There’s Something In The Air! 01 December 2023
The week’s real estate and properties transactions totalled US$ 2.26 billion, during the week ending 01 December 2023. The sum of transactions was 422 plots, sold for US$ 801 million, and 1,380 apartments and villas, selling for US$ 880 million. The top three transactions were all for plots of land, the first in Hadaeq Sheikh Mohammed Bin Rashid for US$ 34 million, the second in Al Barsha South Fourth for US$ 20 million and Palm Jumeirah for US$ 19 million. Wadi Al Safa 2 recorded the most transactions, with one hundred and twenty-six sales, worth US$ 34 million, followed by ninety-six sales, in Madinat Al Mataar for US$ 50 million, and forty-eight sales in Palm Jabal Ali, valued at US$ 357 million. The top three transfers for apartments and villas were for a villa in Al Qusais Industrial Second for US$ 75 million, an apartment in Island 2, sold for US$ 16 million, and an apartment in Um Suqaim First for US$ 16 million. The mortgaged properties for the week reached US$ 379 million, with the highest being for land in Palm Jumeirah for US$ 41 million; one hundred and fifty-six properties were granted between first-degree relatives worth US$ 201 million.
A development, located on a new island at Jumeirah Beachfront, Umm Suqeim 2, will house three Las Vegas hotel brands – MGM, Bellagio and Aria. Encompassing over 3.5 million sq mt, the US$ 1.2 billion waterfront project, called ‘The Island’, is slated for a H2 2028 completion; property developer Wasl has awarded the main contract to China State Construction Engineering Corporation Ltd Middle East. The development will comprise 1k hotel rooms/ apartments and ten villas along with F&B outlets, indoor and outdoor pools, business lounge, water fountains and artificial waterfalls. It will feature a 110 mt tall entertainment tower in the centre of the island, seating three hundred guests for the best view of shows in 3D, and a beach club. Furthermore, an eight hundred seat theatre will host shows, conferences, festivals and weddings. Another amenity is a beach club that offers “maritime leisure services”. A 1.2 km corniche, around the project, will have cafés, restaurants and retail stores, including a so-called ‘Cave of Wonders’ will feature sports and games for children and their families. There is every confidence that this resort will appeal to both local and visiting UHNWIs for many reasons including unique entertainment facilities and potential gaming facilities.
HH Sheikh Mohammed bin Rashid announced an extension to the Metro network – the Blue Line will include fourteen new stations and add 30 km to the Metro network, of which 15.5 km will be underground. The project, which is part of The Dubai 2040 Urban Master Plan, located in the north-east of the emirate, will ease traffic congestion and establish a direct link with Dubai International Airport. The RTA noted that the Blue Line will connect five principal urban regions of Dubai – Bur Dubai/Deira, Downtown/Business Bay, Dubai Silicon Oasis, Dubai Marina/JBR and Expo City Dubai. Comprising two main routes, starting with connections from the Red and Green Lines – the former starting at in Al Jaddaf at the Creek Interchange Station, with the Green Line crossing Dubai Creek on a 1.3km bridge. On completion, the network will be 131km long and encompass seventy-eight stations, served by one hundred and sixty-eight trains. The project is scheduled to be finished in 2029, coinciding with the twentieth anniversary of the Dubai Metro. Costing an estimated US$ 4.90 billion, the project is projected to yield a benefit-cost ratio of 2.60 (US$ 2.60 in benefits for every US$ 1 spent), with total anticipated benefits exceeding US$ 14.40 billion by 2040. Benefits will see traffic congestion on its routes reduced by 20% and increase the value of land and properties near stations by up to 25%. By 2030, it will serve an estimated 200k passengers every day, with an hourly capacity of about 56k passengers in both directions, at a service interval of about 1.5 minutes.
Since its 2008 establishment, the Knowledge and Human Development Authority has seen the size of Dubai’s private school sector more than double from 156.5k, in the 2007-2008 academic year, to its current 365.6k students; over the same period the number of schools has increased by 61.8% to two hundred and twenty, with five new establishments opening in the 2023-2024 year and student numbers 12.0% higher. It is also reported that the quality of education has improved in similar manner – in the last academic year, 77.0% of students were enrolled in schools rated “Good or better”, compared to just 30% in 2008-2009. The emirate’s private schools offer seventeen different curricula, with the main ones being UK-based, Indian curriculum, US curriculum and the International Baccalaureate accounting foe 36%, 26%, 15% and 7% respectively.
DHCC posted a 12.0% growth hike last year, with latest figures indicating that the sector contributed US$ 763 million to the emirate’s GDP. Since its establishment in 2002, it has expanded to its present size of four hundred and eighty-one facilities, with nineteen having expanded their operations last year. These included the ground-breaking of Prime Hospital, the expansion of Moorfields Eye Hospital and the opening of Kandinsky Clinic, Dubai’s first Russian facility. With the 2021 introduction of C37, the country’s first private medical workspace – fully managed and operated by the authority – was meant for UAE-based or visiting doctors looking for an independent, part-time practice solution to enable healthcare beyond borders. In the past twelve months the number of practicing doctors has tripled to twenty-eight, including fourteen international specialists who performed over 5.6k procedures. It has also partnered with Dubai SME to assist with the emirate’s aim to promote Emirati entrepreneurs. This year the Dubai Health Care Authority, the governing body of the DHCC, partnered with KLAIM and Jade Healthcare Consultancy to enhance performance and streamline operations for its business partners. The DHCC also noted that one hundred and thirty international related medical companies have their regional offices in the free zone.
DEWA has given the green light to Acwa Power, which has a 26.95% stake in the project, to start commercial operations for the final 600 MW phase of the total 2.4k MW power capacity of the Hassyan plant, which was converted to run only on natural gas instead of clean coal last year. The US$ 3.2 billion project, which aims to avoid about thirty million tonnes of carbon dioxide emissions by 2030, supports the Dubai Clean Energy Strategy 2020 and the Net Zero Carbon Emissions Strategy 2050 to provide 100% of Dubai’s total power capacity from clean energy sources by then. The complex entails a water desalination project, with a production capacity of 120 million imperial gallons a day, using reverse osmosis technology – with Acwa the pre-preferred bidder to develop and operate the first phase. Dubai is also constructing the 5 GW Mohammed bin Rashid Al Maktoum Solar Park to increase its clean energy capacity. The federal government has confirmed plans to invest up to US$ 54 billion by 2030 to ensure energy demand is met while sustaining economic growth.
There is no doubt that Emirates is none too happy with Rolls Royce, with its President, Tim Clark urging the UK company to go “back to basics” and focus on the performance of its engines. Earlier in the week, RR’s CEO Tufan Erginbilgic laid out plans to quadruple profits and to revive its flagging fortunes, including a sharp increase in profit margins and “value-driven pricing,” suggesting higher servicing bills to increase civil engine profit margins to 15% – 17%.
At the Dubai Air Show, last month, the airline’s supremo, who criticised Rolls over pricing and the performance of its largest engine, appeared non-plussed, adding “if you have an engine … not performing as it should do, your costs are going to rise. But your ability to extract value from the client is going to fall simply because the client won’t accept non-performance.” The company has acknowledged that the downtime on the XWB-97 engine is greater than expected but has denied suggestions by Clark that the performance level equates to being “defective”. Emirates is still interested in ordering the A350-1000, dependent on progress on downtime, with RR saying that the problem of durability was specific to the XWB-97 engine used on the A350-1000, (and only in challenging climates), adding that it was working with Airbus “to improve that engine to a great level”. However, the EK President commented that “we were ready on the -1000, adding the engine stand-off had “opened the door” to reviving the Boeing 777-8 as a passenger variant as well as a freighter.
DP World’s Jebel Ali Free Zone has successfully completed Phase 1 of Jafza Logistics Park. Encompassing an area of 562.5k sq ft, the multi-tenant warehousing facility, developed in collaboration with Group AMANA, comprises a variety of facilities, such as ‘Grade-A’ Dry Pharma storage units, temperature-controlled warehouses, and office space. The second phase, which will add another 250k sq ft of Grade A storage facilities, is scheduled for completion by Q1 2025. The facility was designed with sustainability in mind, and it utilises precast concrete elements and off-site construction techniques to reduce its environmental impact.
DP World Australia’s executive vice president, Nicolaj Noes, confirmed that the personal data of some current and former employees was compromised following a major data breach incident, earlier in the month, that closed operations at four major Australian ports for more than three days. The firm did not reveal the number of its employees’ records that were affected by the cyber-attack but confirmed that their customers were not impacted. The company is responsible for 40% of Australia’s maritime freight, and the outage resulted in a backlog of 30.1k shipping containers stacked up at its depots around the country. Despite speculation that Russian cyber criminals were responsible for the attack that crippled the ports operator, authorities were still investigating to determine the culprit. DP World Australia has not received a ransom demand from the group responsible for the hack to date. The incident remains under investigation by the Department of Home Affairs, with the company having been working closely with a number of government agencies, including the Australian Cyber Security Centre and the Australian Federal Police.
The firm expects there will be further freight delays as industrial action continues at its Melbourne, Sydney, Brisbane and Fremantle operations, with one forty-eight-hour work stoppage planned for next week, which had been planned before the cyber-attack. The strike is over pay and rosters under DP World’s proposed enterprise bargaining agreement, with the Maritime Union of Australia attributing the strike to negotiations with the company breaking down. Undoubtedly, the planned industrial action would result in major supply shocks to the national supply chain, and it is likely that there will be some delays to freight arriving in time for Christmas as a result of the ongoing dispute.
Yesterday, countries at COP28 Countries formally approved a deal on a new climate disaster fund, with it being adopted following the opening ceremony at Expo City Dubai. It will launch a fund to help vulnerable nations cope with the cost of climate-driven damage from drought, floods and rising seas. The UAE will contribute US$ 100 million to the fund, which is seen as an important milestone in delivering for vulnerable communities and building resilience for people suffering the devastating impacts of climate change.
Announced at COP28, the emirate’s government has launched the Dubai Reef project, spanning some 600 sq mt and aiming to increase coral reefs by 400k cu mt and increasing sea life eightfold. It is hoped that the project will help boost food security, improve the sustainability of fishermen’s livelihoods and enhance eco-tourism. Other aims are to reduce carbon emissions, (with an estimated capacity to capture more than seven million tonnes of carbon annually) and increase marine biodiversity. It will be a PPP model (public private partnership), with the government contributing 10% and that a further 50% has already been committed. It will begin in Q4 2024 and is scheduled for completion within four years.
Dubai Holding, when signing the UAE Climate Responsible Companies Pledge in collaboration with the Ministry of Climate Change and Environment, announced its participation as Principal Pathway Partner at the twenty-eighth meeting of the United Nations Climate Change Conference (COP28). The signing was also an indicator of the global investment company’s commitment to the UAE’s Net Zero 2050 initiative. During the thirteen days of the annual meeting, Dubai Holding will host a series of events to showcase sustainable technologies and help develop impactful long-term solutions that support the global climate agenda. It has also developed a group-wide decarbonisation roadmap towards Net Zero 2050, supported by interim targets up to 2030.
The two-day Dubai COP28, that opened yesterday, 28 November, could well have been the world’s last opportunity to rectify its climate course and the need to redesign the global energy system has become critical. There is no doubt that progress has been slow when it is reported that only 7% of the global energy system comprises wind/solar energy and only 2% of vehicles are EV. Furthermore about 50% of the global population lack access to affordable energy and that the decarbonisation rate has been far too sluggish. The Dubai Future Forum saw over 2.5k global experts, from more than one hundred leading global entities, as well as global leaders, ministers, CEOs and policy makers listening to one hundred and fifty climate experts.
It was announced that UAE nationals, who started work “for the first time” from 31 October will be covered under the new pension law on condition that they are employed by entities linked to the General Pension and Social Security Authority (GPSSA), which includes federal and government sector firms in the UAE, apart from those in Abu Dhabi and Sharjah, and all affiliated private firms in the UAE, apart from Abu Dhabi. Current employees will continue to be covered under Federal Law No. (7) of 1999 on Pension and Social Security.
After a price fall last month, the UAE Fuel Price Committee again decreased all retail fuel prices again for December. Eight years ago, the federal government liberalised fuel prices so that they could be aligned with market rates until the onset of the pandemic saw prices frozen by the Fuel Price Committee. In March 2021, prices were amended to reflect the movement of the market once again, as December retail prices all head south:
The breakdown in fuel price per litre for December is as follows:
• Super 98: US$ 0.807, from US$ 0.826 in November (down by 2.30%) and 1.2% lower YTD
• Special 95: US$ 0.777, from US$ 0.796 in November (drop of 2.39%), down 6.18%, YTD
• Diesel: US$ 0.869, from US$ 0.932 in November (down by 6.76%), 3.01% lower over the first eleven months of the year
• E-plus 91: US$ 0.755, from US$ 0.777 in November (decline of 2.8%), up 6.94% YTD
In response to a significant oversubscription, Dubai Taxi Company has increased the number of shares offered in the UAE retail offer of its IPO by 12.495 million to 74.970 million. The initial offering size, equating to 24.99% of the company’s total issued share capital, remains unchanged – only the retail tranche will increase by 2% to 12% of the total offer, equating to US$ 37.9 million, based on the announced price range of US$ 0.504 per share. The IPO raised US$ 327 million and valued the company at US$ 1.25 billion. The subscription period for the Offering closed on Tuesday for UAE retail investors and Wednesday for qualified investors. The only surprise was that the sale garnered US$ 40.87 billion and was oversubscribed by 130 times – the highest over-subscription level achieved by an IPO on the DFM. Investors who subscribed through the First Tranche, “UAE Retail Offering”, will receive an SMS confirmation of their respective allocation next Tuesday, with refunds due to commence from the same date.
The DFM opened on Monday, 27 November 2023, 3 points (0.1%) lower the previous week, dipped 4 points (0.1%) to close the trading week on 3,988, by Friday 01 December 2023. Emaar Properties, US$ 0.21 higher the previous four weeks, was up US$ 0.13, closing on US$ 2.06 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.69, US$ 4.92, US$ 1.51, and US$ 0.39 and closed on US$ 0.69, US$ 4.77, US$ 1.51 and US$ 0.40. On 01 December, trading was at 75 million shares, with a value of US$ 57 million, compared to 49 million shares, with a value of US$ 27 million, on 24 November 2023.
The bourse had opened the year on 3,438 and, having closed on 30 November at 3992, was 449 points (16.1%) higher, YTD. Emaar started the year with a 01 January 2023 opening figure of US$ 1.60, to close the first eleven months at US$ 2.07. Four other bellwether stocks, DEWA, Emirates NBD, DIB and DFM started the year on US$ 0.59, US$ 3.54, US$ 1.55 and US$ 0.41 and closed YTD at US$ 0.69, US$ 4.80, US$ 1.50 and US$ 0.40. On 30 November, trading was at 139 million shares, with a value of US$ 164 million, compared to 66 million shares, with a value of US$ 18 million, on 31 December 2022.
By Friday, 01 December 2023, Brent, US$ 12.38 lower (13.3%) the previous five weeks, shed US$ 1.34 (1.7%) to close on US$ 79.10. Gold, US$ 57 (2.1%) higher the previous fortnight, climbed US$ 88 (4.4%) to trade at US$ 2,092 by 01 December 2023.
Brent started the year on US$ 85.91 and shed US$ 5.24 (5.5%), to close 30 November 2023 on US$ 85.36. Meanwhile, the yellow metal opened 2023 trading at US$ 1,830 and gained US$ 211 (11.5%) to close YTD on US$ 2,041.
Latest reports indicate that, for Q1 2024, the UAE will implement additional volume. cuts of 163k bpd to bring production totals of 2.912 million bpd, in addition to the voluntary reduction of 144k bpd, previously announced in April 2023, but ends this month. Opec+ also noted these cuts will be amended subject to market conditions so as to keep the market in some state of equilibrium.
Saudi Arabia’s Public Investment Fund (which has more than US$ 700 billion in funds) has agreed to buy a 10% stake in Heathrow airport from Spanish infrastructure giant Ferrovial. Another 15% in its parent company, FGP Topco, will be sold to France-based private equity fund Ardian. Other stakeholders in FGP Topco include Qatar Investment Authority, Caisse de dépôt et placement du Québec, Singapore’s GIC, Australian Retirement Trust, China Investment Corporation and Universities Superannuation Scheme. LHR has been badly impacted by soaring interest rates because of its significant debt and it appears that management wanted to increase average charge per passenger by 26.7% to US$ 50.75; however, the Civil Aviation Authority has said charges will fall to US$ 32.28, and “remain broadly flat” until the end of 2026.
Starting in 2024, new US legislation will define a “foreign entity of concern” as a company headquartered in or owned or controlled by China, Russia, Iran or North Korea in a bid to keeping Chinese components out of electric cars sold in the country. Any company in which the government of these countries holds 25% or more of a board’s seats, voting rights or shares would fall under the rules. Furthermore, the restrictions will expand to cars that contain critical materials extracted, processed or recycled by such an entity. As from next year, the law will also ban cars from eligibility for tax credits if they contain battery components manufactured or assembled by a “foreign entity of concern”. By 2025, the restrictions will expand to cars that contain critical materials extracted, processed or recycled by such an entity. To further help the local EV market, legislators had already introduced a US$ 7.5k tax incentive for every vehicle made in the country; only about 20% of electric vehicles for sale in the US currently qualify for the tax credit. Chinese firms currently produce the vast majority of electric car batteries and the minerals used in them; it is estimated that the White House has already expended nearly US$ 100 billion in private investment of electric cars.
Tesla, currently in negotiations with the IF Metall union over a collective bargaining agreement, has sued the Swedish Transport Agency after postal workers, in support of the workers, stopped delivering licence plates connected to the US EV company. About one hundred and thirty staff at Tesla’s Swedish repair shops have been on strike since 27 October, demanding an agreement to guarantee “good wages, good pensions and good insurance for staff”, which now involves eight other unions, including postal, taking their own actions, targeting Tesla, in sympathy with the repair workers; for example, dockworkers have stopped unloading Tesla cars. On Monday, Tesla filed a lawsuit accusing the Transport Agency of unfairly targeting Tesla by not fulfilling the deliveries of the registration plates and demanded access to the plates – a request which was granted that forces the authority to get the plates to Tesla within seven days or face a fine.
After failing to gain an appropriate market share, Beijing-based ByteDance has confirmed that it will significantly downsize its gaming business, along with job cuts, numbering in the hundreds. Having launched Nuverse in 2019, the firm, which also owns popular social network TikTok, entered the gaming market to compete with industry leader Tencent. Although not confirmed, it seems that games with active players, such as Crystal of Atlan and Earth, and Revival, will continue, whilst titles, not yet launched, will be shut down in December. Having failed to build up production capacity, and despite acquiring external studios such as C4games. it now seems that the white flag is being waved and that it is edging out of the very competitive video gaming sector. The global video game market, of which Tencent is the world’s biggest gaming company in terms of revenue, was estimated to be worth US$ 217.0 billion in 2022.
The embattled Metro Bank has announced shareholders are to vote later whether to back a rescue deal aimed at securing the bank’s future. It does seem that the shareholders would agree to a deal – to raise extra funds from investors and refinance debt – which was struck last month but if the deal is rejected, Metro has warned it might be deemed “unviable” by the Bank of England and put into a process for managing failed banks; the bank’s bondholders accepted the deal last month even though they are set to lose 40% of their value. The deal sees Colombian billionaire Jaime Gilinski Bacal becoming Metro’s controlling shareholder with a 53% stake, after his firm, Spaldy Investments, put US$ 129 billion into the bank. The deal includes US$ 410 million in new funding and the refinancing of US$ 757 million of debt. Metro now has 2.7 million customers and holds almost US$ 19.0 billion worth of deposits in seventy-six branches.
Barclays has decided to cut its payroll numbers of 22.3k, by nine hundred, in order to reduce overheads and to “simplify the business”, with the Unite union commenting that the “disgraceful” move in the lead-up to Christmas would boost the bank’s “massive profits”; the bank reported Q3 pre-tax profits of US$ 2.42 billion. Jobs will go across several back-office divisions, including compliance, finance, legal, policy, IT and risk. Last month, chief executive CS Venkatakrishnan said that the bank saw “further opportunities to enhance returns for shareholders through cost efficiencies and disciplined capital allocation across the group”. In recent years, the bank has closed almost two hundred branches, citing the fact that only 10% of transactions were now taking place face-to-face. It is reported that Lloyds is another major bank considering retrenchments, with up to 2.5k positions at risk.
Warmer weather and slowing US retail sales were the main drivers behind Dr Martens issued a warnings report that its earnings will fall below expectations. Because the bootmaker posted that two of its major US wholesalers had reduced its orders, shares plunged nearly 25%. In H1, the firm’s global profits sank by 55% to US$ 33 million, with its chief executive, Kenny Wilson, saying trading in H2 had been “mixed”; it expected its full-year revenues to decline by a “high single-digit percentage”. In 2021, its shares were first listed on the London Stock Exchange at US$ 4.68 – yesterday, it was trading at US$ 1.09.
A class action in the US is suing Cristiano Ronaldo for damages of “a sum exceeding” US$ 1.0 billion for his involvement with Binance’s first CR7 collection of NFTs in which he said would reward fans “for all the years of support”; “CR7” refers to the footballer’s initials and his iconic shirt number. In a social media video, announcing the partnership, Ronaldo told would-be investors “we are going to change the NFT game and take football to the next level”. The cheapest NFT from the collection was priced at US$ 77 when it went on sale in November 2022 – today it is priced at about US$ 1. It is alleged that the footballer’s promotion of Binance led to a “500% increase in searches” for the Caymans Island’s crypto exchange. Furthermore, his presence also led people to use the firm to invest in “unregistered securities” – such as Binance’s BNB cryptocurrency; that being the case – and according to the SEC – these assets can be considered securities and any person endorsing them must adhere to US law. The SEC chair Gary Gensler previously noted that celebrities must “disclose to the public from whom and how much you are getting paid to promote investment in securities”. The class action suit was filed a week after the US Justice Department ordered the firm to pay US$ 4.3 billion in penalties. Major League Baseball, Formula 1 and Mercedes-Benz are all also facing class action lawsuits, filed on the same day, over their promotion of failed crypto-exchange FTX.
This week, the granddaughter of the founder of Wilko’s, which collapsed into administration last August and leaving 12k jobless, faced questions by MPs on the Business and Trade Committee about the failure of the business. Lissa Wilkinson cited that the fallout from last year’s mini budget was one of the factors behind the retailer’s demise. which she claimed significantly increased the interest rate on a loan with Australia’s Macquarie that Wilko was trying to secure. Its former chief executive, Mark Jackson, only appointed in December 2022, noted that another of the main causes was that the company failed was because it stayed open during Covid. During that period, it continued to pay workers, and did not take advantage of the furlough scheme, and paid landlords in full – unlike 90% of other retailers. At the beginning of the year, it had a cash balance of US$ 127 million – twelve months later this had declined to US$ 73 million, with Wilko’s posting a US$ 48 million loss; that year, the company paid the family a US$ 3.8 million dividend, paid to a company which is controlled by series of family trusts.
Canadian billionaire Doug Putman also appeared before the committee detailing how he wanted to acquire about three hundred of the four hundred shops that could have saved over 10k jobs. The owner of HMV was disappointed that firms, including some landlords, had been “super inflexible” and made a deal “literally impossible”, commenting that “I would say everyone just got a little bit greedy and unfortunately weren’t thinking about the 10k-plus jobs that would have been saved.” Eventually, the owner of Poundland took over the leases of seventy-one Wilko stores and rebranded them, while discount chain B&M also took over more than fifty shops. CDS Superstores, which owns The Range retailer, bought Wilko’s name and website andis opening five Wilko stores before Christmas.
There are concerns in China after officials launched an investigation into the workings of Zhongzhi Enterprise Group, one of the country’s biggest shadow banks, which has lent billions to real estate firms, many of which are struggling, as the housing sector self-implodes. The bank’s asset management arm has reportedly handled more than US$ 139 billion and last week announced that it was insolvent, with authorities investigating “suspected illegal crimes” against the firm and have already taken “criminal coercive measures” against “many suspects”. The entity has a negative equity figure of US$ 26.0 billion – US$ 38 billion in assets, compared to US$ 64 billion in liabilities. Historically, informal banking has always taken place in China’s economy but with the shadow banking industry falling outside the regulators’ remit, it has been badly impacted by a severe credit crunch. This “industry” is valued at US$ 3.0 trillion and has relied on providing the once booming housing sector with much needed capital at much higher rates and less onerous conditions. In booming times, all things work well – investors get high returns for providing high risk funds to developers that would be unable to access funding from the “normal” banks. It was a win win for all concerned, as property prices move higher – the opposite when the industry turns which it has done so dramatically. Worryingly, there are reports that embattled property developers currently owe Chinese banks money worth as much as 30% of the banks’ assets, bearing in mind that China’s property sector makes up a third of its economic output.
According to Nationwide, November UK house prices nudged 0.2% higher amid “encouraging signs”, noting that financial markets estimated interest rates had peaked and would start to come down. Although property values have risen over the past three months, last month were 2% lower on the year. However, it did warn that it would be unrealistic to think rates, currently at 5.25%, would fall significantly, anytime in the near future. The average price of a UK home is now US$ 328.3k – more than US$ 50.8k higher than at the pandemic peak. Today, 01 December, the average two-year fixed mortgage rate was 6.04% while the average five-year deal is 5.65%, with figures from the BoE showing that the number of mortgages approved for home buyers picked up in October to 47,4k, from an eight-month low of 43.3k recorded in the previous month.
BoE governor, Andrew Bailey, has again cautioned that UK interest rates – currently at a fifteen-year 5.25% high – will not be cut in the “foreseeable future” and that he was concerned about the economy’s growth and that “there’s no doubt it’s lower than it has been in much of my working life”. He has only reiterated the government’s position that its growth forecasts have been slashed, in part due to high inflation and interest rates. (If only the Governor, and his cohorts, had not vacillated in 2021 and hiked rates when inflation started to take hold). Inflation has slowly headed south – mainly because of a fall in energy prices – and although touching 4.6% in October, it is still more than double the Bank’s 2.0% target, with a caveat that lowering inflation further would be “hard work”. There is no doubt many agree with a House of Lords committee report that reforms were needed to improve the institution’s performance and accountability.
Despite recent low growth forecasts, prime minister Sunak has noted that an influx of US$ 37.28 billion of new investment can be seen as a “huge vote of confidence” in the UK economy. Although the previous week’s Autumn Statement was meant mainly for the ‘domestic market’, last Monday he hosted a group of leading business figures at Hampton Court to highlight foreign firms’ plans to invest in the UK. The government said it had been a “historic” event, which celebrated the UK’s track record in innovation, “from the steam train to quantum computing”, with the day’s activities being followed by dinner with Charles lll at Buckingham Palace. Some of those attendees included Blackstone’s chief executive, Stephen Schwarzman, Goldman Sach’s David Solomon and Jamie Dimon at JP Morgan Chase. Some projects confirmed include Australia’s IFM Investors’ US$ 12.63 billion into infrastructure and energy projects, BioNTech’s commitment to build a new lab in Cambridge, a US$ 8.84 billion boost to the amount Spain’s Iberdrola is investing in UK electricity transmission and distribution, Australia’s Aware Super’s US$ 6.3 billion spend in a range of businesses, (including the energy transition and affordable housing), and Microsoft’s US$ 3.16 billion in AI infrastructure.
Zurich tied with Singapore as the world’s most expensive city in 2023, according to The Economist Intelligence Unit’s Cost of Living survey. The main driver, behind the hike in prices of goods and commodities, has been the continuing, (but slowing), cost of living crisis, with the survey noting that the rise was at 7.4% – slightly down on the year but still well up on historic levels. The top ten most expensive cities were:
2023 Ranking City 2022 Ranking
1 Zurich 6
1 Singapore 1
3 New York 1
3 Geneva 7
5 Hong Kong 4
6 Los Angeles 4
7 Paris 9
8 Tel Aviv 3
8 Copenhagen 10
10 San Francisco 8
Zurich moved to joint top spot largely because of the strength of the Swiss franc and high prices for groceries, household goods and recreation. Globally, utility prices witnessed the slowest inflation of the ten categories covered in the survey. Grocery, on the other hand, saw the fastest pace of price growth, with food inflation moving higher for various reasons, including the increasing frequency of extreme weather events impacting harvests, supply issues and rising operational costs. On average, Asia continues to see relatively low-price increases, with four Chinese cities– Nanjing, Wuxi, Dalian and Beijing – along with Osaka and Tokyo being among the biggest movers down the ranking this year.
Earlier in the month, the company, Lighter Than Air Research, founded by Google co-founder, revealed Pathfinder 1, a prototype electric airship. It is set to revolutionise climate-friendly air travel and accelerate Sergey Brin’s humanitarian work. The 122 mt long airship is double the size of the current holder of the world’s longest aircraft – the Boeing 747-8. It appears that the company’s aim is to repurpose these colossal airships into cargo vessels, which will be safer, stronger and more efficient than any of its predecessors. Eco-friendly airships are special flying machines filled with gas, like helium, and unlike planes, they float using the gas inside their flexible envelope, not wings. Advanced technology makes airships more useful for cargo transport and surveillance, sparking renewed interest in these unique flying vessels. The Google co-founder is keen to create a fleet of airships for disaster relief in areas with damaged infrastructure. There’s Something In The Air!
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