know when restrictions would be completely removed or predict how much flying would be possible over the summer.” It is not obvious to the minister that it is impossible to shut down an entire global industry, destroy its image, switch it on then off, destroy families, lives, businesses and then try and find someone to blame. On Wednesday, he called for urgent steps to address the causes of mayhem at check-in desks and security – an issue that he should have addressed some time ago.

(This is the same minister who last September branded the UK fuel shortage a “manufactured situation”, created by a road haulage association, seemingly blaming hauliers for the crisis, claiming they leaked details to the media which then prompted panic buying. He was also highly critical of P&O’s management and modus operandi but when he tried to force legislation through, aimed almost entirely at P&O, it was rejected by the industry, with even the man himself belatedly commenting that his original plan to legislate for shipping companies to pay the minimum wage was not feasible).

Football has been beset by scandals for so many years and the shenanigans at FIFA for well over fifty years have been well documented.  Another footballing body with “form” is UEFA which has also been caught up in the mire of corruption that has swept through world football. In January 2011, Michel Platini demanded FIFA pay him backdated extra salary of US$ 1.4 million, for working as a presidential adviser during Blatter’s first term, from 1998 to 2002 which Blatter authorised at a time when he was preparing to campaign for re-election and needed European backing, where Platini’s presence was influential. Later this month, the two protagonists face a Swiss court on trial for fraud and other offences. Platini was an obvious successor to the eventually disgraced Blatter but his involvement with Blatter precluded him from taking over, with the mantle passing to Gianni Infantino, who had been with UEFA since 2000 and was appointed as the Director of UEFA’s Legal Affairs and Club Licensing Division in January 2004, becoming Secretary-General five years later. In 2016, he was elected as FIFA President to replace the disgraced Blatter who had virtually run his football fiefdom for over thirty years.

That year the now infamous Panama Papers were released with documents implicating UEFA with claims that it had undertook deals with indicted figures where previously they had denied any relationship. The now FIFA supremo stated he was “dismayed” at the reports and that he has never personally dealt with the parties involved.

Following the debacle at last week’s UEFA Champions League final last week It did not take long for UEFA to suggest that thousands of Liverpool fans had been caught out and tried using ‘fake tickets’ that did not work at the turnstiles, and within hours had called for an official enquiry to be held by UEFA and French authorities. It took the footballing body longer – over six days – to admit their error and to issue a statement apologising “to all spectators who had to experience or witness frightening and distressing events”. It seems that nothing has been heard from the French minister, Darmanin. Now the governing body has eventually called for an inquiry from French officials into the use of teargas on fans at the Stade de France.

It seems that Gerald Darmanin, Grant Shapps and UEFA are past masters in not only Passing The Buck but also finding Someone Else To Blame!



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