Missing In Action!                                                            06 January 2023

The 2,173 real estate and properties transactions totalled US$ 2.72 billion, during the week, ending 06 January 2023. The sum of transactions was 270 plots, sold for US$ 613 million, and 1,903 apartments and villas, selling for US$ 1.33 billion. The top two transactions were for land, the highest in Marsa Dubai, sold for US$ 170 million, and for a plot in Al Thanyah Fifth for US$ 21 million. Al Hebiah Fifth recorded the most transactions, with 133 sales worth US$ 105 million, followed by Jabal Ali First, with forty-nine sales transactions, worth US$ 62 million, and Al Merkadh, with twelve sales transactions, worth US$ 34 million. The top three transfers for apartments and villas were all for apartments in Island 2 – the first at US$ 32 million, the next two for US$ 31 million and US$ 20 million. The mortgaged properties for the week reached US$ 504 million, with the highest being for a building in Burj Khalifa, mortgaged for US$ 82 million, whilst 101 properties were granted between first-degree relatives worth US$ 272 million.

It was reported that the UAE and Saudi Arabia account for 83.6% of all regional property transactions, equating to US$ 107.8 billion, with Dubai and Abu Dhabi grabbing 48% of the aggregate value over the ten months to October. In that period, the region posted a 21% hike in value, whilst Dubai witnessed a massive 81% surge, attributable to several factors including solid demand and price gains witnessed by luxury residential properties, and healthy revenues in the affordable segment. Although Dubai posted a 61% hike in transaction numbers, other nations – Saudi Arabia, Kuwait and Qatar – posted a decline compared to a year earlier. Saudi did top the listing when it came to the average value per transaction – at 35.5% – with Dubai returning a 12.2% increase.

Recent research work by Realiste indicates that Dubai real estate sector transactions are set to grow by 46% this year. The Dubai-based PropTech company also noted that last year, property prices grew by between 20% – 40%, with some areas posting even bigger rises; they included Palm Jumeirah and Trade Centre First, growing by 59% and 210% respectively. The company has developed an AI-powered tool that enables investing in real estate in major global capital cities, including New York, Abu Dhabi, Dubai, Riyadh, and London, that will notify the asset owners when it is the right time to buy or sell their properties. Using analytics, the company’s research shows trends in the Dubai’s real estate market, such as the areas of the city showing the most significant increase, the average cost of properties across locations, and the most high-priced or low-priced locations. According to its AI, the most expensive areas were Trade Centre First, followed by Al Wasl Part 2, and that Dubai average prices ranged from US$ 116k in Wadi Al Safa 2 Part 1 to US$ 3.28 million in Al Safouh First Part 2. There was an average 53% growth in average prices of Dubai Hills’ residences, climbing to US$ 436k.

According to data from analytics agency Dsight, more than 16% of Russian companies and entrepreneurs relocated to the UAE in H1 2022 and, with it, the biggest inflow of private wealth this year. Russian entrepreneurs, investors, and top-level professionals have arrived in the emirate to settle, and this has boosted the local property market. There is no doubt that Dubai will remain attractive to overseas investors who are seeking to shield their assets and looking for a safe haven.

Dubai hosted 12.82 million overnight international visitors – more than 85% of the pre-Covid figures from 2019 and more than double the 6.02 million figure reported in 2021; the latest numbers are still 3.91 million shy of the total 2019 return of 16.73 million. Last month, the country launched a national tourism strategy to attract forty million guests by 2031.  With its 794 hotels, and 145.1k available rooms, average occupancy in year-to-date November 2022 was only 2.3% less than pre-pandemic levels, despite the 17 per cent increase in room inventory. The RevPAR statistic came in at almost US$ 103, compared to the US$ 75 and US$ 83 figures recorded in 2021 and 2019. Last year, it is estimated that Dubai recorded almost 23.7 million traveller arrivals in 2022 – up 89% on the previous year, with 21.8 million arriving through Dubai’s airports, and the balance via Hatta Border Crossing (1.6 million) and 243k via the seaports.

There was a 78% hike, to US$ 1.73 billion, in Dubai Duty Free 2022 sales, as DXB passenger traffic started to return to some form of normalcy; it is expected that last year’s numbers will top 64 million. Over the year, the retailer’s head count jumped 16.6% to 4.7k, as sales transactions topped 17.3 million, with 47.3 million units of merchandise being sold.

Starting on 01 January 2023, all establishments purchasing alcohol in the emirate will no longer have to pay the 30% municipality tax, and, apart from now buying their drinks for 30% less, personal liquor licences will be free for those eligible to legally purchase alcoholic beverages in Dubai. However, for those applying for a licence, a valid Emirates ID for residents or passport for tourists, is still required to apply; a person must be at least 21 to drink legally in the UAE, and alcohol can only be consumed privately or in licenced public places. There is no doubt that this will be a boon for the travel and hospitality sectors, as Dubai becomes a more affordable tourism destination.

Also starting on New Year’s Day, the country’s ‘Involuntary Loss of Employment Insurance Scheme’, covering all workers, whether in the private or public sector in the country, and including Emiratis, came into effect. This social security programme will pay anyone, who becomes unemployed, a cash sum for up to three months from the date of an employee’s job loss and will be calculated at 60% of their basic salary for a maximum payment of US$ 5,450, (AED 20k) a month. For those earning US$ 4,360, (AED 16k), or less, the annual insurance cost is just over US$ 16, (AED 60k); for those earning more, the figures are double at US$ 32, (AED 120). The insurance, with premiums subject to VAT, is compulsory, and failure to register in an unemployment insurance scheme will result in a penalty of US$ 109 (AED 400) being imposed on the employee. It appears that employers are not required to register their employees nor to actually pay the insurance for them, with the onus on individuals to register and pay for themselves.

On 04 January – and on the anniversary of his Ascension Day – HH Sheikh Mohammed bin Rashid launched the Dubai Economic Agenda ‘D33’; its targets were to double the size of the emirate’s economy, over the next decade, and to consolidate its position among the top three global cities. He also commented that, “the Dubai Economic Agenda ‘D33’ includes one hundred transformative projects, with economic targets of AED32 trillion, (US$ 8.72 trillion), over the next ten years, doubling our foreign trade to reach AED25.6 trillion, (US$ 6.98 trillion) and adding four hundred cities as key trading partners over the next decade”. He also commented that, “Dubai will rank as one of the top four global financial centres with an increase in FDI to over US$ 38.58 billion in the period and an annual US$ 120.57 billion contribution from digital transformation”.

Despite a slowing economy, as well as surging inflation, and the December UAE adjusted S&P Global PMI dipping 0.2 to 54.2, the country’s non-oil business activity is still well in positive territory and on track to expand at its fastest pace in more than a decade last year. Output growth, driven by an increase in sales and customer numbers, was positive, as new business at non-oil companies continued to rise, although at a slower pace, and demand from domestic clients improved. Output charges fell for the eighth consecutive month, with more discounts on offer, as businesses fight for an increased share of the market There was a rise in some firms’ inventory levels in their expectation of higher sales and new projects being launched. (Meanwhile December PMIs for Saudi Arabia and Egypt came in at 56.9, down from 58.5, and 1.8 higher to 47.2 – but still in negative territory).

The country’s economy has rebounded strongly in the aftermath of the pandemic, driven by higher energy prices and progressive government initiatives. Estimates for 2022 growth range from around 6.5% to 7.6%, with this year’s growth forecasts just shy of 4.0%. In the first nine months of 2022, non-oil foreign trade grew 19% to US$ 446 billion, compared to the same period in 2021. In H1, hotel guest numbers jumped 42%, from the same period before the pandemic, with revenue from tourism touching US$ 5.2 billion and guest numbers topping twelve million.

The DFM opened on Monday, 02 January 2023, 20 points (0.6%) higher on the previous week, shed 34 points (1.0%) to close on 3,302 by Friday 06 January. Emaar Properties, US$ 0.06 lower the previous week, shed US$ 0.03 to close the week on US$ 1.57. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.59, US$ 3.54, US$ 1.55, and US$ 0.41 and closed on US$ 0.62, US$ 3.57, US$ 1.53 and US$ 0.40. On 06 January, trading was at 58 million shares, with a value of US$ 28 million, compared to 88 million shares, with a value of US$ 38 million, on 30 December 2022.

By Friday, 06 January 2023 Brent, US$ 9.31 (1.2%) higher the previous three weeks, shed US$ 7.36 (8.6%) to close on US$ 78.55.  Gold, US$ 27 (1.5%) higher the previous fortnight, rose US$ 41 (2.2%) to close at 1,871, on Friday 06 January.

Huawei expects its 2022 revenue to reach over US$ 91.5 billion, in line with earlier forecasts. The Chinese tech giant confirmed that its ICT infrastructure business maintained steady growth, whilst the decline in device business has slowed; robust growth was seen in digital power and Huawei Cloud. It also indicated that future business opportunities would be found in digitalisation and decarbonisation, and that the company would continue to expand its R&D investment. Meanwhile, Samsung expects its Q4 profits to slump by 69% – its lowest level since 2014 – which made the global leader, of memory chips, smartphones and TVs, downgrade its quarterly forecast to US$ 3.4 billion. This is yet another indicator that the sector has been hit badly by the global economic slowdown and a marked decline in consumer demand.

Having delivered 405k vehicles in Q4, Tesla posted annual deliveries of 1.3 million – 40% higher than a year earlier, but quarterly down on the 405k Q4 Wall Street forecast. The outlook points to slowing demand in 2023, as the impact of a decelerating global economy and rising rates takes effect, with the EV manufacturer confirming that it had to deal with “significant Covid and supply chain related challenges throughout the year”. In the past, Tesla has always managed to deliver as many vehicles as it produced but is now facing increased competition from the traditional carmakers, such as Toyota, VW, Ford and GM. Tesla’s shares fell by 65% in 2022 – its worst year since going public in 2010.

Another tech giant facing problems is Amazon which this week announcing a lay-off of 18k jobs (about 6% of its total 300k workforce), which will mainly impact its e-commerce and human-resources units. Amazon has been impacted by the fact that soaring inflation has led to businesses and consumers to cut back spending, causing its share price halving over the past year. According to Layoffs.fyi, the tech industry has lost more than 150k jobs in 2022, with the trend continuing into the new year. This week, Salesforce Inc announced a 10% staff cut from its 8k payroll.

In the aviation sector, the company with the most sales could hinge on recent deals. As of the start of December, Airbus had 825 orders compared to 576 net sales for Boeing, but the US platemaker has chipped away at the lead with a 200-jet sale to United Airlines Inc and a 40-jet deal with a lessor. It is likely that Airbus will just be in the lead when final delivery – and sales – totals for 2022 are released shortly. However, after major problems since 2019, Boeing shares have jumped 57% in Q4, adding US$ 42 billion to its market value, as the plane maker released plans to revitalise the company; Boeing’s latest market cap, at US$ 113 billion, compares to its rival’s US$ 94 billion.

Another bad week for Meta as Ireland’s Data Protection Commission fined the Facebook parent company US$ 410 million for online privacy violations and also banned it from forcing European users to agree to personalised ads based on their online activity. There were two fines – US$ 221 million for violations of the EU’s strict data privacy rules and US$ 189 million for breaches involving Instagram. These are the latest penalties imposed on the tech giant which had already been hit with US$ 947 million of fines since 2021. The Irish watchdog is Meta’s lead European data privacy regulator because Meta’s regional headquarters is in Dublin.

Although still the world’s largest company, Apple’s value, fell by about 4% at the close of Tuesday’s trading to US$125.07, resulting in its market cap falling below the US$ 2 trillion level for the first time since March 2021; the US tech entity first attained the US$ 2 trillion level in August 2020, and surpassed the US$ 3 trillion level last January. The main drivers behind the fall continue to be inflation, international supply issues and a slowing global economy, with its share value trading more than 30% lower over the past twelve months.

Another one of the big US mega tech companies which has also seen its market cap tumble, is Tesla. With its share price tanking more than 12% in Tuesday’s trading to US$ 108.10, its current market cap of US$ 338.7 billion is a marked downturn in fortunes from its US$ 1 trillion mark reached in October 2021; over the past twelve months, its share value has sunk by around 72%., attributable to many factors, including concerns about EV demand and the impact of its chief executive Elon Musk’s acquisition of Twitter.

One of India’s best known business tycoons has been arrested, almost four years after investigations began – Venugopal Dhoot is facing a case of criminal conspiracy and fraud. It seems that India’s federal investigation agency is beginning to crack down on white collar crime and has seen the arrest of former ICICI Bank chief, Chanda Kochar, and her husband for an alleged fraud. The former bank’s supremo was alleged to have been involved in granting Dhoot’s companies high value loans in 2009, in return for investment in her husband’s renewables business. With the tycoon initially denying any of the claims against him, it seems that he has offered to give evidence against Kochhar, and if that happens it will be inevitable to bring other senior ICICI bankers into the limelight and could unravel a web of intricate fraud.

With higher energy prices last year, it is expected that Gulf sovereign wealth funds, awash with more cash, will play an increased role in the global markets in 2023. It is reported that five of the top ten global SWFs are to be found in the Gulf region, with Singapore’s GIC leading the pack of state-owned investors, having  US$ 40.3 billion invested in 2022 – up 17% on the year. ADIA, at second place, Mubadala and ADQ were also in the top ten. Last year, they more than doubled their investments in western economies, including the US and Europe, to US$ 51.6 billion in 2022, from US$ 21.8 billion in 2021. On the global stage, state-owned funds enacted fewer deals but with greater value – 747 deals, worth US$ 261.1 billion, compared to 890, worth US$ 229.9 billion; this year will see both figures move inevitably higher. The value of assets managed by SWF dipped US$ 0.5 trillion to $10.6 trillion in 2022, while those managed by public pension funds declined US$ 1.3 trillion to US$ 20.8 trillion. Like other investment vehicles, SWF will face all the global economic problems and disruptions – a looming recession, a cost-of-living crisis, record high inflation levels, a strong greenback and growing inequality,

President Tayyip Erdogan has announced that Turkey will decrease the price of natural gas between 13% to 25% for industrial users compared to November 2022. Natural gas prices for electricity production were cut by 12.73%, with electricity prices declining 16%.

According to CoreLogic, Australia’s Home Value Index fell 5.3% last year – its first decline since 2008 – with the largest being 12.1% and 8.1% noted in Sydney and Melbourne; the main driver was the surge in interest rates. With national values dipping 1.1% last month, home values could fall further in the early months of 2023 before stabilising after interest rates peak by the end of H1; rates have jumped 3.0% since last May to 3.1%. .Australia’s US$ 6.4 trillion housing market has declined 8% since its April 2022 peak, after surging 28.6% post-Covid. The RBA has posted that some 30% of Australian borrowers on fixed-rate mortgages will see repayments climb by more than 40% when their loans roll over in 2023. However, the consultancy noted that despite the downturn across many areas of the country, “housing values generally remain well above pre-Covid levels.”

Last month, US employers added a further 223k position to the country’s jobs market, pushing the unemployment rate 0.1% lower to 3.5%. These figures continue to show the resilience of the labour sector, despite soaring prices, with some forecasting that this will reduce the possibility of a severe economic downturn in H1. It must be noted that with the tech giants apparently reducing their payrolls, with double-digit job cuts, this could affect the labour market growth numbers, as consumer spending slumps and financial costs rise. The most recent report showed prices 7.1% higher on the year from a year earlier. It is readily apparent that the country’s economy has been slowing since 2021 and that, despite the economy still creating jobs, employers seem to be planning for a downturn, which will severely hit the market. The Fed is in a quandary – if it raises rates again, to rein in inflation, which is highly probable, this would result in higher costs for both businesses and consumers; this, in turn, will see a further slowdown in the economy and further job cuts.

Kristalina Georgieva has posted that this year will be “tougher” than that of 2022, as the economies of US, EU and China slow and, more worryingly, that over 33% of global economies will be in recession. The IMF supremo also indicated that the main drivers continue to be the war in Ukraine, rising prices, higher interest rates and the renewed spread of Covid in China, and noted that “even countries that are not in recession, it would feel like recession for hundreds of millions of people.”

Latest figures point to a slowing of China’s economy, with the official PMI data showing that its factory activity contracted for a third consecutive month in December – and at the fastest pace in three years – with coronavirus infections spreading in the country’s factories. Furthermore, home prices in one hundred cities fell for the sixth month in a row. Even President Xi Jinping called for more effort and unity as China enters what he called a “new phase”. The economy will also be impacted by the fact that demand for its products will slow, as other global economies cut down on their spending, as well as the fact that rising borrowing costs will ensure that investment is impacted. The knock-on effect is that lack of growth will see investors pulling money out of China, which in turn could see the see its currency weakening. A weak currency makes exports cheaper (but there are less exports because of reduced global demand) and imports dearer adding to China’s potential economic woes.

With the latest December round of rate rises taking effect, UK mortgage approvals fell to their lowest level in two years at 46k, and almost 12k lower last month; the September mini budget, hatched by the comedy duo, Liz Truss and Kwasi Kwarteng, was also a main driver behind the fall in the mortgage sector.  Things will also get worse this year and with mortgage approvals drying up, the knock-on effect will have a negative effect on house prices; latest forecasts indicate that they will dip by as much as 10% in 2023. These figures from the BoE also show that people were also borrowing more on credit cards, as cost of living pressures continue to weigh on household budgets, and that people were saving more for the proverbial “rainy day”. It is estimated that, in November, households deposited US$ 6.87 billion, (GBP 5.7 billion) – an indicator that because of the weakening consumer confidence index, households are spending less, with credit card debt rising by US$ 1.44 billion, (GBP 1.2 billion).

There is no doubt that the UK economy is in for troubled times in 2023, with both the BoE and the Office for Budget Responsibility forecasting a continuing recession – the former’s outlook is for a longer recession, if consumers increase their precautionary spending, and the latter a short sharp dip, as consumers dip into their savings. Any recession will see a slowdown in consumer spending, and this will present an economic headache, bearing in mind that UK Private Consumption accounts for over 63% of its GDP. After two years of decline, 2021 witnessed a 16.9% hike in ‘household final consumption expenditure’ to US$ 2,369.1 billion, (GBP 1,959.1 billion). Despite a seemingly strong labour market, even though actual wages are heading lower, the government’s guarantee energy prices, (probably costing less than initially forecast, and the possibility of it being extended in April), along with petrol pump prices edging lower would point to a soft landing. However, the canary in the mine is the ongoing industrial action which seems to be getting more serious by the day, with every man and his dog out on strike. If this continues ad infinitum, then the UK is heading for both a deeper recession and increased social unrest.

Lady Michelle Mone and her companies are being investigated by the National Crime Agency, investigating PPE Medpro a company that received US$ 242 million of government contracts, weeks after the Conservative peeress had referred it to ministers at the onset of Covid-19. It seems that the good lady is not the only government-related person to have had her “nose in the trough”. Some disturbing data has been revealed that could possibly implicate certain politicians who have done likewise, the most disturbing being that US$ 14.5 billion spent on PPE had been wasted, including US$ 4.9 billion, not being used because it did not meet NHS standards, and US$ 6.0 billion being written down to reflect subsequent price falls. Yet another report, by the National Audit Office confirmed that of the US$ 20.9 billion, spent between March and July 2020, a massive US$ 12.7 billion was awarded without any competition and US$ 8.1 billion to pre-approved suppliers (although they were not necessarily pre-approved for the products they were selling), Strangely, only US$ 0.24 billion was awarded using the established competitive process. To some, it does seem that during this period, some. Within the upper echelons of the ruling party, some were given ‘tickets to board the gravy train’; many of the ‘connected’ companies, many without any prior experience, and some had been newly established at the time, were given contracts, without due process. To date, just like dealing with the country’s current civil unrest, by not negotiating with many of the striking sectors, Rishi Sunak and his cohorts appear to be Missing In Action!