Takin’ Care Of Business!                                                              05 January 2024

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The real estate and properties transactions valued at US$ 5.81 billion in total during the week ending 05 January 2024. The sum of transactions was 114 plots, sold for US$ 371 million, and 1,721 apartments and villas, selling for US$ 1.58 billion. The top three transactions were all for plots of land, the first in Al Thanyah Fifth for US$ 73 million, the second in Warsan Fourth for US$ 31 million and in Palm Jabal Ali for US$ 18 million. Madinat Hind 4 recorded the most transactions, with eighteen sales, worth US$ 6 million, followed by eleven sales, in Palm Jabal Ali for US$ 85 million, and eight sales, in Saih Shuaib 1, valued at US$ 4 million. The top three transfers for apartments and villas were in Al Thanyah First for US$ 17 million, followed by two in Palm Jumeirah for US$ 17 million and for US$ 15 million. The mortgaged properties for the week reached US$ 212 million, with the highest being for land in Al Hamriyah, mortgaged for US$ 34 million; ninety-eight properties were granted between first-degree relatives, worth US$ 168 million.

Arada has purchased a 138.5k sq ft plot of land in Zabeel 2, for US$ 163 million, with plans to build a fifty-floor luxury residential tower on the land, containing four hundred apartments. The Sharjah property developer purchased the land from Rital Properties, the real estate subsidiary of Emirates NBD. Last year, it announced a partnership with the Armani Group and Japanese architect Tadao Ando to build the ultra-luxury Armani Beach Residences on The Palm Jumeirah and has indicated that there will be another property launch in Q1. In H1 2023, it posted a 186% surge in annual sales, of 1.6k units, to US$ 1.16 billion, including 169 villas in Jouri Hills, valued at US$ 335 million (In addition to its project pipeline in Dubai, it has three master-planned communities in the Northern Emirates, valued at US$ 9.0 billion in total, including Aljada, a mixed-use development in Sharjah.

US$ 163 million could find you owning one of Dubai’s largest penthouses. Encompassing 77.7k sq ft – and spread across three levels and the rooftop – R1 at Raffles The Palm Dubai is an eight-bedroom property with its own indoor and outdoor cinema, gym and basketball court, along with other add-ons such as a spa and wellness area that includes a cryogenic room, an outdoor swimming pool, a bar and barbecue area, a mini golf course in a meditation garden, a cigar lounge and a bar offering 360-degree views of the Arabian Gulf. The owner of the project, Emerald Palace Group, confirmed the property also includes a central terrace area that can entertain hundreds of guests, and that the handover term for the penthouse is fifteen months from the date of booking. To date, the most expensive penthouse, at Como Residences, on Palm Jumeirah sold for US$ 136 million, (AED 500 million); it will be handed over in Q3 2027.

Last year, the total number of deals, totalling one hundred and seventeen and valued at over US$ 272 million, in Burj Khalifa rose by 22%. However, Knight Frank estimates that the total number of homes available in the world’s tallest building declined by 52% in 2023 – an indicator that there is a growing number of long-term investors and genuine end users. The tower, accounting for 7% of all sales in Downtown, has one hundred and sixty habitable levels – the most of any building in the world. The consultancy noted that the most expensive home in the building was “trading for 140% more than 2022.” And that Burj Khalifa prices have grown by 55.4% since March 2021, compared to the 38.0% increase in average city-wide prices. Forty-five branded residential units were sold during 2023 with the most expensive going for US$ 9 million, covering 8.8k sq ft.

Lottery operators in the UAE have been instructed to pause their business, inside the country, as from 01 January, because of an “industry-wide mandate consistent with the regulators’ new role to create a well-regulated gaming environment”. Companies such as Mahooz, Emirates Draw, Big Ticket and Dubai Duty Free have been impacted, although it appears that the last two are still selling tickets, with Big Ticket noting that “you can still buy your lucky ticket from our website or Abu Dhabi International Airport and Al Ain Airport counters,” and DDF continuing to sell tickets, and lists on its website two sold-out draws due to take place on Wednesday.

Dubai Duty Free also offers a raffle where participants can purchase multiple tickets across three raffle categories:

• Millennium Millionaire raffle, which costs US$ 272k, (AED 1k), per ticket and is limited to 5k tickets, making it a one in 5k chance of winning US$ 1.0 million per ticket bought
• Finest Surprise Car raffle costing US$ 136k (AED 500), with only 2.5k tickets available
• Finest Surprise Bike raffle will cost players Dh500 per ticket, with only 1.2k tickets available

Surprisingly eight players have won more than once.

With figures 24.5% higher on the year – and up 6.4% on pre-pandemic 2019 – Dubai Duty Free posted a record US$ 2.16 billion in sales in 2023, with December sales of US$ 221 million, another record number, 8.4% higher than a year earlier. In 2023, DDF registered over twenty million sales transactions, (averaging 55k daily), with a staggering 55.2 million units of merchandise sold; online sales accounted for 2.0% of total sales, with departures and arrivals accounting for 90% and 8%. The top five selling categories were perfumes (US$ 372 million), liquor (US$ 307 million), gold (US$ 211 million), cigarettes/tobacco (US$ 203 million) and electronics (US$ 171 million). The top source markets for sales were India (US$ 265 million), Russia (US$ 207 million), China (US$ 154 million), Saudi Arabia (US$ 140 million), and the UK (US$ 102 million). Its workforce numbers have risen to 5.5k.

After a price falls over the previous two months, the UAE Fuel Price Committee again decreased all retail fuel prices again for January. 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 January is as follows:

• Super 98: US$ 0.768, from US$ 0.807 in December (down by 4.7%)

• Special 95: US$ 0.738, from US$ 0.777 in December (drop of 4.9%),

• Diesel: US$ 0.817, from US$ 0.869 in December (down by 5.9%), 3.01%

• E-plus 91: US$ 0.719, from US$ 0.755 in December (decline of 4.6%)

The latest MUFG report expects the UAE to retain its growth momentum, led by the “triple T” whammy of trade, transport, and tourism, aided and abetted by a surging population growth. The country will also benefit from the fact that it already has a well-established infrastructure, a well-oiled bureaucracy, and a dynamic/progressive government. It expects 2024 GDP growth to be 0.6% higher than 2023’s 3.4%, with the UAE economy expected to grow 5.5% to US$ 536.8 billion and by 4.5% in 2025 to US$ 561.2 billion. MUFG expects the country’s GDP per capita to rise by 3.6% and 6.3% over the next two years to US$ 52.4k and US$ 53.8k in 2025. 2024 growth levels – 5.7% and 4.0% – are forecast by the IMF and UAE Central Bank respectively. It also noted that since there had been a marked increase in capital spending awards over the past two years, the government has no financing needs over the next two years, which will result in healthy surpluses, as well as significant cash excess. Any bonds maturing over the next two years should be settled via the expected surpluses.

Under a new law issued by HH Sheikh Mohammed bin Rashid, Dubai has set up Parkin to oversee car park operations which will allow the public to own shares – via public or private subscription – with the proviso that the ownership percentage of the Dubai government “must not fall below 60%” of the company’s capital when its shares are offered; the Executive Council will determine this percentage. The public joint stock company, operating under a renewable ninety-nine-year mandate, will be responsible for creating, planning, designing, operating and managing public parking spaces. The new law stipulates that the RTA will delegate responsibilities related to public and private parking, and this handover of duties is to be reached by a franchise agreement to be finalised between the authority and Parkin which will be responsible for issuing permits to individuals. Its other assignments will include establishing, designing and managing private parking spaces, as well as investment in related business activities.  Salik is one of five government-related companies listed on the Dubai Financial Market bourse, along with DEWA, Tecom, Empower and Dubai Taxi Company, in a 2021 government strategy to list ten state-owned companies to increase the size of Dubai’s financial market to US$ 817.4 billion, (AED 3 trillion), as well as to set up a US$ 545 billion marketmaker fund to encourage the listing of more private companies from sectors such as energy, logistics and retail.

e& has terminated negotiations to raise its stake in Saudi Arabia’s Etihad Etisalat (Mobily) from its current 27.99% stake to 50% and one share; it had earlier made an offer to raise its stake and suggested a price of US$ 12.53 per share. The UAE telecoms group commented that “following a period of engagement, a way forward to conclude the potential transaction could not be determined. Hence, e& has now decided not to pursue the financial transaction.” Despite all this, e&, Mobily’s major shareholder, noted that it remains positive about the Saudi Telecom’s future.

The   Central Bank of the UAE noted a 9.6% hike, (US$ 3.13 billion), in insurance sector assets in the first nine months of 2023, topping US$ 35.86 billion; in Q3, growth was US$ 1.06 billion, (up 3.5%), to US$ 34.80 billion. In 2021, the country continued its position as the leading Arab insurance market in terms of total subscribed premiums, whilst climbing one place to become the thirty-seventh in the world, according to Swiss Re Insurance Institutes’ Sigma. The UAE was also the leading GCC country, having the highest share of the total value of real estate deals in the ten months to October – more than in the twelve months of 2022.

R.J. O’Brien (MENA) Capital Limited has been fined US$ 1.36 million by the Dubai Financial Services Authority for numerous breaches of DFSA legislation, mainly for inadequate compliance systems and controls. The brokerage firm was initially penalised US$ 2.72 million for the offences but this was reduced after the firm agreed to rectify the failings and settle the matter. The regulatory watchdog noted that “the firm’s senior management was aware of the lack of compliance resources and failed to adequately address it to ensure that the compliance function was able to fulfil its regulatory obligations.” However, there was no evidence that the firm acted deliberately to violate the DFSA’s rules and regulations.

The DFM opened the week, and the new year, on Tuesday 02 January, 94 points (2.2%) higher the previous fortnight, gained a further 23 points (0.6%) to close the trading week on 4,068 by Friday 05 January 2024. Emaar Properties, US$ 0.15 higher the previous three weeks, shed 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$ 0.67, US$ 4.70, US$ 1.56, and US$ 0.38 and closed on US$ 0.68, US$ 4.80, US$ 1.58 and US$ 0.38. On 05 January, trading was at 62 million shares, with a value of US$ 54 million, compared to 138 million shares, with a value of US$ 58 million, on 29 December 2023.

By Friday, 05 January 2024, Brent, US$ 1.94 lower (2.5%) the previous week, gained US$ 1.67 (2.2%) to close on US$ 78.90. Gold, US$ 36 (1.6%) higher the previous fortnight, shed US$ 26 (1.4%) to trade at US$ 2,046 on 05 January 2024.

In Q4, BYD noted that it had sold more electric vehicles than Tesla – 526k EVs to 484.5k units, with Tesla still the leading manufacturer for the twelve months last year, selling 1.8 million; the US company was hoping for annual sales in the region of two million, but were still 20% higher when compared to 2022. Although the Chinese interloper sold more than three million new energy vehicles, around 1.6 million were battery-only vehicles and the balance hybrids. The Shenzhen-based EV-maker, founded in 1995 by Wang Chuanfu, started life as a manufacturer of rechargeable batteries – used in smartphones, laptops and other electronics. It started trading its shares on the stock market in 2002 and diversified by purchasing a struggling state-owned car manufacturer, Qinchuan Automobile Company. BYD’s battery business has helped give it flexibility to cut its EV prices sharply at the end of 2023, lifting sales, which jumped by 70% in December alone; batteries are probably the most expensive part in any EV and BYD is one of the top manufacturers that make them in-house, reducing their costs markedly.

More bad news for Tesla sees it recalling more than 1.6 million vehicles in China over issues with steering software and door-locking systems, with the problem being fixed by remote updates to software. This comes less than a month after the carmaker recalled two million vehicles in the US, and eight months after China said more than a million of its vehicles may have acceleration and braking system issues. Tesla will release an over-the-air software update for a total of 1,610,105 vehicles, including imported Models S and X and the China-made Models 3 and Y cars made from 2014 to 2023.

New data from the Society of Motor Manufacturers and Traders indicates that demand growth for EVs in the UK has flatlined, having seen cars sold reach record levels last year, but their share of the market did not increase; this is the first time that EVs failed to improve market share since 2018. These disappointing figures have again seen the calls for tax cuts to boost uptake among buyers, and at a time the overall market for new cars is growing rapidly, with 1.9 million vehicles registered in 2023 – almost 18% more than a year earlier. However, there was a 0.1% dip to 16.5% to 315k, in the EV share of the market.

After an Irish High Court ruling banned screen scraper Flightbox from gathering Ryanair flight information for online travel agents, several larger sites such as Booking.com, Kiwi and Kayak suddenly removed the budget airline’s flights in December. Ryanair retaliated by taking its flights off their platforms without warning, noting that the websites’ removal of flights would increase empty seats by 1% or 2% in December and January, and said it would respond by lowering fares for passengers booking directly through its own website. Describing these online agents as “pirates”, Ryanair said it would “continue to make its fares available to honest/transparent online travel agents such as Google Flights,” which it said, “do not add hidden mark ups to Ryanair prices and who direct passengers to make their bookings directly on the Ryanair.com website”. In the half year to 30 September 2023, passenger numbers rose 11% to a record 105.4 million, despite average fares rising by 24%, resulting in profits almost 60% higher at US$ 2.38 billion. It flew 12.5 million passengers in December, up 9% from the same period in 2022, despite more than nine hundred flights being cancelled due to the war in Gaza.

In consultation with the Federal Aviation Administration, Boeing has issued a Multi-Operator Message urging operators of the newer 737 Max planes to inspect for a possible loose bolt in the rudder control system. This comes after an international operator discovered a bolt, with a missing nut, while performing routine maintenance. The US plane maker confirmed that the aircraft, with the missing part, was fixed, but for safety’s sake wanted to ensure all 737 Max planes in service worldwide are checked for similar issues. flydubai noted that it was conducting voluntary inspections to assess any implications this may have on its 737 Max fleet.

Germany won the UK Christmas supermarket war, with both Aldi and Lidl posting “record” festive trading, with the former, with over 1k outlets, confirming that sales jumped over 8.0% to top US$ 1.90 billion, and Lidl noting that 2023 was its best Christmas yet since it entered the UK market in 1994; in 2023, it had seen UK sales 12.0% higher. There is no doubt that, although there has been a decrease in the cost of living, households still face pressure from higher food costs, and this put these two discount supermarkets in prime position.

Zhongzhi Enterprise Group has filed for bankruptcy on the grounds it was unable to pay its debts, and two months after Chinese officials had launched an investigation into “suspected illegal crimes” against the shadow bank that had lent billions to real estate firms and developers. It had earlier notified investors that its liabilities – up to US$ 64 billion – had outstripped its assets, now estimated at about US$ 38 billion. Shadow banking, a form of informal lending, is unregulated and is not subject to the same kinds of risk, liquidity and capital restrictions as traditional banks; the sector is valued at US$ 3.0 trillion. At its peak, ZEG’s asset management arm reportedly handled more than US$ 139 billion and there are concerns that financial troubles at ZEG, and other similar entities, could – and probably will – impact on China’s economy.

Last January, Hindenburg Research alleged fraud against billionaire Gautam Adani’s companies. involving “brazen” stock manipulation and accounting fraud. In March, the court set up a committee to oversee an investigation by India’s market regulator into the allegations, and within two months, the regulator notified that it had so far “drawn a blank” in the inquiry. Despite being requested to set up a new panel, this has been rejected by India’s top court which has called for the regulator to finish its investigation within three months. Hindenburg – which specialises in “short-selling – accused Mr Adani of “pulling the largest con in corporate history”. Petitioners had alleged that India’s market watchdog was not doing a proper job, and that there was a “conflict of interest” among some members in the court-appointed panel. The report questioned the Adani Group’s ownership of companies in offshore tax havens, such as Mauritius and the Caribbean, as well as claiming that Adani companies had “substantial debt” which put the entire group on a “precarious financial footing”. Mr Adani is among the richest people in the world and is perceived as being close to Prime Minister Narendra Modi. He has long faced allegations from opposition politicians that he has benefited from his political ties, which he and Mr Modi’s party deny.

Despite his legal problems, Adani remains the richest person in Asia, surpassing Mukesh Ambani with his net worth at US$ 97.6 billion. However, Elon Musk is again the wealthiest person in the world, with a net worth of US$ 229 billion, having added US$ 92.0 billion in 2023. However, Bloomberg lists Musk’s cash holding as US$ 0, with his private assets including SpaceX, The Boring Company and X Corp valued at US$ 53.2 billion, US$ 3.3 billion and US$ 53.2 million; his one publicly listed asset is Tesla, valued at US$ 102 billion.

New President, Javier Milei, has withdrawn Argentina from its planned entry into the expanding Brics club of nations, advising the bloc that decisions taken by the preceding government had been revised. It would have been admitted to the Brics club on 01 January, alongside Egypt, Iran, Ethiopia, Saudi Arabia and the UAE but he said in his letter that his government’s foreign policy “differs in many ways from that of the previous government”; he said that although he did not consider it “appropriate” for Argentina to become a full Brics member, he was still committed to strengthening bilateral ties, particularly with the aim of increasing trade and investment flows. The country, with 40% of the population living under the poverty line, continues to be blighted by inflation, with prices rising by about 150% on the year, not being helped by low cash reserves and high government debt; the president has already devalued the country’s currency by more than 50%.

Going into 2024, Australia is facing a major housing crisis, with the main reason being the stark reality that housing is ultra-expensive – the average property now costs about nine times an ordinary household’s income, triple what it was as at the turn of the century, with Sydney now the second least affordable city in the world, behind Hong Kong. Those who live in the country’s main cities, that account for 75% of the country‘s 26.4 million population, are particularly impacted. Recently, the boss of ANZ, Shayne Elliott, commented that home loans had become “the preserve of the rich”. Even though the ownership level has been around 67% for many years, there has been a marked decline for the younger generation. Apart from prices skyrocketing, even those who could scrape into the mortgage market have been impacted not only by soaring rates, but a shortage of available property, not helped by the fact that one in three homeowners now own a property other than the one they live in. Furthermore, the arrival of 500k new immigrants last year only exacerbated the housing problem that sees millions of people trapped in the rental market, where vacancies are at unprecedented, prolonged lows and prices continue to move inexorably north. The crisis is tipping people into homelessness or overcrowded living conditions, and there are reports that demand for housing support is so high that some charities say they’ve been handing out tents.

The Albanese government has introduced measures to help prospective buyers and renters, including a promise to build thousands of new social and affordable houses and set up an investment fund to support future projects; it has pledged to create a National Housing and Homelessness Plan and beef up protections for renters. It has also promised to halve t country’s immigration intake and triple the fees for foreign homebuyers. These measures are indeed welcome but whether they have such an impact on improving this dire situation is highly unlikely.

The Food and Agricultural Organisation posted that December food prices fell 10.1% on the year, as the prices of most commodities declined, helping to ease concerns over global food inflation, with the monthly change in the international prices of a basket of commodities, averaged 118.5 during the month, and 1.5 lower on the month. Most commodities – including meat, dairy, cereals and vegetable oils – fell but those of sugar, dairy and cereals increased. The index recorded 124 points over the entire year, 13.7 per cent lower than the average value recorded in 2022, and 1.7’s in 2021, but still higher than the 98.1in 2020.

RedBird IMI consortium, the Abu Dhabi-backed bidder for the Daily and Sunday Telegraph, has confirmed that journalists will be given total editorial freedom, backed by legally binding agreements. It also posted that an independent editorial trust board will further protect the Telegraph’s editorial independence. Despite providing 75% of the money, Jeff Zucker, who is leading the bid, and will become the chief executive, insists the UAE will remain a “passive investor”, with no influence over editorial decisions; he also insisted that his investment firm would be a responsible owner of the titles. The decision will ultimately fall to the UK Culture and Media Secretary, Lucy Frazer, either to let it go ahead, require further guarantees or amendments, or block it outright; a decision is expected next month.

In December, US employers added 216k jobs, with the unemployment rate unchanged at 3.7%, driven by increased government hiring. There was limited growth in sectors such as retail, financial activities and leisure and hospitality, which includes bars, restaurants and the arts, and has yet to recover to pre-pandemic employment levels. The latest figures have extended one of the strongest runs of job creation, and with this unexpectedly strong data being a sign that the economy continues to defy forecasts of a slowdown – and another month that forecasters have been proved wrong by them expecting job losses as higher borrowing costs slowed the economy. Average hourly earnings in December were 4.1% higher on the year. Last year, the US added 2.7 million jobs, lower than the boom of 4.8 million in 2022 and 6.4 million in 2021, but a faster pace than pre-pandemic years. These figures reduce the chances of an early Fed interest rate cut, but there is no doubt that global central banks are set to cut interest rates as from Q2, as inflation continues to fall amid the easing of oil and gas and food prices, as the US Federal Reserve, having made “clear progress” in bringing down inflation towards its 2% target.

S&P Global/CIPS UK noted that, for the seventeenth consecutive month it has been below the 50 threshold, the manufacturing PMI weakened 1.0, on the month, to 46.2; output, new orders and employment all headed south, as business dipped to a twelve-month low. Two of the main drivers continue to be client closures and high interest rates. Although “UK manufacturing output contracted at an increased rate at the end of 2023”, “the demand backdrop also remains frosty, with new orders sinking further, as conditions remain tough in both the domestic market and in key export markets, notably the EU”. If there is any good news, it is that it has resulted in a marked improvement on supply chains, with suppliers reducing prices for raw materials and vendor lead times showing a further improvement. Job losses were recorded for the fifteenth month in a row,  part due to redundancies and hiring freezes in the sector.

Yorkshire Building Society said around 290k first-time property owners entered the mortgage market in 2023 – a 20%+ decline on 2022’s total of 370.2k – the triple drivers being increases in mortgage rates and property prices, as well as the impact of the cost-of-living expense crisis. With factors appearing to be improving, analysts expect conditions for buyers to improve this year, with expectations that mortgage rates will dip, (but not as quickly as many may hope), in 2024, with the same applying to inflation rates. A further plus is that many expect house prices to fall. UK’s third largest building society also said the overall number of property buyers decreased at an even more severe rate last year, meaning the proportion of first-time buyers rose to 54% of the total – up from 53% in 2022.

Other mortgage lenders also started the year by cutting rates, with the UK’s biggest lender, the Halifax, dropping some interest rates by close to one percentage point, followed by HSBC

posting cuts in what it described as being in as a “fast-moving market”. Halifax is reducing its rates, with interest on a two-year fixed deal being cut by up to 0.83%, with HSBC with a two-year fixed rate for remortgages (for someone with at least 40% equity in their home) falling below 4.5% for the first time since last June. However, the two caveats that lenders should be aware of – banks do not generally reduce all of the products by the same amount and that mortgage rates will remain higher than many people expect. It is forecast that some 1.6 million homeowners will see their current fixed-rate deal expire over the next twelve months, the vast majority of whom could see their monthly repayments rise quite sharply.

Prior to the PDC World Darts Championship, he had earned less than US$ 3k, and was an unknown entity in the sport, now sixteen-year old Luke “The Nuke” Littler is US$ 255k richer and has become one of its biggest names. He has a bright future ahead of him and could earn millions, through sponsorships and endorsements, even though money in darts is not as lucrative as in other individual sports. He already has nearly 700k followers on Instagram. There should be no shortage of offers from fast food companies or offers for book deals or documentaries in the future, and his youthful, unpretentious and normal attitude has already opened doors for TV appearances. His success will see darts attract a younger audience, which will benefit the sport in general, widening its global appeal, and see him become the most recognisable player in darts. The Nuke’s success is similar to that of tennis player, Emma Raducanu – who won US$ 2.5 million for winning the 2021 US Open – but has since earned millions on top from sponsorship.

The High Pay Centre claimed that by lunchtime yesterday, 04 January 2024, bosses of Britain’s biggest companies had made more money in 2024 than the US$ 44.5k the typical worker will have earned by 31 December 2024. The study indicated that, including pensions, top bosses’ average reward amounts to US$ 4.85 million per year, equating to US$ 1.49k per hour – 109 times the average full-time worker. It seems that top City lawyers will reach that figure by 12 January, but leading bankers will only reach that figure by 17 January but that executives at companies listed on the bigger FTSE 350, with a median pay of US$ 1.68 million, will need to work until 10 January for their pay to overtake the annual pay of the typical UK worker. Little wonder that the Trades Union Congress, which represents forty-eight member unions, said the figures were a sign that the UK faced “obscene levels of pay inequality”. However, it is noted that the median pay for US S&P supremos comes in a lot higher at more than US$ 14 million. Maybe that is the going rate for Takin’ Care Of Business!