Who Got The Juice Now?

Who Got The Juice Now?                                                                      24 June 2022

For the past week, ending 24 June 2022, Dubai Land Department recorded a total of 2,624 real estate and properties transactions, with a gross value of US$ 2.18 billion. A total of 274 plots were sold for US$ 313 million, with 1,757 apartments/villas selling for US$ 1.09 billion. The top three transaction sales were for plots of land – one in Palm Jumeirah for US$ 34 million, another sold for US$ 14 million in Al Thanayah Fourth., and a third in Umm Suqeim Third for US$ 7 million The three leading locations for sales transactions were Al Hebiah Fifth, with 154 sales worth US$ 91 million, followed by Jabal Ali First, with 29 sales transactions worth US$ 24 million, and Al Merkadh, with 17 sales transactions, worth US$ 35 million. Burj Khalifa came in first in terms of number of transfers for apartments and villas recording 223 transactions worth US$ 172 million, followed Marsa Dubai, with 173 transactions worth US$ 144 million, and Al Jaddaf, with 151 transactions worth US$ 55 million. The sum of mortgaged properties for the week was US$ 744 million. 77properties were granted between first-degree relatives worth US$ 41 million.

According to a CBRE report, Dubai off-plan sales increased by 55.4% and secondary market sales by 18.0%, with May monthly transactions totalling 5.54k – the highest monthly total recorded since 2009 – and 33.0% higher YTD at 30.9k; average prices were 10.9% higher. Rentals for villas and apartments averaged out at US$ 68.0k, up 19.8% on the year – equating to US$ 356k per sq ft – and US$ 22.7k, (9.6%) higher for villas, and US$ 300 per sq ft for apartments; the study found that, compared to the peaks of 2014, the rates were 9.5% and 25.9% lower. The highest rents were located at Al Barari (US$ 238.2k) and Palm Jumeirah (US$ 58.2k).

Officials have announced that 80% of Expo-built infrastructure is to be retained and repurposed including 123 LEED-certified buildings that will have many features including being the first WELL-certified community in the region; it will host ten km of cycling tracks, five km of running tracks and 45k  sq mt of parks and gardens. Expo City will be pedestrianised, without cars, and will be a human-centric smart location, driven by sustainability innovation, education and entertainment. Many of the cultural attractions of Dubai Expo will be maintained including its two focal points – Al Wasl Plaza and Terra -as well as many country pavilions, including those of the UAE, Saudi Arabia, Morocco, India, Pakistan, Egypt and Luxembourg.

It seems that the Dubai property market is again seeing properties being snapped up within hours of their launch, with long queues of property buyers waiting for the various openings. Last Saturday, Nshama’s 200-plus units of Shams Townhouses, located in Town Square, were sold out, to a mix of investors and end users, within three hours. It was reported that by 4am, on Saturday morning, there was a queue of over one hundred waiting in line. Prices for a 3 B/R townhouse, (with a 2.1k sq ft built up area) were US$ 441k and US$ 572k for a 4 B/R with a built-up area of 2.4k sq ft.  Buying terms were 10% down payment, 40% during construction and 50% upon handover in 2024. Earlier this month, Danube Properties saw long queues ahead of its Gemz project which was also sold out on the same day. Last September, Nakheel also saw a strong response with long queues of investors on the day of the sale of its 360 units of phase two of Murooj Al Furjan West

During the first five months of 2022, Dubai’s tourism sector posted a 197%, year on year, jump in international overnight visitors, reaching a total of 6.17 million. The figures were released at the first ‘City Briefing’ for 2022, organised by Dubai’s Department of Economy and Tourism, and attended by 1.2k key executives from across the tourism ecosystem. The bi-annual meeting discussed future strategies to further reinforce the city’s position as a global hub for business, investment, talent and tourism. Over the period, the emirate’s hotels maintained an average occupancy level of 76%, up 14% compared to a year earlier, and a figure that places Dubai the leading location in the world. STR figures show that the likes of New York, London and Paris lag far behind with occupancy levels of 61%, 60% and 57%.

At this week’s meeting of the Executive Council, chaired by Sheikh Hamdan bin Mohammed, confirmed that Dubai’s GDP grew by 6.2% last year and 5.9% in Q1, equating to US$ 27.8 billion. The Crown Prince noted that the figures reaffirmed the emirate’s ability to adapt and grow, and that the government’s attractive fiscal measures directly helped to stimulate economic growth; he also indicated that the successful Expo 2020 Dubai contributed to a post-pandemic tourism boom, leading to increased air and sea traffic and record foreign trade. The Deputy Ruler of Dubai, Sheikh Maktoum bin Mohammed, also attended the meeting, which was held at the newly opened Mohammed Bin Rashid Library.

This week, DP World and the Saudi Ports Authority (Mawani) signed a thirty-year agreement to build a state-of-the-art, port-centric Logistics Park at the Jeddah Islamic Port. The US$ 133 million investment includes the construction of a 415k sq mt logistics park, with an in-land container depot capacity of 250k TEUs (Twenty-foot Equivalent Units) and 100k sq mt of warehousing storage space. The project will expand the Dubai port operator’s regional footprint and will boost the Jeddah’s export activities as well as reducing the time and cost of logistics for importers and exporters. In April 2020, DP World signed a new thirty-year US$ 800 million concession agreement with Mawani to continue operating and managing the South Container Terminal at the Jeddah Islamic Port.

This week saw another announcement that the UAE would build a new Red Sea port in Sudan, as part of a US$ 6 billion investment package involving the DAL Group and the Abu Dhabi Ports Group. However, the latter has yet to sign any such agreement but noted there were “preliminary” talks taking place in Sudan and that it is “always exploring new opportunities and projects.”

Although it is expecting to receive two A350s a month from the summer of 2024, Emirates is in discussions with Airbus to increase the flow of planes because of continuing delays with Boeing’s 777X programme. The aircraft, of which the 777-8 and 777-9 are variants, has been in development since 2013 and was expected to be released for commercial use in June 2020. Even now the GE engines are yet to be subject to scrutiny by Emirates, and there has been no flight test programme to date. The airline is hoping to get its fifty-plane order, worth US$ 16 billion and signed at the 2019 Dubai Air Show, over a shorter time period to “pick up this big capacity”. Delivery had been planned to start in May 2023 and run until 2028. The airline is set to meet Boeing officials next week in Dubai to seek more clarity on the delivery timeline and programme and have warned that if negotiations are unsuccessful “it’ll have serious repercussions.” (This week, Emirates made its first flight to Israel as EK 931, with 335 passengers taking off to Tel Aviv).

flydubai is hoping that the recent surge in passenger demand continues into the summer to ensure a record-breaking holiday period for the Dubai carrier. It is planning to carry three million passengers in the coming three months on its 8.5k monthly flights to 102 destinations. Its CEO Ghaith Al Ghaith said that, “while the global aviation sector has been slowly recovering from the repercussions of the pandemic, we have seen Dubai steadfast in its approach to enable the return to free flows of trade and tourism. The decisions made early on in the pandemic have enabled us to ramp up our operations to cater to the pent-up demand in record time.”

Fujairah’s Sakamkam area, was the location for the signing of a US$ 327 million deal between Etihad Rail and Spain’s CAF for designing, manufacturing, supplying, and maintaining passenger trains for the UAE’s new rail network; it will also be the site of the country’s first passenger train station. Each train will have a seating capacity of more than 400 and will reach speeds of up to 200 kph. With the train line between Abu Dhabi and Dubai completed in March, the 1.2k km rail link will eventually connect eleven cities and regions within the UAE; a launch date has yet to be released. It is estimated that the travel time between Dubai and Abu Dhabi, and Dubai and Fujairah will both be fifty minutes Recently, the operator has signed three MoUs with Spain’s national railway operator Renfe, and UK companies, High Speed 1 and GB Railfreight. A launch date for the passenger service has not yet been announced.

The Securities and Commodities Authority’s Annual Report 2021 noted that the country’s listed public joint stock companies approved cumulative dividends of US$ 9.37 billion last year, of which 97.3% were paid out in cash and the balance in stock. A further breakdown sees banks being the largest distributors of profits, US$ 4.30 billion, followed by the telecommunications – US$ 3.19 billion – and the realty sectors, US$ 516 million.

The second auction of federal treasury bonds (T-Bonds) was held last Monday, with an auction size of US$ 408 million, (AED 1.5 billion), comprising two equal tranches of US$ 204 million – one for two years and the other for three years. It was over-subscribed 6.5 times. The first auction in April, also for US$ 408 million, was well received and carried a uniform coupon rate fixed at 3.01% (for its two-year tranche), and 3.24%, (for the three year one) respectively. The Ministry of Finance confirmed that there would be further issues of local bonds during the rest of this year, with the aim of improving liquidity in the secondary market.

As part of its strategy to utilise the debt market, the Ministry of Finance confirmed that it will issue dual-tranche, US dollar-denominated sovereign bonds, including a ten-year tranche and a thirty-year Formosa tranche; the latter refers to debt issued in Taiwan by foreign borrowers in currencies other than the Taiwanese dollar. Each tranche will be valued at a minimum US$ 500 million, with the ten-year note being listed on the London Stock Exchange and Nasdaq Dubai, as will the thirty-year tranche plus the Taipei Exchange. 2021 was the first time that the federal government issued such bonds at a federal level, and raised US$ 4 billion through the issuance of multi-tranche sovereign bonds. Typical tenures will range from ten to twenty years, with forty years for the Formosa funds. The UAE federal government is rated “AA-” by Fitch, and “Aa2” by Moody’s Investors Service, with a stable outlook for the national economy.

According to the Arab Investment Export Credit Guarantee Corporation, the UAE has received 41% of foreign direct investment projects, directed to Arab countries, over the past nineteen years. During that period, the countries have attracted 14.4k foreign projects, with a total capex of US$ 1.3 trillion; it is estimated that these projects have created approximately two million job opportunities. Last year, Western Europe was the region’s main investor, with Saudi Arabia being the top investment destination in view of the capex (US$ 9.3 billion), while the UAE came first in terms of the number of projects (455).  It is reported that, in Q1, the number of foreign projects into the region rose by 15%, on the year, while their capex jumped 86% to US$21 billion.

The RTA announced that, last year, its digital platforms generated US$ 954 million of revenue, up 32.0% on the year, with the number of smart app transactions topping 1.2 million – 44.0% higher on the year. It estimates that over one million people are active users of its digital service platforms, with more than two million users in 2021, and that there was a 28.3% increase in the number of digital transactions at 676 million.

In a major local marketing coup, adidas has come up with a limited edition of the ‘adidas x Ravi Restaurant trainers’ and yesterday they went on sale at its Dubai Mall’s flagship store, with the first person queuing at 4am. The store was decked out just like Ravi Restaurant including the iconic green and white. The trainers were sold at US$ 150 and although no numbers are available, it is thought that the white and green trainers, with a snippet of Ravi’s menu on the tongue of the shoes, will be sold out very quickly. The concept had taken eighteen months to fruition.

As it continues to expand its food offerings, local ride-hailing firm Careem has acquired UAE subscription-based food delivery company Munch:On, but no financial details were available. It will stop daily operations and its services will be incorporated into Careem’s multi-service platform. In 2019, Careem became the region’s first unicorn – a start-up with a valuation of more than $1 billion – when US-based Uber paid US$ 3.1 billion for it. The firm, with its co-founder Mudassir Sheikha still chief executive, offers more than a dozen services including ride-hailing, food and grocery delivery, micro-mobility and payments; it continues to increase its services and geographic footprint to grab a larger share in FinTech services.

The DFM opened on Monday, 20 June, 125 points (3.6%) lower on the previous fortnight, and shed 175 points (5.2%), to close on Friday 24 June, on 3,202. Emaar Properties, US$ 0.13 lower the previous fortnight, shed US$ 0.05 to close on US$ 1.40. Dewa, Emirates NBD, DIB and DFM started the previous week on US$ 0.71, US$ 3.68, US$ 1.60 and US$ 0.50 and closed on US$ 0.69, US$ 3.54, US$ 1.56 and US$ 0.46. On 24 June, trading was at 35 million shares, with a value of US$ 26 million, compared to 225 million shares, with a value of US$139 million, on 17 June 2022.

By Friday 24 June 2022, Brent, US$ 11.55 (10.5%) lower the previous week, gained US$ 2.46 (2.2%) to close on US$ 112.62. Gold, US$ 33 (1.8%) lower the previous week, shed US$ 14 (0.8%), to close Friday 24 June, on US$ 1,828.  

By selling at a discount, there is no surprise to see that Russia has become China’s biggest supplier of oil, as imports to the country increase by 55%, and surpasses Saudi Arabia. This comes at a time when China has seen an economic slowdown because of recently introduced Covid-related lockdowns, and Russia has seen exports to Europe slow markedly because of EU sanctions. Last month, the Chinese General Administration of Customs confirmed the import of 8.42 million tonnes, with Saudi’s balance being 7.82 million tonnes. A recent report noted that in the first hundred days of the country’s invasion of Ukraine, Russia continued to earn fossil revenue, topping US$ 100 billion, of which the EU ‘contributed’ US$ 59 billion; it is estimated that Russia’s daily spend on the war is around US$ 876 million.

Rattled by surging energy prices and ongoing staff issues, Qantas has decided to reduce the number of domestic flights until March 2023. Last month, it cut flights by 10% and will apply a further 5% for flights in August; the 15% flight reduction will last for two months before returning to 10% flight cuts as from October. The Australian carrier is still confident of posting a profit in the next financial year ending 30 June 2023 and noted that it had already reduced its debt to below pre-pandemic levels. Surprisingly, the airline was able to charge higher fares on its international routes, to recover the higher cost of fuel, but was unable to do so within its domestic flights. The airline is expecting capacity levels to reach 99% of pre-pandemic levels in Q1 (ending 30 September 2022) and 106% by Q2. It also plans to give 19k staff a US$ 3.5k, (AUD 5k), bonus after signing fresh union contracts, following a two-year wage freeze during the pandemic, and also to negotiate a new enterprise agreement for a 2.0% pay increase each year — well below the current 5.1% headline rate of inflation. This seems to be a recipe for staff action later in the year.

A US$ 200 million five-year agreement between Qantas and Airbus will help the Australian carrier meet its commitment to use 10% SAF, (sustainable aviation fuels), in its overall fuel mix by 2030; it currently uses 1% SAF in its network and has a 60% target by 2050. Qantas currently sources SAF from overseas, including 15% of its fuel use out of London. (Engine maker Pratt & Whitney, selected to provide the engines for the new narrowbodies, will inject some of the funding). Both parties are already involved in sustainability initiatives as part of the airline’s May’s multi-billion-dollar orders for A350-1000 widebodies and A220 and A321XLR narrowbodies. The partnership will invest in locally developed and produce SAF and feedstock initiatives, on condition that projects are commercially viable and meet strict environmental sustainability criteria.

Revlon, the multinational iconic beauty company, with household names such as Almay, Elizabeth Arden and Revlon in its brand portfolio, has been in slow decline for the past twenty-five years. The ninety-year-old business was slow in the 1990s to adapt to women’s shift away from bright colour cosmetics to more muted tones and has also faced increasing competition not only from the likes of Procter & Gamble, but most recently from celebrity lines like Kylie Jenner-backed Kylie, which benefitted from their high-profile social media network and consequently had a much lower marketing budget. Covid did not help matters with 2020 sales slumping 21.0% to US$ 1.9 billion but recovered slightly last year with an 9.2% growth. However, the company, like many others, has been saddled with higher costs, labour shortages and supply chain challenges. A sign of the times and a sign of its problems see the company, that for most of the last century was the world’s second largest cosmetics company behind Avon, now lying 22nd in the global rankings. None of Revlon’s international operating subsidiaries are included in the proceedings, except for Canada and the UK.

Anyone with paper £20 or £50 notes should be aware that by the end of September, they should be spent or deposited in a bank. It is estimated that 163 million paper £50 banknotes and about 314 million £20 paper notes are still in circulation. From October, people with a UK bank account should still be able to deposit the paper notes into their account or at the Post Office but spending them will be impossible. The ‘old’ paper notes have been replaced by more durable polymer notes that will last longer and be harder to counterfeit.

UK households are cutting back on food shopping as the rising cost of living bites into budgets, a trend confirmed by supermarket giants, Tesco and Asda. Tesco said that it had seen early signs that shoppers were changing their habits due to high inflation such as buying less food and visiting more frequently. Asda has noted many customers are asking cashiers to stop scanning items when the total reaches US$ 36.81, (GBP 30.00) and are changing to budget ranges. The Office for National Statistics found that supermarket sales dipped 1.5% in May, with a 2.2% fall in specialist shops such as butchers and bakers. Retail sales overall fell by 0.5% in May, the ONS said, and it also revised down its sales growth figure for April to 0.4% from its previous estimate of 1.4%.

May inflation figures hit forty-year highs last month, touching 9.1%, with every chance that it will hit double digits by the end of Q3; it was noted that the increases were across a wide range of sectors, including everything from fuel and electricity to food and beverages. Prices, rising 0.7% in the month, witnessed a marked fall compared to the 2.5% pace recorded in April. It was the highest inflation rate across the G7, driven mainly by food – and the figure would have been higher but for lower clothing/footwear prices, as well as recreation/culture prices.

Elon Musk is not too happy with the progress of his two new Tesla factories in Austin Texas and Berlin, as they are “losing billions of dollars” due to battery shortages and supply disruptions in China. Furthermore, Tesla’s huge production facility in Shanghai has faced closures this year, as the Chinese government ordered the city to lockdown as Covid returned. He bemoaned the fact that his gigafactories were “losing billions of dollars right now. There’s a ton of expense and hardly any output,” and Tesla has plans to shed 3.5% of its global workforce. He commented that Tesla’s new factories have been struggling to increase production since their opening because battery components are “stuck at a Chinese port, with no one to actually move it”, Last week, the company raised the price of its whole range of cars in the US by almost 5%, as the cost of raw materials including aluminium and lithium rose.

Latest April figures from the Office for National Statistics indicate that UK average house prices rose 12.4%, year on year to April, well up on the 9.7% increase a month earlier; the average house price was US$ 345k – US$ 37k higher than in April 2021. There are signs that the housing market is softening, with comparative figures skewed by the fact there had been falls in 2021 from changes in the previous stamp duty holiday. Also, there are other problems including future increases in borrowing, as rates move north, and ongoing inflation with the latest May figure of 9.1%, with every chance that it will hit double digits by the end of Q3.  However, this could be offset by a shortage of quality property options and strong employment prospects. Across the UK, prices in England, Scotland and Wales have risen by 11.9% to US$ 366k, 16.2% to US$ 230k and 10.4% to US$ 202k.

Prime Minister Ranil Wickremesinghe has told the Sri Lankan parliament that the country’s debt-laden economy has “collapsed” after months of shortages of food, fuel and electricity, with the island nation unable to even purchase imported oil. He confirmed that the Ceylon Petroleum Corporation was US$ 700 million in debt and that “no country or organisation in the world is willing to provide fuel for us.” There is no doubt that a succession of corrupt or inept governments has not helped the cause, with the problem further exacerbated by lost tourism revenue, surging commodity costs and other effects of the Covid-induced slowdown. US$ 4 billion worth of credit lines from India has helped the country muddle through in recent weeks but India cannot keep the country from sinking further for too much longer. It has already reneged on the repayment of US$ 7 billion in foreign debt due for repayment this year, pending further negotiations with the IMF. It sees highly unlikely that it will be in a position to repay US$ 5 billion a year, until 2025, due to international creditors.

Robinsons and The All England Lawn Tennis Club have “mutually agreed” to end their eighty-six year partnership that will see the end of Robinsons Lemon Barley Water being seen on Wimbledon courts, as the soft drink company will no longer sponsor the two-week tennis championship. A spokesman for Britvic, which owns several drinks brands including Robinsons, said it was “tremendously proud to have been such a prominent partner to this historic tournament for so many years and the wider role we have played in boosting engagement with the game of tennis in the UK”. Last month, the company signed a three-year sponsorship with The Hundred, cricket’s 100-ball competition. Who Got The Juice Now?

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