Bridge The Gap! 14 April 2023
The 2,709 real estate and properties transactions totalled US$ 3.16 billion, during the week, ending 14 April 2023. The sum of transactions was 226 plots, sold for US$ 1.57 billion, and 2,020 apartments and villas, selling for US$ 1.21 billion. The top three transactions were for plots of land, one in Mugatrah, sold for US$ 1.05 billion, and the other two in Al Layan 1 for US$ 172 million and in Al Barsha South for US$ 25 million. Al Hebiah Fifth recorded the most transactions, with seventy-four sales, worth US$ 15 million, followed by thirty-four sales in Madinat Hind 4 for US$ 12 million and twenty-seven sales in Al Hebiah Fourth, valued at US$ 68 million. The top two transfers for apartments and villas were for apartments located in Palm Jumeirah, valued at US$ 16 million and US$ 14 million. The mortgaged properties for the week reached US$ 357 million, whilst sixty-eight properties were granted between first-degree relatives worth US$ 39 million.
According to the latest Luxhabitat Sotheby’s report, the average price of ultra-luxury homes rocketed by more than 27% in Q1, compared to Q4 2022. The demand for such property continued to head north on the back of a broader economic recovery and an influx of overseas buyer seeing Dubai as a refuge and safe environment in a troubled world. In Q1, Dubai’s average price of a prime property rose to US$ 6.86 billion, with the average price per sq ft of a prime property rising 21% to US$ 919. Highest quarterly growth was seen in Jumeirah Bay, Al Barari and Downtown Dubai – 220% to US$ 559 million, 168% to US$ 252 million and 49% to US$ 926 million. The Consultancy indicates more of the same in Q2. The top five sales in Q1 were:
Jumeriah Bay Island Bulgari Lighthouse US$ 112 million Built-up 39.0k
Palm Jumeriah XXll Carat (Club Villa US$ US$ 50 million Built-up 12.1k
Jumeirah Bay Island Bulgari Lighthouse US$ 44 million Built-up 11.7k
Palm Jumeirah The Fronds Frond D US$ 41 million Built-up 7.0k
Palm Jumeirah The Fronds Frond F US$ 34 million Built-up 7.0k
The recent Knight Frank report pointed to the fact that Dubai has ranked as the fourth-most global active market in the luxury residential segment, with 219 homes, selling above US$ 10 million, and valued at US$ 3.8 billion last year. In Q1 2023, there were sales of eighty-eight units, valued at US$ 1.63 billion, with wealthy buyers snapping up these units valued at more than $10 million Four of the top ten property sales prices in Q1 were in Jumeirah Bay, where the average price of the twenty-two units sold was just under US$ 25 million, equating to US$ 2.88k per sq ft; the most expensive sold were found at Bulgari Lighthouse and Bulgari Resorts and Residences. The prices of the next two highest locations – The Palm Jumeirah and Emirates Hills – were some way behind the leader at US$ 846 and US$ 653.
In Q1, the luxury apartments segment witnessed 1,584 units being sold, valued at US$ 2.67 billion, accounting for 66% of the overall prime market. The top three locations were The Palm Jumeirah, with sales of US$ 1.01 billion, Downtown Dubai – US$ 926 million – and Jumeirah Bay – US$ 490 million. The average cost of a prime apartment jumped 35% on the quarter to US$ 7.73 million, with off-plan sales accounting for 70% of all apartments sold in Q1. In the prime villa segment, 294 units were sold for a total of US$ 1.53 billion, with the three most popular areas being The Palm Jumeirah, Dubai Hills Estate and Al Barari. In Q1, the average cost of a prime villa rose 37%, quarter on quarter, to US$ 10 million.
Property prices continued their upward journey in March in Dubai, surpassing their 2014 peak level for villas and some apartment areas of the emirate. The latest CBRE report confirms that apartment prices overall are still 17.1% down on 2014 levels but there are certain locations where prices have breached that historic volume. For the villa segment, overall prices are now 0.7% higher over the nine-year period. Last month average prices for apartments were at US$ 336 and US$ 396 per sq ft for villas. The report also noted that over the twelve months to March 2023, apartment and villa prices posted gains of 12.4% and 14.8% respectively. Jumeirah recorded the highest sales rate per sq ft in the apartment category, reaching US$ 665, while Palm Jumeirah villas recorded the highest sales rate per sq ft of US$ 1,214. Realiste estimated that the most expensive area in Dubai is Jumeirah Bay, with an average apartment cost of US$ 5.45 million.
Latest figures from STR show that Dubai hotels ended 2022 on a strong footing, after recovering better than expected from the impact of Covid. Revenue per available room rose about 31% to US$ 186, compared to December 2019 pre-pandemic returns. Dubai’s Department of Economy and Tourism posted that in the eleven months to 30 November 2022, overnight international visitors totalled 12.82 million, equivalent to 85% of 2019 pre-Covid numbers; it was also more than double the 6.02 million people who had visited Dubai over the same period in 2021.
Dubai’s business activity in non-oil private sector economy rose 1.4, to 55.5, to hit a five-month high, driven by output expanding on stronger increases in both jobs and inventories, with growth rates reaching multiyear records; the pace of job creation came in at its fastest pace since January 2018, with construction companies posting strong growth numbers, and there was also a marked improvement in staffing levels. Stocks of inputs registered their fastest rate in nearly five years, as firms purchased greater volumes of raw materials to service new and current projects. Furthermore, output prices fell for the eighth consecutive month, attributable to discounting by companies keen to maintain their market share, whilst supplier delivery times continued to shorten, as vendors worked to tighter customer requirements. Emirates NBD has posted that it estimates Dubai’s full-year 2022 growth at 5.0% and expects the emirate’s GDP to grow by 3.5% next year.
The UAE’s goods trade with the rest of the world hit $1.024 trillion last year, and it is expected that the emirate will see increased growth for a myriad of reasons including the reopening of the Chinese economy, the government’s progressive action in ensuring the non-oil sector diversifies and consolidates and the increase in bilateral trade deals. In 2022, UAE’s exports grew 41% to US$ 599 billion, with imports topping US$ 425 billion, accounting for 1.7% of global merchandise imports; the country was ranked 11th globally of the top commodity-exporting countries. Trade has always been an important pillar of Dubai’s economy, with Oxford Economics noting that “we expect trade in goods and services to expand and be stimulative of economic growth”. Since Dubai is now a major economic hub, situated between Europe and Asia, it will be able to benefit from its position to service the Asian economies which are forecast to see robust growth in the coming months, even though business in Europe and US may be dismally flat. Last week, HH Sheikh Mohammed commented that the UAE’s trade is set to surge further this year, following strong growth last year. According to the WTO, the UAE accounted for 2.4% of the world’s goods exports in 2022.
Dubai’s ambitious D33 economic agenda has several objectives for the next ten years to 2033 including to;
- double the size of its economy
- double the size of its foreign trade
- add four hundred cities to its foreign trade map
- establish Dubai as the go to destination for major international companies and investments
- ensure that Dubai becomes one of the top three global cities
It does seem that certain banks have been reluctant to pass on the benefits of rate hikes to their savers. The last increase was in March when the UAE Central Bank moved its overnight deposit facility 25bp higher to 4.9%, following the Federal Reserve’s 0.25% increase. In the not-too-distant past, any rise in the deposit interest rate for retail investors would move in tandem with the same rate.
The latest bulletin from the federal Ministry of Finance has listed out a number of entities that are not required to register for Corporate Tax. They include government and government-controlled entities, extractive businesses, and non-extractive natural resource businesses. Furthermore, a non-resident person will be exempted if they earn only UAE-sourced income and do not have a Permanent Establishment in the country.
Last year, Dubai Integrated Economic Zones Authority posted increases in both its revenue, by 29.0%, (including commercial licensing and services, 69.0%, and rentals by 9.0%), and operating profit by 42.0%. With 22k companies and over 41k employees, DIEZ contributed 5.0% to Dubai’s GDP and 11.0% to the emirate’s non-oil foreign trade in 2021.
With a US$ 400 million investment, e& has become a majority shareholder in Careem’s super app, along with all three of Careem’s co-founders, subject to regulatory approvals. This investment will allow telecoms and technology provider boost the growth of its consumer digital services, including the expansion of e& life’s fintech vertical, e& money. Careem will also benefit by having the extra finances to expand its core food, grocery and fintech services and as well as adding more partner services.
On Tuesday, e& announced that its shareholders had approved the Board of Directors’ recommendation to distribute H2 cash dividends, at a value of US$ 0.109 per share, with the total annual dividend double that figure at US$ 0.218.
Dubai Electricity and Water Authority PJSC, reported that its shareholders approved the payment of total dividends of US$ 1.30 billion; based on a share price of US$ 0.676, the dividend, to be paid next Thursday, 20 April, equates to a 6.3% dividend yield. The utility posted a total US$ 2.70 billion annual 2022l pay-out.
The DFM opened on Monday, 10 April 2023, having gained 62 points (1.8%) the previous fortnight, gained 81 points (2.4%) to close on 3,492 by Friday 14 April. Emaar Properties, US$ 0.10 higher the previous three weeks, gained US$ 14 to close the week on US$ 1.68. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.67, US$ 3.62, US$ 1.44, and US$ 0.35 and closed on US$ 0.68, US$ 3.54, US$ 1.46 and US$ 0.39. On 14 April, trading was at 144 million shares, with a value of US$ 77 million, compared to 65 million shares with a value of US$ 37 million on 07 April.
By Friday, 14 April 2023, Brent, US$ 11.27 higher (16.4%) the previous three weeks, gained a further US$ 6.69 (8.4%) to close on US$ 86.63. Gold, US$ 46 (2.3%) higher the previous three weeks, dipped US$ 39 (0.4%) at US$ 2,018 on 14 April 2023.
This week, Bitcoin continued its bounce back to economic health, touching U$ 30k for the first time since last June and trading 80% higher YTD, but still down 50% from its November 2021 all-time high; it is also the first time that it has crossed that level since the collapse of Terra/Luna and Three Arrows Capital. The current price indicates that it has fully recovered from Celsius, FTX and the US regulatory crackdown, but the US regulators seem tb focussing a lot more time on the crypto industry which will be under even more scrutiny in the future. This week, crypto exchange Coinbase Global was cited by US Securities and Exchange Commission, confirming that it was to bring an enforcement action. Meanwhile, the US Commodity Futures Trading Commission has sued Binance founder, Changpeng Zhao, and his crypto exchange for alleged violations of derivatives regulations.
A report by the International Data Corporation has noted a 29% decline, to 56.9 million, in Q1 for global shipments of personal computers, compared to a year earlier Apple took the brunt of the fall in numbers, posting its largest ever year-over-year drop in shipments to 4.1 million, falling 40.5%; this saw Apple’s market share in the personal computer market falling 1.4% to 7.2% on the year. Of the major players, only HP saw an increase of its market share rising from 19.7% to 22.1%. The decline in shipments was attributed to weak demand, excess inventory and a worsening macroeconomic environment, with the report noting that shipment volume also declined to lower than pre-pandemic levels. The current decline in numbers is expected to continue to fall in the short-term but should pick up later in the year if the global economy improves.
According to reports, Twitter has been merged with Elon Musk’s “everything app” and is no longer considered an independent entity. It seems that in a court filing involving Twitter and its former CEO, Jack Dorsey, one of the documents noted that “X Corp. is a privately held corporation. Its parent corporation is X Holdings Corp. No publicly traded corporation owns 10% or more of the stock of X Corp. or X Holdings Corp.” Elon Musk evidently revealed that his other company – X Corp – has absorbed Twitter Inc. After finally acquiring Twitter, in a drawn-out US$ 44 billion deal, Musk has said that the move was eventually “an accelerant to building X,” the “everything app”.
Elon Musk is awaiting the Federal Aviation Administration’s approval to launch his Starship rocket, claimed to be the world’s most powerful rocket. The launch is scheduled for this Monday, with the tech billionaire admitting he thinks there is only a 50% chance of success. He confirmed that his company SpaceX is building multiple Starship vehicles at the South Texas site, increasing the likelihood of a successful launch. It is expected that a similar rocket will send humans to the Moon and eventually to Mars. The Starship spacecraft is also designed for everything including from interplanetary exploration to suborbital supersonic flights on Earth.
Alphabet, the parent company of Google, has been fined US$ 31 million by South Korea’s Fair Trade Commission for blocking the release of mobile video games on a competitor’s platform. It had been cited for bolstering its market dominance and impacting on local app market One Store’s revenue and value as a platform, by requiring video game makers to exclusively release their titles on Google Play in exchange for providing in-app exposure between June 2016 and April 2018. Game makers affected by Google’s action included Netmarble, Nexon and NCSOFT. Two years ago, Google had been hit by a a larger fine of US$ 151 million for blocking customised versions of its Android operating system.
Tupperware, founded in 1946 by Earl Tupper, an American chemist, has warned that it could go into liquidation if much-needed funding cannot be raised, as it has “substantial doubt about its ability to continue as a going concern”. On the news, the US maker of food storage containers saw its share value tank 50% on Monday; it had made its fortune, mainly in the sixties and seventies, by employing a direct sales force including people holding “Tupperware parties” in their homes to sell plastic containers for food storage. The company, which has failed in its strategy to reposition itself to a younger audience, still maintains a direct sales force – who earn a percentage of all the goods they sell – as well as selling goods on its website; that number dipped by 18% in 2022 compared to the previous year. Analysts, including GlobalData, concur that it has “failed to change with the times in terms of its products and distribution”, and that the method of selling direct to younger customers, through Tupperware parties, “was not connecting”. Because it has yet to file its annual report, Tupperware could be delisted from the New York Stock Exchange and has also warned that it had to renegotiate its loans after already amending its loan agreements three times since August 2022. It is also known that its 2021 and 2022 financial results had been “misstated” due to how the firm accounted for taxes and leases.
When there are problems, the French police have history in blaming anybody else but themselves. Now the French border police have accused the Port of Dover of failing to prepare properly for last weekend’s holiday rush, when many travellers encountered lengthy delays. Noting that the gendarmerie “had taken the necessary measures to cope with this flow,” it later posted that `’this was not enough to absorb the number of buses announced for one day, due to the structural organisation of the control queues at the port of Dover, on the British side.”
Q1 witnessed Türkiye’s budget deficit was at US$ 13.65 billion, with revenue up 30.8% on the year to US$ 42.4 billion and expenditure, 57.0% higher at US$ 55.7 billion; privatisation moves added a further US$ 169 million. The monthly March budget came in with a US$ 1.68 billion deficit, whilst the primary balance – excluding interest payments – was at minus US$ 9.1 billion) in the three-month period.
Latest February, Eurostat data indicate that there were production increases in both the EU and the euro area by 1.4% and 1.5% on the month and by 2.1% and 2.0% on the year. Over the month, the EU and the euro area saw growth in capital goods by 2.1% and 2.2%, non-durable goods by 2.4% and 1.9%, energy by 1.2% and 1.1% and intermediate goods by 0.5% and 1.1%. The highest monthly increases were registered in Belgium (6.1%), Luxembourg (4.9%) and Greece (4.8%), with the largest decreases seen in Slovenia (3.6%), Finland (2.3%) and Portugal (2.0%).
It does not take an expert to confirm that debt-ridden developing countries are in a mega economic mess, exacerbated by factors such as the global growth slowdown, high interest rates and reduced investment. However, the UN Conference on Trade and Development confirmed this fact and warned that annual growth across large parts of the global economy will be below pre-pandemic levels in 2023; it estimated that rising interest rates, allied with soaring debt levels, will cost developing countries over the coming years, at least US$ 800 billion “in foregone income”. The report noted that last year, borrowing costs increased 3.2% to 8.5% for sixty-eight emerging markets, and over the last decade that “the number of countries spending more on external public debt service than healthcare increased from thirty-four to sixty-two. The situation will get even worse as public investment in developing countries continue to suffer as countries pay more to their external creditors than they receive in new loans, as was the case in 2022, with thirty-nine countries in this bracket. More worryingly, eighty-one developing countries (excluding China) lost US$241 billion in international reserves in 2022, or 7.0% on average. It is a fact that the gap between the so-called rich nations and the poorer developing ones is getting wider by the year; it is about time that global bodies start making a concerted effort to Bridge The Gap!
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