Do They Know It’s Christmas?                                                  22 December 2023

The real estate and properties transactions valued at US$ 16.6 billion in total during the week ending 22 December 2023. The sum of transactions was 216 plots, sold for US$ 1.34 billion, and 2,729 apartments and villas, selling for US$ 2.04 billion. The top three transactions were all for plots of land, the first in Al Yelayiss 5 for US$ 662 million, the second in Al Hebiah Fourth for US$ 16 million and in Al Goze for US$ 16 million. Palm Jabal Ali recorded the most transactions, with thirty-five sales, worth US$ 232 million, followed by twenty-nine sales, in Madinat Hind 4 for US$ 14 million, and twenty-two sales in Al Hebiah Fifth valued at US$ 16 million. The top three transfers for apartments and villas were all apartments, the first in Palm Jumeirah for US$ 196 million, followed by one in Dubai Investment Park First for US$ 25 million and the third in Island 2 for US$ 17million. The mortgaged properties for the week reached US$ 624 million, with the highest being for land in Al Sufouh Second mortgaged for US$ 139 million; two hundred and fifty-seven properties were granted between first-degree relatives, worth US$ 545 million.

Over the past twelve months, Dubai’s population has grown 104k to 3.651 million. There is a theory that supply has been lagging demand because of Covid but what is sometimes forgotten is that Dubai’s population growth rate has been moving at a much quicker rate over the past four years, post-Covid – by 2.279% to 3.411 million in 2020, by 1.964% to 3.478 million in 2021, by 2.070% to 3.550 million in 2022 and by 2.845% to 3.651 million in 2023. It is estimated that the number of housing units will reach 830k by the end of this year – an increase of 46.4k from 2022’s total of 783.6k (639.0k apartments and 144.6k villas). A quick estimate would see the approximate household size being 4.40 people per household, with recent trends showing that this ratio is declining.

                                         

		Villas	Apartments	Total	%age	Population	%age	Household
	000s							Size
	2019	120.6	542.6	663.2		3,335		5.03
	2020	130.5	581.2	711.7	7.313%	3,411	2.279%	4.79
	2021	138.5	617.9	756.4	6.281%	3,478	1.964%	4.60
	2022	144.6	639	783.6	3.596%	3,550	2.070%	4.53
	2023	150	680	830	5.921%	3,651	2.845%	4.40

By the end of this year, Dubai will have a portfolio of some 830k housing units and a population of some 3.651 million – an increase of around 104k this year; the ratio of apartments to villas is in the region of 82:18, (680k:150k). Average occupancy will be 4.40 (3,651,000/830,000)

The outlook for 2024 is positive with a caveat that we live in a period of turbulence and all bets could be off the table if a major incident were to occur next year. There is every likelihood that Dubai’s population will jump by at least be 3.65% in 2023, which would add 0.128 million to the population by the end of 2024 at 3.784 million; based on an average 4.30 per household, total unit portfolio would be 880k – a 50k unit annual increase. Over the previous four years, the number of Dubai residential units rose from 663.2k at the end of 2019 to 830.0k by 31 December 2023 – a 166.8k jump, equating to 41.7k per annum. Dubai’s residential property market supply has been lagging population growth with the affordable segment also witnessing shortages after luxury in certain areas of the emirate.

Industry executives say that supply will not be able to keep pace with the demand even in 2024 due to the high influx of foreigners and residents increasingly turning buyers amidst rising rentals. The increase in population is attributed to the high inflow of foreign workers, professionals and investors who flocked to the emirate this year, attracted by the higher returns on investments and the introduction of a variety of residency permits. This was reflected in the Dubai Land Department’s nine-month data which showed the number of transactions jumped by 33.8% to 116.1k worth US$ 116.89 billion. There are areas of under-supply which have contributed to price growth in recent years – such as the villa market, waterfront locations, and mature, established communities which are now ‘built out’ – with little or no land left for further development. In these segments, demand often exceeds supply and drives price growth. There is no surprise to see prices in the more affordable areas rising at a quicker rate because of high mortgage rates and the fact that the whole sector is becoming costlier – with more expensive properties being priced out for many on – or considering climbing on to – the property ladder. Such locations would include Business Bay, Discovery Gardens, DPC, DSO, JV and The Greens. However, a major concern is that if price rises do not cool quick enough over the next three years, many at the lower level will be priced out of the market.

Latest figures from Property Monitor indicate that Dubai property prices continued their upward trend in November, rising by 1.17% to a record high of US$ 346 per sq ft – 3% higher than the previous all-time high of September 2014. Currently, it appears that the apartment segment is growing at a faster rate than that previously seen in the villa/townhouse sector. Cavendish Maxwell estimate that since “bottoming out in October 2020, prices have gone on to increase 44.9% on average, with all three residential property types experiencing varying growth trajectories… Apartments — appreciating, but not at the same pace as villas and townhouses —lagged somewhat in their recovery until Q3 2022 and have since realised stronger gains, while townhouses and villas have experienced muted growth appearing largely to have topped out.”

Sankari Properties is set to build a US$ 1.0 billion ultra-luxury, twin tower development in Business Bay, located in the Marasi Marina Area. With starting prices at US$ 10.0 million, the project will encompass a range of 3 B/R, 4 B/R and 5 B/R apartments, with unit sizes from 600 sq mt; each of the fifty-seven apartments will occupy an entire floor. With a launch date to be announced “very soon”, completion date is slated for Q4 2027. Its chairman, Mohammed Sankari, also noted that the company’s pipeline of projects will include ‘a few more surprises’, with one on the Palm Jumeirah. Sankari Properties was founded this year on the fortieth anniversary of Paris Group, the flagship unit of UAE-based holding company Sankari Investment Group, which was established in 1983 by Mohammed’s father Abdulkader Sankari.

With the aim of catering to Dubai’s stature as a prime market for HNWIs, Arista Properties has entered the emirate’s booking real estate, starting with up to US$ 1.36 billion over the next four years. It plans to set new benchmarks in the realty sector by infusing bespoke designs and elegance into each of its projects. Its first development will be at Mohammed Bin Rashid City, designed by renowned architect firm HBA, (Hirsch Bedner Associates). Its official partner will be One Broker Group, as the firm is also targeting into commercial real estate, developing luxury commercial spaces in the future. Srishti Gaur, Head of Media Relations, noted that “through this launch in the UAE, we recognise the unparalleled potential of this dynamic market. The UAE, with its visionary leadership, thriving economy, and diverse population, perfectly aligns with Arista’s commitment to redefine luxury living. We are confident that our bespoke services will not only redefine the essence of community luxury living but also enable the industry to reach new heights.”

An agreement with Dubai Mall sees listed toll operator, Salik, delivering a parking management system at the mall by Q3 2024. This move is in line with Salik’s strategy of  diversifying revenue streams and easing traffic for visitors. In conjunction with the mall’s management, the terms of the agreement will feature automatic fee collection for ticketless parking, using vehicle plate recognition to deduct fees from Salik user accounts. According to chief executive, Ibrahim Al Haddad, “the project is important for the company’s strategy to offer sustainable and smart mobility solutions to drivers in Dubai, as well as our objective to diversify into complimentary revenue streams,” and that “the solution eliminates the need for gates or barriers at Dubai Mall, helping to minimise congestion and traffic for customers. We are looking forward to building on the success of this initiative to expand the offering to other locations around the city.” With the private parking market estimated to cater for 50k spaces, Salik “sees a compelling opportunity toexpand further and is actively exploring options for growth in the private parking market in Dubai”.

LHR and Gatwick expect today, Flyaway Friday, to be their busiest of the year, with Dubai being the most popular long-haul destination, (and Geneva for short-haul). On the day, LHR expects 689 flights catering for some 250k travellers. December 22 follows the end of the school term and the beginning of the Christmas holiday period.

The Central Bank of the UAE has raised its 2024 forecast for the GDP growth to 5.7% – up 1.4% on its previous 4.3% projection, with non-oil growth at 8.1`% and oil-growth of 4.7%. It expects this year’s growth to come in at 3.1%, with non-oil growth at 5.9%. It noted that actual Q2 growth of 3.8% was down on the year by 4.2%, with 8.0% being recorded in Q2 2022, with non-oil growth at 7.3%, compared to 4.5% a year earlier. Regarding the non-oil sectors of the economy, the report highlighted significant expansions in financial services, insurance, construction, wholesale and retail trade.

DP World will move its global headquarters to Expo City Dubai, after eighteen years located in Jebel Ali it was established under its current name in September 2005. The fifty-year-old global supply chain operator will move to a new building, (designed by Dubai-based DEC Dynamic Design Studio), integrated with DP World’s iFlow Pavilion and water fountain; it will have nine storeys, encompassing 37.3k sq mt of space, and will house approximately eight hundred dedicated staff. Its Group Chairman, Sultan Ahmed bin Sulayem, noted that the move to Expo City Dubai “puts us at the heart of Dubai’s future, while also signifies our commitment to innovation, sustainability, and making trade flow for our global customers”.

Dubai Customs posted an impressive 94.5% growth to 107k in business registration applications in the first five months of 2023, compared to the same period, pre-Covid 2019. Over that period, there were 358.7k refund requests, 220.7k certificate/report requests and 146.9k inspection date booking requests. The number of completed customs transactions grew 36.0% to 5.9 million. There is no doubt that Dubai Customs is one of the leading government agencies when it comes to IT which it has used to maximum efficiency and to enhance customer service. Its investment in advanced technology has helped to facilitate trade and support global trade so much so that only 0.8% of its 3.51 million transactions are done via service counters.

Replacing the Supreme Audit Institution, and reporting directly to the President, HH Sheikh Mohamed bin Zayed Al Nahyan has issued Federal Decree-Law No. (56) of 2023 on establishing the UAE Accountability Authority. With the twin targets of maintaining and enhancing the integrity of public finances, the Accountability Authority will be the highest authority for financial control, auditing, integrity and transparency in the UAE. It will be tasked to reviewing and auditing the Consolidated Annual Report of the federal government and expressing opinion on it, as well as auditing separate and combined annual financial statements in the entities subject to the control of the Authority. It will be reviewing and undertaking administrative investigation into complaints and reports regarding any misappropriation of funds and assets belonging to the regulated entities, conflicts of interest, misuse of authority, disclosure of official data and information, or exploitation of public office for personal gain or benefit to third parties.

As part of its US$ 437million digital strategy 2023-2030, the Roads and Transport Authority has unveiled eighty-two new projects, structured around six key pillars:  – people’s happiness, quality digital services, data intelligence, integrated digital operations, excellence in asset management, and innovation and partnerships. It will be implemented in four phases – the Preparatory, First, Second and Third Phases – covering seven, sixty-two, ten and three projects, valued at US$ 127 million, US$ 225 million, US$ 68 million and US$ 27 million respectively. It will include enabling 100% fintech-driven mobility, increasing digital service adoption to 95%, digitising the skill set of RTA’s employees to as much as 100%, and developing fifty artificial intelligence use cases. The strategy has also been carefully aligned with the strategic directions of the emirate, RTA’s Strategic Plan 2024-2030 and Dubai Digital Strategy.

According to Euromonitor’s annual Top 100 City Destinations Index 2023, Dubai is the world’s second-best and most attractive city destination to visit; this finding was the result of the emirate possessing a highly conducive business environment, strong international travel demand, consistent development of infrastructure and creative marketing campaigns. The result is based fifty-five metrics across six key pillars – economic/business performance, tourism performance, tourism infrastructure tourism policy/attractiveness, health/safety and sustainability. Paris remained the world’s most attractive city, followed by Dubai, Madrid, Spain, Tokyo, Amsterdam, Berlin, Rome, New York, Barcelona and London. The global market research company expects that Dubai 2023 international trips to be 18.0% higher at 16.8 million, ranking the emirate third after Istanbul (20.2 million) and London (18.8 million) followed by Antalya, Paris, Hong Kong, Bangkok, New York, Cancun and Makkah.

The DFM opened the week on Monday 18 December 2023, 47 points (1.1%) higher the previous week, gained 15 points (0.4%) to close the trading week on 4,016, by Friday 22 December 2023. Emaar Properties, US$ 0.03 higher the previous week, gained US$ 0.06, closing on US$ 2.10 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.66, US$ 4.66, US$ 1.57, and US$ 0.38 and closed on US$ 0.67, US$ 4.62, US$ 1.55 and US$ 0.38. On 22 December, trading was at 65 million shares, with a value of US$ 32 million, compared to 137 million shares, with a value of US$ 443 million, on 15 December 2023.

By Friday, 22 December 2023, Brent, US$ 1.41 higher (18.7%) the previous week, gained US$ 2.36 (3.1%) to close on US$ 79.19. Gold, US$ 25 (1.2%) lower the previous week, gained US$ 27 (1.3%) to trade at US$ 2,065 by 22 December 2023.

Having joined the bloc in 2007, Angola has decided to leave Opec; on the news, oil prices dropped further following yesterday’s announcement – with Brent down 1.68% to US$ 78.37. One of the reasons behind the withdrawal seems to be that last June, the Opec+ meeting reviewed Angola’s quota cuts and decided that it was massively reduced, with the country being given a target of sticking to 1.11 million bpd of output in 2024.; the Angolans were not impressed and decided to vote with their feet. Opec+ now has total production cuts in place of 3.66 million bpd which includes a 2.0 million bpd reduction agreed in 2022, as well as voluntary cuts of 1.66 million bpd, announced in April. Global oil demand growth forecast for 2024 is expected to be 2.2 million bpd.

Despite all the recent hoo-ha surrounding the environmental/climate sector, it seems that the global consumption of coal reached an all-time high in 2023, with the IEA energy watchdog confirming that Earth has experienced its hottest ever recorded year – surpassing 2022’s record; it confirmed that consumption of the dirtiest fossil fuel was 1.4% higher at 8.5 billion tonnes.  Increases in China, India and Indonesia – up 4.9% ((by 220 million tonnes), 8.0% and 11% – outweighed sharply falling demand in Europe (23% lower by 107 million tonnes) and the United States (21% lower by 95 million tonnes). China remains the world’s largest user of coal, responsible for 54% of all coal burned worldwide, with more than 60% of coal burned in China used to generate electricity and the country continues to build coal-fired power stations. it is largely agreed that greenhouses will have to be cut by more than 50% before 2030 to meet the global target of limiting global heating and avoiding the disastrous impacts on the world’s climate. The EU’s Copernicus Climate Change Service said earlier in December that 2023 will be the hottest on record after November became the sixth record-breaking month in a row. However, the IERA sees a decline in coal consumption in 2024, as renewable power generation from solar and wind continues to expand.

BP has become the latest international conglomerate to pause all shipments through the Red Sea after recent attacks on vessels by Houthi rebels; the tech giant noted that it made the decision because of the “deteriorating security situation”, with a number of freight companies also suspending their ships from operating through the region. The Red Sea is one the world’s most important routes for oil and fuel shipments, as well as for consumer goods, with ships being targeted travelling through the Bab al-Mandab Strait – also known as the Gate of Tears – which is a 32 km wide channel and known for being perilous to navigate. Any diversion means that ships must take a much longer route navigating around southern Africa which will add up to ten days to a journey to Europe, as well as adding extra costs. It seems that nearly 15% of goods imported into Europe, the Middle East and North Africa are shipped from Asia and the Gulf by sea, including 21.5% of refined oil and more than 13% of crude oil. There is always the chance that oil prices could move higher and lead to higher inflation, which has just fallen to 3.9%, after topping double digit territory last year – and probably the last “present” needed for Christmas.

Houthis have declared their backing for Hamas in its war with the Israelis and the rebels based in Yemen said they were targeting vessels which they believe are heading for Israel. US defence secretary Lloyd Austin held a virtual meeting with ministers from more than forty countries on Tuesday and called on more nations to contribute to the security efforts, noting that “these reckless Houthi attacks are a serious international problem and they demand a firm response”.

There are reports of a possible merger between two of Hollywood’s “Big Five” studios, Warner Bros Discovery and Paramount Global, and if the US$ 38.0 billion deal goes through, it would see the owner of HBO channels and CNN team up with the studio behind the Mission Impossible films and CBS News. The streaming of shows and films has meant that traditional media companies have had to invest more money and cut costs to maintain margins and to compete with the likes of Netflix, Amazon Video and Apple TV. Last year, AT&T’s WarnerMedia unit and Discovery merged to become Warner Bros Discovery, with a portfolio that included Discovery Channel, Warner Bros. Entertainment, CNN, HBO, Cartoon Network and franchises such as Batman and Harry Potter. Currently, Netflix has subscribers 247.2 million globally, well ahead of Paramount Plus total subscribers at 63.4 million and Warner Bros Discovery’s 95 million.

Malaysian businessman, Leonard Glenn Francis, is one of ten US citizens in Venezuela released as part of deal that saw Joe Biden authorise the release of Alex Saab, a close aide to Venezuela’s president, Nicolás Maduro. The fugitive billionaire – known as Fat Leonard – masterminded a brazen US$ 35 million fraud against the US Navy. In August 2022, he escaped house arrest in California, where he was being held after admitting to his role in a sprawling scam that cost the US tens of millions of dollars and implicated dozens of navy officers. In September that year, he was detained trying to board a plane from Venezuela to Russia. His crime centred on his Singapore-based business – which had contracts to service US naval vessels – to defraud the US Navy, while also plying American officers with cash and gifts as bribes. Francis was first arrested in 2013 and pleaded guilty to offering US$ 500k in bribes in 2015.

Lebanon has become another casualty of the Israel-Gaza war, as the country has been hauled back into recession territory, as a result of the Israel-Gaza war. After five years of recession, The World Bank had forecast a 0.2% growth in 2023 but now has downgraded this to a possible 0.9% recession. Lebanon shares a border with Israel in the south and is at risk of being dragged into the conflict and had already been in the midst of a political and institutional vacuum, and a crippling socio-economic crisis for over four years, it has now been hit by another large shock, fearing “that the current conflict centred in Gaza could escalate further into Lebanon.” Since its last expansion, in 2017, the economy has endured what the World Bank has called one of the worst global financial crises since the middle of the 19th century. Inflation, which has haunted Lebanon for several years, is projected to accelerate to 231.3% this year, mainly a reflection of the continued deterioration of the underlying macroeconomic environment. The World Bank noted Lebanon’s banking sector, continued in insolvency, with losses at US$ 72 billion, and that the banking sector’s losses as a share of GDP are “among the largest, if not the largest, in the world”.

Although supportive of manufacturers from across the world investing in US jobs and workers, President Biden indicated that he viewed a strong domestic steel industry as vital to the US economy and national security and said he supported a careful Committee on Foreign Investment in the United States review of Nippon Steel Corp’s US$ 14.9 billion  proposed acquisition of US Steel Corp; he added  it deserved “serious scrutiny,” given the company’s core role in US steel production that is critical to national security. His National Economic Council Director, Lael Brainard, said President Joe Biden welcomed manufacturers from across the world investing in US jobs and workers, but also believed “the purchase of this iconic American-owned company by a foreign entity – even one from a close ally – deserves serious scrutiny in terms of its potential impact on national security and supply chain reliability.” It seems there is strong criticism of the proposed agreement by both Democratic and Republican lawmakers and the powerful United Steelworkers union – and Biden is heading into an election year.

For the first time since its major economic crisis, Sri Lanka’s bankrupt economy has recorded its first positive growth, with Q3 GDP  1.6% higher, on the year. The island nation has posted a minus 8.0% when it declared bankruptcy in April 2022. However, the IMF, which released the second tranche of its US$ 2.9 billion bailout earlier this week, has said that Sri Lanka’s overall growth for 2023 would remain negative, but that this should turn positive in 2024. The loan comes with strings attached, with the world body insisting on some stringent measures, with President Ranil Wickremesinghe saying that reforms were essential despite strong criticism from the opposition. Sri Lanka, which defaulted on its sovereign debt, is still in negotiations with external creditors for concessions on repayment to achieve sustainability, a key component of the IMF bailout.

India maintains its position as the world’s largest recipient of global remittances, with a 12.3% surge in inward flow to US$ 125 billion this year. The US continued to be the largest source country for remittances while the GCC countries, including the UAE and Saudi Arabia, remained top sources of remittances in 2023. The World Bank’s latest Migration and Development Brief points to a continuing growth in remittance flows to low- and middle-income countries (LMICs) in 2023, 3.8% lower, reaching a total of US$ 669 billion. Led by India, South Asia sustained its position as the top recipient region while the MENA region saw a decline in remittance flows for the second consecutive year, mainly driven by a sharp drop in flows to Egypt. Apart from India, the other top four remittance recipient countries were Mexico, China, the Philippines and Egypt, with totals of US$ 67 billion, US$ 50 billion, US$ 40 billion and US$ 24 billion. Last year, the top five were India (US$ 111 billion), Mexico (US$ 61 billion), China (US$ 51 billion), the Philippines (US$ 38 billion), and Pakistan (US$ 30 billion). In the fiscal 2022 year, India received remittances from the following three countries – US, UAE, UK – accounting for 23.4%, 18.0% and 6.8% of the total. Regionally, Saudi Arabia, Kuwait, Oman and Qatar had shares of 5.1%, 2.4%, 1.6% and 1.5%. Unfortunately, recipients continue to suffer from high remittance costs, with the World Bank’s Remittances Prices Worldwide Database noting that remittance costs remain persistently high, averaging 6.2% to send US$ 200 in Q2 2023; not surprisingly, banks continue to be the costliest channel for sending remittances, with an average cost of 12.1%.

The UK’s November inflation rate fell at a quicker than expected 0.7% drop to 3.9% – its lowest figure in twenty-four months – with many expecting it to fall to just 4.3%. The Office for National Statistics noted that dropping fuel and food prices helped drive a bigger-than-expected decrease and that it was the first time since June 2022, that food price inflation had fallen to single digit figures. Despite the apparent good news, prices still remain substantially above what they were before the invasion of Ukraine, and the current rate is still almost double that of the BoE’s long-standing 2.0% target.

However, this rate is still well above those seen in the US and the eurozone where inflation has eased to 2.1% and 2.4% respectively. Although the UK’s inflation rate is on par with that of France, it is higher than the rates of 2.3% and 0.6% seen in Germany and Italy. There are various reasons why the UK rate is higher, with the main one being food price inflation rate is at 9.2%, compared to those of France, Germany, Italy and the US – 7.9%, 6.1%, 6.1% and 1.6%. The UK has to import a lot more food (about 50%), than many of its peers, with import prices rising a lot more than for domestic food.

The UK is once again at risk of recession after revised figures showed the economy shrank in Q3, with its GDP contracting by 0.1%, following an amended zero rate the previous quarter – it had earlier been reported as a 0.2% expansion. A technical recession occurs after two consecutive quarters of contraction and the UK has “dodged the bullet” on a few recent occasions. Whether a 2024 recession actually takes place is probably academic, but one certainty is that economic growth will remain subdued during next year. (The Office for National Statistics has forecast Q4 growth at 0.1%).  Chancellor Jeremy Hunt’s main hope is for inflation to keep heading south and then the measures he outlined in his Autumn Statement would “deliver the largest boost to potential growth on record” – or so he thinks! The conundrum is that higher interest rates can reduce inflation and benefit savers – but the flipside is that it impacts economic growth by making it more expensive for consumers and businesses to borrow. The latest GDP data from the Office for National Statistics (ONS) suggested that rising interest rates are weighing on consumer spending, which slowed over the period.

Christmas has long gone from being a religious festival, celebrating the Birth of Jesus Christ. This year, it seems that consumer spending will remain downbeat, with families struggling with high mortgage repayments, soaring energy prices etc and suppliers, with supply issues and higher running costs Furthermore, there is ever growing global tensions. including the continuing Russia-Ukraine crisis and the horrific war occurring in the Saviour’s birthplace, Bethlehem. Do They Know It’s Christmas?