Fool Me Once, Shame on You!                                                            26 January 2024

The real estate and properties transactions, totalling 4.12k, were valued at US$ 3.87 billion in total during the week ending 26 January 2024. The sum of transactions was 312 plots, sold for US$ 804 million, and 2,696 apartments and villas, selling for US$ 1.59 billion. The top three transactions were all for plots of land, the first in Al Barshaa South Second for US$ 57 million, the second in Saih Shuaib 2 for US$ 28 million and in Saih Aldahal for US$ 27 million. Madinat Hind 4 recorded the most transactions, with one hundred and thirty-three sales, worth US$ 92 million, followed by forty-nine sales, in Al Hebiah Fifth for US$ 46 million, and twenty sales, in Hadaeq Sheikh Mohammed Bin Rashid, valued at US$ 136 million. The top three transfers for apartments and villas were a villa in Nad Al Shiba First for US$ 48 million, and two apartments, both in Palm Jumeirah, for US$ 21 million and the other for US$ 12 million. The mortgaged properties for the week reached US$ 1.25 billion, with the highest being for land in Trade Centre First, mortgaged for US$ 262 million. One hundred and ninety-five properties were granted between first-degree relatives, worth US$ 232 million.

Azizi Developments has begun construction of a US$ 1.5 billion mega-tall tower that could become the second tallest building in the world, (to the 828 mt Burj Khalifa), if the authorities approve plans; whatever happens, it will definitely be the second tallest in Dubai. To become the world’s second tallest, it would have to be higher than Malaysia’s 679 mt Merdeka 118 and to be more than the 450 mt high Franck Muller Aeternitas tower, which is currently under construction in Dubai Marina.

Downtown Dubai is the location for Binghatti Properties’ latest launch – the uber-luxury project US$ 1 billion Mercedes-Benz Place Binghatti, launched in partnership with the German luxury carmaker; the sixty-five storey property will comprise one hundred and fifty 1 B/R, 2 B/R and 3 B/R apartments, duplex and triplex apartments, and 5 B/R penthouses, with prices starting at US$ 2.72 million, (AED ten million). The 341 mt project, which  is slated for completion by the end of 2026, will also have a range of restaurants, sports and wellness zones, lounges, non-automotive retail, exhibition spaces, and parking. Each and every unit will come with its own private swimming pool. The duplex will feature six bedrooms, a private gym, and an office among other amenities. The triplex will be based on three floors and will come with a private gym, cinema, spa and other amenities. By the end of the week, its chief executive, Muhammad Binghatti, confirmed that 50% of the project had already been sold.

Alphabeta Properties has introduced a new concept to Dubai’s real estate sector, when it comes to renting out a residential building. The Dubai property development and management company is initiating a unique auction system to select tenants for its M77 apartments and will select its tenants via an invite-only online auction. Comprising seventy-seven apartments and located on Meydan Avenue, it will also include a full-floor gymnasium, a fifty mt Olympic-sized pool and a smart keyless entry system. Rents for the one, two and three B/R apartments range from US$ 29k – US$ 41k, US$ 59k – US$ 71k and US$ 68k – US$ 95k, dependent on size and floor space. Interested candidates are required to register, and those shortlisted will be invited to take part in the auction and also visit the properties in person. The developer has already delivered over US$ 272 million worth of projects in different localities, including Al Barsha, Jumeirah, Al Safa and others. The company has built its portfolio around leasing, and most tenants are based in the affluent rental market segment.

Aqua Properties launched its mixed-used four-tower, The Central Downtown project in Arjan, slated for completion in 2026. The towers will be completed on a 300k sq ft plot — atop a sprawling 150k sq ft shopping mall – and will house 1.17k residential units from studio to 1, 2 and 3 B/R, along with a selection of retail outlets. The project boasts a roof podium featuring a series of indoor and outdoor amenities, as well as a golf simulator, wave pool, jacuzzi and a multipurpose hall. Aqua Properties recently announced plans to launch a series of significant developments in Dubai, valued at US$ 817 million.

Master developer Expo City Dubai has unveiled its latest residential properties, as the city continues to grow, launching Sky Residences – a collection of one-to-three-bedroom apartments, as part of the vibrant Expo Central communities. Sky Residences is one of three distinct clusters of apartments, with prices ranging from US$ 488k, that form Expo Central, each within a few minutes’ walk of the city’s attractions; units will be handed over by Q3 2026. Last year, the triple-tower Mangrove Residences was unveiled, with units selling out fast. Both projects are seen as important steps to make Expo City a sustainable location, as well as the cornerstone of Dubai’s 2040 Dubai Urban Master Plan.

Betterhomes has released data that indicates that Indians, moving from last year’s third place, have replaced Russians as the leading buyers of real estate in Dubai in 2023; UK buyers move down to third place, compared to 2022. Making up the top ten are Egyptians, Lebanese, Italians, Pakistanis, Emiratis, French and Turkish. Last year, there was a marked variance in the increase, in the average sales price of villas, with prices pushed higher because of a shortage of inventory in key locations. There were marked increases seen in JVT (29%), Dubai Hills Estate (29%) and Arabian Ranches (25%) which pale into insignificance when villa prices on Palm Jumeirah were up 74%; on the flip side, Jumeirah Golf Estates posted a marginal 1% decrease. Average apartment prices ranged from 8% – 20%, with three of the better performers being JGE, Dubai Hills Estate and Downtown Dubai with increases of 21%, 21% and 17%.

Bayut data confirms what many others already know – that the bull market in the Dubai property market continued in 2023, helped by factors such as a record influx of local and international investors attracted taking advantage of the “unprecedented boom,” wanting to own property in this surging market. It pointed to a notable uptick in sales prices for apartments and villas across prime neighbourhoods in Dubai, registering surges of between 4% and 21% last year. CBRE note a 42% rise in rents since January 2020, and property prices increasing by approximately 33%, with villa rents having followed a similar trend, averaging an annual US$ 88.4k, with an annual 19.2% increase in November.

Bayut also noted that in 2023 a total of 132.6k property sale transactions, amounted to a total value of US$ 111.66 billion. CBRE said there had been a 42% rise in rents since January 2020, with property prices increasing by approximately 33%; villa rents followed a similar trend, averaging an annual US$ 88.4k, with a 19.2% increase in November. There is no doubt that Dubai’s property has bounced back strongly from the pandemic-induced slowdown, helped by government initiatives such as residency permits for retirees and remote workers. Last year, the Dubai real estate market continued to break records, with residential sales transactions 38.1% higher at 120.7k. This growth came predominantly from apartment sales, which increased by 49% to 94.2k.

The most popular locations in the affordable property segment, for potential investors and home buyers, were in International City, Dubailand Residence Complex and Damac Hills 2; in the mid-range budget – Jumeirah Village Circle, Dubai Silicon Oasis, Al Furjan and The Springs – and for luxury property – Dubai Marina, Business Bay, Arabian Ranches and Dubai Hills Estate. The average transaction prices for affordable villas have generally decreased by 10% to 26%, with the exception of Damac Hills 2, which recorded a minor increase of 0.54%. In the mid-tier property segment, the average sales transaction prices for apartments have generally increased by up to 3.0%, although Jumeirah Lake Towers saw transactional sale prices fall by 0.77%. Sought-after areas with mid-tier villas have reported 15% – 21% increases in average transaction sales price, whilst in the luxury sector, transactional prices have been between 3.0% and 17%.

The study indicated that, based on Return on Investment, DIP, Liwan and Discovery Gardens returned the best returns, with yields of over 11% in the apartment sector. In the mid-tier segment, Dubai Silicon Oasis, Dubai Sports City and Motor City returned the best rental yields of up to 9.0%, whilst in the luxury apartment segment, areas like Al Sufouh, Green Community and Jumeirah Golf Estates have seen returns of up to 10%. When it comes to villas, in the budget sector, Al Rashidiya sees RoI surpassing 9.0%, with areas such as International City and Jebel Ali posting ROI percentages of over 8.0%. For mid-tier villas, JVC, Town Square and Reem have recorded projected ROIs of between 6.0% to 8.0%. Al Barari is the stand-out performer in the luxury villa category, with an ROI of over 8.0%.

Data from aviation consultancy OAG confirmed that Dubai International has surpassed Atlanta’s Hartsfield-Jackson International to become the busiest global airport; it recorded five million seats in January 2024 – 0.3 million higher than ATL, which saw its capacity decrease by 8% on the month. Last year, DXB registered 56.5 million seats – compared to 2022’s 53.98 million and pre-pandemic’s 45.27 million. Calculations used to classify the busiest global airports are based on total capacity (domestic and international), and for the top ten busiest international airports only using international seats. The other eight airports to make the top ten busiest globally include Tokyo International (Haneda), Guangzhou, London Heathrow, Dallas/Fort Worth, Shanghai Pudong, Denver International, Istanbul and Beijing Capital International.

Last year, the Mohammed bin Rashid Aerospace Hub at Dubai South posted a record annual 8% hike in private jet movements to 16.7k in 2023, with some drivers including the hosting of the Dubai Airshow, COP28, and the soft opening of the new ExecuJet FBO and hangar. MBRAH is the region’s busiest airport for international business aviation movements in the ME. During the year, there were several agreements with new partners seeking to set up their facilities across different zones to provide different MRO services.

According to Dubai Business Events, last year, the emirate extended its status as a hub for international business events, posting a record three hundred and forty-nine bids to host major conferences, meetings and programmes – 49% higher than recorded in 2022, and up 18.5% than the then 2019 pre-pandemic record number of two hundred and ninety-five. Some of these have already taken place, with others to take place in the future, and it is estimated that they will attract more than 191k international delegates.

This week saw the third 2024, two-day edition of World of Coffee, opened by Abdulla Bin Touq Al Marri, Minister of Economy, and featuring 1.65k local, regional, and global brands and companies. This year, space was expanded 50%, with fifty-one countries participating in its activities. The minister commended the event organisation’s efficiency and praised the hard work of the teams involved; he visited the Roasters Village, Cupping Room, and Brew Bar pavilions. According to Data Bridge Market Research, the value of the coffee and Espresso drinks market in the MENA region is expected to reach around US$ 1.33 billion by 2030, on the back of an anticipated Compound Annual Growth Rate of 2.6%.

One Dubai family was duped by responding to a call from Apollo Times office, advising that a free gift had been won but they would have to attend the agency’s office in Karama. On arrival, the family were exposed to a time-share scam, with an all-expenses paid trip to the US for eight family members, priced at US$ 10.9k if they signed up for the platinum package. Late last year, a couple paid US$ 7.6k for a gold membership, with the promise of a world tour. Last Saturday, numerous other UAE residents visited Apollo’s office seeking answers about trips that never materialised but were shocked to find the company had shut down, and its owners and staff had disappeared. Trips to all over the world, including Europe, Australia, US and Singapore, as well as to Umrah, had been promised. Victims said that each time they tried to book a trip, they were told the slots were unavailable and that they had to wait. Excuses ranged from the unavailability of hotels to a lack of advance notice, and the only “prizes” that were delivered a dhow cruise dinner and a stay at a three-star hotel in Fujairah.

Last month, Sharjah-based Royal Palm closed its doors abruptly after employing a similar modus operandi to defraud numerous residents. In February 2023, Royal Regis Tours and Travels shut down, leaving hundreds counting their losses. The company had sold over half a million dirhams worth of holiday packages that never materialised. Prior to this, Arabian Times Travel & Tourism LLC (Arabian TTT) defrauded approximately two hundred people in a similar fashion. Unfortunately, Apollo is the latest – but definitely not the last – fraudulent exercise emanating from a travel agency to scam Dubai residents.

According to the Dubai Media Office, in the first nine months of 2023, the Dubai economy expanded 3.3%, driven by growth in the emirate’s tourism and transportation sectors. Data indicates that the emirate’s accommodation and food services industry recorded 11.1% growth, while the transportation and storage services sector surged by 10.9%. HH Sheikh Mohammed posted that “it is also a reflection of Dubai’s favourable economic climate, robust world-class infrastructure, pro-business regulations and deep talent pool which together consistently draw in a diverse array of investors and entrepreneurs from all corners of the globe.”

In H1 2023, Dubai’s GDP expanded by an annual 3.2% to US$ 60.9 billion. In the first nine months of the year, the transport/storage sector, (which includes land, sea and air transport and logistics), was a major contributor accounting for 13.1% of the emirate’s GDP, equating to US$ 116.9 billion. Dubai’s information/communication technology industry grew 4.4% annually to US$ 4.09 billion. The accommodation/food services sector accounted for 3.4%, (equating to US$ 3.02 billion), of Dubai’s economy. Helal Al Marri, director general of Dubai’s Department of Economy and Tourism, commented that “our focus is not only on maintaining the current momentum but also on further strengthening an environment that enables businesses to thrive,” with the aim to increase the size of the economy to US$ 8.72 billion, under the government’s D33 agenda. It also targets to make Dubai a global digital economy leader, and the fastest growing and most attractive global business centre, a centre for sustainability and economic diversification, and an incubator and enabler of talented citizens.

Established in March 2022, Dubai’s Virtual Assets Regulatory Authority is the competent entity in charge of regulating, supervising, and overseeing VAs and VA Activities in all zones within the emirate, with the exception of the DIFC. VARA has two roles – protecting investors and establishing international standards for Virtual Asset industry governance and supporting the vision for a borderless economy. Last year, it worked hard to establish Dubai as the leading, responsible hub for regulated VA, awarding nineteen regulated VASP licences – of which eleven are already operational. A further seventy-two Initial Approvals have been issued to new entrants to the Dubai market that have already commenced the licensing process.

Emirates NBD posted a 3.0% rise in Q4 profit, to US$ 1.09 billion, attributable to the continuing strength of the local, and wider Mena region, economies. Dubai’s biggest lender by assets saw total quarterly income increase by 5.0% annually to US$ 2.81 billion, driven by a 2.0% year-on-year rise in the bank’s net interest income to US$ 2.13 billion, with non-funded Q4 income surging by 18.0% to US$ 681 million. The bank’s chairman, Sheikh Ahmed bin Saeed, noted the rise in quarterly net profit reflects “a healthy regional economy and the success of the group’s diversified business model”. Annual returns saw its net income rise 65.0%, to a record US$ 5.86 billion, attributable to factors such as asset growth, a stable low-cost funding base, increased transaction volumes and substantial impaired loan recoveries, (with provisions 33.0% lower at US$ 940 million). Total income jumped 32.0% in December to US$ 11.72 billion, driven by “excellent deposit mix, solid loan growth and strong fee and commission growth across all business segments”. Other positive indicators include a marked improvement credit quality, with the impaired loan ratio improving to 4.6%, (its lowest level since 2009), loans growing 5% to US$ 131.06 billion, customer deposits 16% higher at US$ 159.04 billion and total assets up 16% to US$ 231.15 billion. The bank’s Board proposed a US$ 0.027 dividend, in addition to a special US$ 0.005 dividend to celebrate the bank’s sixtieth anniversary; this equates to a doubling of the shareholders’ payment on the year.

The country’s biggest Sharia-compliant lender by assets posted a 24.1% jump in 2023’s fiscal net profit, to US$ 6.79 billion profit, attributable to rising non-funded income and lower impairment charges, (down 34.0% to US$ 354 million). Revenue from Islamic financing and investing transactions surged nearly 46.7% to US$ 4.69 billion, with income from properties held for development and sales jumping 72.3% to almost US$ 65 million. Commissions, fees and foreign exchange income also moved higher by more than 12% to US$ 488 million. Customer deposits increased 12.0% to US$ 60.49 billion, with current and saving accounts comprising 37% of the total deposit base. DIB’s net financing and sukuk investments rose 12.0% to US$ 73.02 billion last year, with its balance sheet up 9.0%.

Deyaar’s 2023 net profit, tripled for the 12 months to the end of December, to US$ 120 million and its net operating profit came in 95% higher at US$ 77 million, as total assets expanded by 6.5% to US$ 1.78 billion. Revenue was 56% higher to US$ 354 million, mainly due to the very healthy state of Dubai’s property sector, and a jump in “property development revenue of US$ 112 million from the sale of properties”, along with a 15% rise in revenue from other businesses. Mar Casa, Deyaar’s luxury seafront residential destination at Dubai Maritime City, valued at US$ 302 million, and launched in March 2023, was sold out in record time. Other projects handed over last year were the Mesk and Noor Residential communities, with its flagship project. Its flagship project Midtown also introduced its final residential community, Jannat.

The DFM opened the week, on Monday 22 January, 37 points (0.9%) lower the previous week, gained 96 points (2.4%) to close the trading week on 4,163 by Friday 26 January 2024. Emaar Properties, US$ 0.08 lower the previous week, was flat, closing on US$ 2.04 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.69, US$ 4.75, US$ 1.58, and US$ 0.38 and closed on US$ 0.68, US$ 4.93, US$ 1.70 and US$ 0.37. On 26 January, trading was at 63 million shares, with a value of US$ 47 million, compared to 138 million shares, with a value of US$ 127 million, on 19 January 2024.

By Friday, 26 January 2024, Brent, US$ 0.95 lower (1.2%) the previous three weeks, gained US$ 3.93 (5.0%) to close on US$ 82.49. Gold, US$ 22 (1.1%) lower the previous week, shed US$ 16 (0.8%) to trade at US$ 2,016 on 26 January 2024.   82.49

Despite a Q4 dip in revenue, Apple’s net profit jumped 10.7% on the year, and this week it surpassed Amazon to become the world’s most valuable brand, valued at US$ 516.6 billion – a 74% increase from last year; this came despite the tech firm seeing its prime product iPhone’s volume share flattening. Brand Finance rated Microsoft, Google, Amazon and Samsung well behind the leader with brand values of US$ 340.4 billion, US$ 333.4 billion, US$ 308.9 billion and US$ 99.4 billion respectively. In the region, the usual suspects – Aramco and Adnoc – filled the first two places, with the world’s biggest oil producing company posting an 8.0% decline in value to US$ 41.6 billion and Abu Dhabi petro giant growing its value by 7.0% to US$ 15.2 billion and climbing ten places on the global ladder to one hundred and twenty-eighth. Saudi Telecom Company and etisalat by e& both posted 12.0% gains on the year to US$ 13.9 billion and US$ 11.7 billion.

On Wednesday, Microsoft returned to its top position, (albeit temporarily), with its shares gaining nearly 9.2% since 01 January, and a massive 67.3% over the past twelve months; its market cap topped the US$ 3 trillion level to touch US$ 404.71 per share. The main driver seems to be the company’s strategic investments in AI under the transformative leadership of Satya Nadella.  Earlier this month, the Redmond, Washington-headquartered technology company announced the addition of a new Copilot key on the Windows keyboard, in a move aimed at supporting the adoption of AI in its hardware products. Morgan Stanley has elevated their price target to US$ 450, from US$ 415, and said they “remain confident in upside to our above consensus estimates”. However, Apple has since reclaimed the top position, with its market capitalisation reaching about US$ 3.03 trillion

Three months after acquiring Activision-Blizzard, (maker of the Call of Duty and Warcraft series), in a US$ 69.0 billion deal, 1.9k workers, (8.6% of the 22k current workforce), in Microsoft’s gaming division are to be laid off. It seems staff within the Xbox division and at publisher Zenimax – which oversees studios including Bethesda and Arkane – will also be impacted. Last year, there had been a series of redundancy announcements in the video game and tech industries and the first month of 2024 has seen much of the same.

Last May, Terraform Labs’ TerralUSD and Luna tokens lost US$ 40.0 billion of their value which contributed to the so-called “cryptocrash” then; now, the firm has filed for bankruptcy in the US. Its founder, South Korean Do Kwon is currently in jail in Montenegro, after having been found guilty of forging documents, and still faces charges in his home country – the US – and Singapore for defrauding investors by US regulators. In December 2021, its Luna token began trading at US$ 5 and surged over the ensuing four months to top US$ 116 million the following April, but on 09 May 2022, it collapsed, losing 99% of its value in just forty-eight hours to US$ 0.02. This resulted in an estimated US$ 400 billion being wiped from the value of other cryptocurrencies such as Bitcoin. Documents show that Terraform still has up to US$ 500 million in assets and that its two shareholders are Do Kwon (92%) and co-founder Hyunsung Shin (8%).

Earlier in the week, there were reports that Boeing will now carry out checks on a second model of its 737 fleet – with the US Federal Aviation Administration grounding more than one hundred and seventy of the 737 Max 9 fleet, after a cabin panel broke away thousands of feet above the ground. The agency said, “as an extra layer of safety”, airlines should also inspect older 737-900ER models, which use the same door design, even though there had been no reported issues of any problems, even though it uses the same style of panel to “plug” an unused door. The FAA is investigating the firm’s manufacturing practices and production lines, including those linked to subcontractor Spirit AeroSystems, which provided the panel. Following the Air Alaska incident earlier in the month, after the watchdog grounded one hundred and seventy-one 737 Max 9 jets, United Airlines, which has seventy-nine such planes, says it expects to lose money in Q1, due to their grounding of the jets; the carrier has been forced to cancel hundreds of flights, as inspections continue to be carried out. The 737-900ER models have carried out eleven million hours of operations without any similar incident to the newer 737 Max 9s, so the FAA did not see the need for the older model to be grounded while the visual inspections are carried out by operators. By the middle week, Alaska Airlines chief says checks on Boeing 737 MAX 9 planes have found ‘many’ loose bolts.

Boeing status, and already tarnished safety reputation, took another blow this week with news that a Delta Air Lines Being 757 passenger plane’s nose wheel fell off and rolled away, as the jet lined up for take-off, at Hartsfield-Jackson Airport in Atlanta. Not surprisingly there was no early comment by the plane maker, but the FAA confirmed that it was investigating the incident. However, on Wednesday, chief executive, Dave Calhoun, said the manufacturer will not operate its planes unless the company is fully confident in their safety.

In Q4, China’s BYD overtook Tesla as the leading global EV maker and now it seems that Elon Musk is keen to introduce a cheaper model to compete with cheaper gasoline-powered cars and a growing number of inexpensive EVs, including those made by Chinese and Vietnamese rivals. There are plans for Tesla to commence production of a new mass compact crossover electric vehicle codenamed “Redwood” in mid-2025; an entry-level US$ 25k vehicle seems to be on the cards. Tesla sent “requests for quotes,” or invitation for bids for the “Redwood” model, to suppliers last year, with an expected weekly production volume of 10k vehicles. At a meeting on Wednesday, Tesla forecast a 21% hike in 2024 deliveries – well down on a long-term 50% target, set by its founder three years ago. posting a 38% surge in deliveries last year, and record sales of 1.8 million cars, Tesla warned that this year will see growth “notably lower”, following which its share value dropped 6% in extended trade in New York. Elon Musk also warned that Chinese rivals “will pretty much demolish most other car companies in the world” unless trade barriers are put in place and noted that Tesla had to slash prices repeatedly last year in a bid to keep demand up, so that revenue grew at about half that pace. In its quarterly update to investors, Tesla said it was not expecting another big wave of expansion until it launches a new model. The slowdown in Tesla’s revenue and margins reflects what is happening in the EV market, where, after several years of robust growth, there are signs that sales are sliding, with major car companies scaling back on production. automaker

Vietnamese automaker,VinFast says it plans to spend up to US$ 2 billion to build an electric vehicle factory in India, the world’s third-largest auto market by sales, and has committed to an Initial US$ 500 million in the first phase of construction in Thootukudi, in India’s Tamil Nadu state; it is expected that production will be in the region of an annual 150k units. This will be VinFast’s first foray into India and is part of a global expansion that has included exports of EVs to the United States. It is building a US$ 4 billion EV factory in North Carolina, where production is slated to begin this year, and has invested US$ 400 million to set up production lines in Indonesia. It has also started shipping EVs, made in Vietnam, to neighbouring Laos to serve as a fleet for Green SM, an EV taxi operator that is mostly owned by VinFast’s founder, Pham Nhat Vuong. India is one of the fastest-growing electric vehicle markets in the world, with more than 90% of its 2.3 million electric vehicles  cheaper and more popular than motorbikes, scooters, and rickshaws. The government has launched a US$ 1.3 billion federal plan to encourage EV manufacturing and provide discounts for customers.

A sign that the Indian economy is ticking over nicely is that this week its stock market overtook Hong Kong to become the fourth-biggest equity market globally by market capitalisation; on Tuesday, its market cap stood at US$ 4.33 trillion, compared to its rival’s US$ 4.29 trillion. The US is way ahead of any of its competitors with a market cap of US$ 50.86 trillion, followed by China’s US$ 8.44 trillion and Japan’s US$ 6.36 trillion.

Last week, Apple announced that it would permit app developers to sell products in places other than its own store – but only if they still paid commission. The tech giant decided to take this action following a recent court decision, involving Apple and Fortnite, in which Apple won but it fell foul of a law by not allowing app developers to tell people about other ways of paying, including through links that bypass Apple’s own App Store payment system. Consequently, it charges the biggest developers a 30% fee to use this system, though smaller developers pay around 15%, and 85% of developers do not pay a fee at all. Apple has introduced a new set of rules in the US which will allow people to subscribe to services without using its system, but it will charge developers up to a 27% commission to do so. This has more than annoyed Spotify which called the commission amount “outrageous” and accused Apple of “stopping at nothing” to protect its profits. In the UK, the Digital Markets, Competition and Consumer Bill is currently going through parliament that could decide limits that Apple could charge for their services.

In line with several other high profile tech companies, eBay is planning to lay off some 9.0% of its staff, (1k employees), with its chief executive, Jamie Iannone, saying the move was the “most significant and toughest” of all planned changes to ensure “long-term, sustainable growth”. He also said eBay plans to scale back the number of contracts it has within its alternate workforce over the coming months. The move comes as tech companies continue to lay off employees to streamline operations, after a hiring spree during the pandemic. Earlier in the month, Google retrenched hundreds of employees across its hardware, engineering and digital voice assistant units, as “part of efforts to optimise its operational costs”. Before that, the world’s biggest e-commerce company’s live-streaming unit, Twitch, said it was laying off 33% of its workforce (equating to five hundred) calling it a “difficult decision” intended to help the company “build a more sustainable business”, and help it stay for the “long run”. A report by Challenger, Gray & Christmas indicated that technology job losses in 2023 were 73% higher, at 168k, compared to 2022.

Arguing that just 8% of customers chose to use a branch exclusively to manage their money, Lloyds confirmed 1.6k staff will lose their jobs but that the banking group’s relationship growth team would be strengthened by the addition of eight hundred and thirty jobs; staff will be available to customers in branches through video meetings or over the phone. Last year, it closed a further forty-five branches – twenty-two Halifax branches, nineteen Lloyds and four Bank of Scotland; staff that are impacted will be offered roles within the bank. Lloyds has been announcing changes to its business since February 2022 and, with this latest move, it will take the total of Lloyds group branch closures to two hundred and seventy-six, leaving five hundred and fifteen Lloyds Bank sites, four hundred and thirteen Halifax branches, and one hundred and thirty-three Bank of Scotland branches remaining. Other financial institutions have also been cutting payroll numbers, with Barclays, NatWest, Virgin Money, Ulster Bank, Metro Bank, (planning 20% staff cuts), and RBS all announcing closures in 2023.

It is reported that Google has started construction on a new US$ 1 billion data centre in the UK, to be located on a thirty-three-acre site in Hertfordshire, purchased by the firm in October 2020. It expects that the new project will boost the growth of AI and “help ensure reliable digital services to Google Cloud customers and Google users in the UK”. The tech giant currently employs 7k but this number will increase, initially due to the construction process, posting “this new data centre will help meet growing demand for our AI and cloud services and bring crucial compute capacity to businesses across the UK while creating construction and technical jobs for the local community”.

It is reported that the EU competition watchdog will block Amazon’s takeover of vacuum cleaner maker iRobot – and this comes after it was given the green light from the UK’s Competition and Markets Authority; it had found that its place in the UK market was “modest” and that it already faced several significant rivals. European regulators are concerned that iRobot’s tie-up with Amazon could make it difficult for other vacuum-makers to compete.

One of the UK’s well-known food suppliers, Premier Foods, is planning to cut prices on more of its products, including Mr Kipling, Bisto and Angel Delight. Latest figures indicate that food prices are rising less quickly, with Premier planning to increase prices of own-brand products – this sector had seen marked growth attributable to surging food prices, as food inflation figures topped 19% only ten months ago in March 2023; last month, it had dropped to 8.0%. The company started lowering prices in Q4 and noted that discounts had helped it to report strong trading over Christmas, with group sales up 14.4% on the year.

Towards the end of last year, there was concern that some suppliers and retailers had not been passing on savings quickly enough down the supply chain to shoppers. In November, the UK’s Competition and Markets Authority concluded that makers of some popular food brands had raised prices by more than their costs over the past two years.

Last December, China’s National Press and Publication Administration had proposed regulations limiting the amount of money and time people spent playing video games. However, last Tuesday the draft rules were no longer on the NPPA website which then saw share prices of Chinese gaming firms – including the world’s biggest gaming company Tencent Holdings and its rival NetEase plummet almost US$ 80.0 billion at the time – surge after this apparent U-turn. China is the world’s biggest online gaming market and the government had introduced legislation to limit in-game purchases. Its largest crackdown to date, was in 2021 when children were banned from playing for more than an hour on certain days.

In a bid to make its business more profitable, Scottish investment firm Abrdn is to cut five hundred jobs, (equating to about 10% of the workforce), as it hopes to cut US$ 191 million costs, mainly in non-staff, as it faces “challenging” market conditions in 2024. About 80% of the savings will be from its investments arm, which in the six months to the end of December “continued to face structural headwinds”.

The expected agreement that would have seen Sony and India’s Zee merge has been abandoned because “as, among other things, the closing conditions to the merger were not satisfied by then”. Part of the problem is Zee’s chief executive, Punit Goenka, who had been touted to head up the new entity, is now the subject of a probe by India’s market regulator. When the deal was first announced, the newly planned firm was set to become a major media player in the country, challenging rivals such as Walt Disney’s Hotstar. Both firms have operated in India for years and own streaming platforms ZEE5 and SonyLIV, with the country becoming an increasingly lucrative market for streaming platforms that are targeting a young digital audience.

Driven by the double whammy of high interest rates and increased costs for buyers, annual US home sales sank to their lowest since 1995, with many potential sellers with lower rates deciding to stay at their current abode. Last year, only 4.09 million homes were purchased, with tight supply pushing up prices to a new record. There was a 1.0% rise in the 2023 median price to US$ 389.8k, having climbed by more than 40% since 2019. The buying frenzy, which had started during a period of rates being slashed to boost the sector during the pandemic, started to fizzle out in 2022, when rates began to soar. In the subsequent period, an increasing number of buyers entered the market, whilst many with loans, (with shorter terms or variable rates are more common), found it better and more economically sensible to stay because of the high costs, including rates of up to 7.0%, to move.  This has also created a stark divide between would-be buyers and existing homeowners.

Latest reports show that freight traffic going through the Suez Canal has almost halved
since October, when Yemen’s Houthi rebels began attacking cargo ships in the Red Sea. The Suez Canal handles 12%-15% of global trade and 25%-30% of container traffic, with the latter’s shipments down 82% in the week to 19 January from early December. The United Nations Conference on Trade and Development reported that the number of ships using the canal since early December had fallen by 39%, leading to a 45% decline in freight tonnage. There are two other key global trade routes disrupted, one following Russia’s invasion of Ukraine and the other being the Panama Canal, where low water levels from drought meant shipping last month was down 36% year-on-year and 62% from two years ago. All these disruptions have resulted in delays, higher costs and higher greenhouse gas emissions, because ships were opting for longer routes and also travelling faster to compensate for detours.

Before the start of the Gaza-Israel war, the World Trade Organisation had forecast that the global economy would grow 3.3% in 2024, but since then, events, such as the ME crisis and the friction in the Red Sea, may see this prediction rather ambitious. Add in other factors – including presidential elections, in several high-profile counties such as the US UK and India, and a worrying drought in the Panama Canal, the economy would do well to beat the miserable 0.8% 2023 growth. The WTO Director General, Ngozi Okonjo-Iweala, indicated that the world is “moving towards normalisation”, but at the same time conditions are “not normal”.

The bull market, that started on 12 October 2022, continues unabated as last Friday, the S&P 500 closed at a record high 4,840, and even higher today, boosted by the tech sector, driven by chipmakers, such as SMCI, Nvidia and Broadcom, surging on AI optimism and the belief that interest rates will start to head south. At the same time, the Dow Jones Industrial Average also hit new records, trading on the day at 37,864 and today at over 38,000.  Although the Nasdaq recovered 43% lost in 2023, it would need to rise another 4.8% to return to its record high close of 16,057, reached on 19 November 2021.

With Australia’s population surging over the past eighteen months, following the reopening of international borders, the IMF has finished a global study on the macroeconomic effects of migration, along with the drivers of big migration inflows. It concluded that migration surges have historically been associated with higher growth and favourable labour market outcomes, with negligible price pressures except in the housing market. The latter could be partially solved by boosting supply which has been a problem for the Albanese – and earlier – governments. It concluded that there has been a positive impact of migration on macroeconomic outcomes—output, employment, and productivity—without significant inflationary impact.

The IMF also indicated that the country has the second highest level of foreign-born residents in the OECD and that “around 30% of Australia’s population was foreign-born in 2019, which is more than twice the OECD average of 14% and higher than other major migrant-receiving OECD countries such as Canada (21%), Germany (16%), the UK (14%),  the US (14%) and France (13%)”, and that migrants constitute 40% of the total population in large metropolitan regions. One significant factor was that recent migrants to Australia tended to have higher levels of educational attainment than existing residents and than the migrant intake of most other nations.

Every year, the IMF releases an annual assessment of every country’s economy, and Australia is no exception. Although there are many positives in their study, it does warn that that the country’s 2024 growth will be 0.4% lower, on the year, at 1.4%. That being the case, Australians will have had endured a per capita recession for almost two whole years running. Another warning sees the global body noting that inflation may not fall to RBA’s 2%-3% target range until 2026, and “highlighted the potential need for further monetary tightening to achieve the targeted inflation range by 2025”; this year, it expects the average cash rate at 4.4%, and that there will be a negative savings rate of -5.1% of Australians’ disposable income this year. It also urged further restraint on public spending, whilst acknowledging the fact that the federal government did return to surplus for the fiscal year ending 30 June 2023 and its

 commitment to debt sustainability.” The IMF also noted that a comprehensive tax reform would be beneficial and highlighted that rebalancing the tax system from direct to indirect taxes, while addressing regressive impacts, would promote greater efficiency. Some worrying news was that home prices last year rose to 4.9 times income, across the capital cities, and it forecast that this would keep rising for the next five years at an average of 5% plus. Accordingly, it “supported the initiatives to boost housing supply to improve affordability and emphasized the criticality of supportive planning and land‑use policies.”

After the government decided that Australia’s “golden visa” was “delivering poor economic outcomes”, it has been axed and will be replaced with more skilled-worker visas, capable “of making outsized contributions to Australia”. Since its 2012 inception, thousands of significant investor visas have been granted, with 85% of successful applicants coming from China. Its aim was to drive foreign investment and stoke innovation, with candidates having to invest more than US$ 3.3 million, (AUD 5 million), in Australia to be eligible, but critics have long argued that the scheme was being used by “corrupt officials” to “park illicit funds”. Transparency International Australia noted that “for far too long corrupt officials and kleptocrats have used golden visas as a vehicle to park their illicit funds in Australia and arguably hide their proceeds of crime.”

This blog has previously commented on the housing crisis in Australia driven by factors such as affordability and supply shortage, not helped by 2023 net migration figures of 500k. This week, there are reports from New South Wales that since 2016, about 53% of apartment buildings, registered in the state, have had at least one serious defect. The current NSW Building Commissioner, David Chandler, was appointed in 2019. The scale of the problem can be seen that his staff numbers have risen from thirty to more than four hundred to tackle this problem. Only last month, the NSW Building Commission was established to tackle shoddy development work across the state and has already issued sixteen building work rectification orders. In 2021, a third of buildings registered had one or more serious defects compared to five years prior where 63% of strata managers reported problems. Lawyer Bronwyn Weir, co-author of the 2018 Building Confidence report, which examined how effective compliance and enforcement systems were in the construction industry across Australia, noted, “construction really changed in the mid to late 90s with some shifts by all Australian governments towards what we call a privatised model of building certification, and what that also meant was fewer inspections that also led to lower levels of detail and documentation,” and “so [it was] a combination of things, but generally the system is not robust enough”. The Building Confidence report also found systemic issues with the construction industry nationwide. The conundrum facing the NSW Premier Chris Minns – and other state leaders – is the demand for increased housing cannot be met if regulations are tightened. For example, Minns is on record saying he has “no chance” to reach his annual 75k target he agreed to in National Cabinet last year.

The annual Sunday Times top taxpayers’ listing in the UK is always worth reading, with 67% of this list paying less tax this year than they did a year earlier; it is estimated that these one hundred individuals added US$ 6.32 billion (GBP 5.35 billion). The top three “contributors” were the Russian financial trader, Alex Gerko, Bernie Ecclestone and Bet365’s owner, Denise Coates; they paid tax amounting to US$ 847 million, (GBP 665 million), US$ 828 million (GBP 650 million), and US$ 479 million (GBP 376 million). The former F1 supremo is a new entrant to the list having had to pay the tax to avoid imprisonment, after having failed to declare more than US$ 510 million held in a trust in Singapore when asked by tax authorities in 2015. Others in the top ten include, Fred and Peter Done and family – owners of gambling company Betfred, Sir Tim Martin – owner of pub chain JD Wetherspoon, Sir James Dyson and family – vacuum cleaner and household appliance company, the Weston family – owners of brands including Selfridges, Primark, Ryvita, Silver Spoon, Ovaltine and Twinings,  Mike Ashley – owner of brands including, Sports Direct, House of Fraser, Evans Cycles and Jack Wills, John Bloor – owner of Bloor Homes and Triumph Motorcycles, and Bruno Schroder and family,investment management company. Other names include JK Rowling, Ed Sheeran and Anthony Joshua – in at thirty first, thirty second and eighty-eighth.

3.3% Q4 growth in the US economy surprised the market that was expecting more like 2.0%, with the main drivers being robust household and government spending. Over the year, the economy grew more than 0.6% to 2.5% but had improved markedly in H2 with Q3 growth of 4.9%. Noting the last two quarterly returns, the immediate outlook for the resilient US economy is promising and is a godsend for the eighty-one-year-old resident of the White House in election year – with consumer sentiment improving, the stock market is up, petrol prices are down, unemployment remains low and inflation easing to 3.4%, down from more than 9.0% in 2022.

In an unusual move, Kerri Badenoch has pushed the blame on the UK’s failure to hit post-Brexit trade targets, on a change of the US president. The Business Secretary claimed that although the UK has free trade agreements covering 60% of overseas trade, it missed its 80% target because she said Joe Biden’s administration had no appetite for trade deals.  She also indicated that “the Biden administration decided it was not doing trade deals – with anyone not just us.” She noted that the US had moved to specific smaller deals in areas like semiconductors and critical minerals. Liam Byrne, chair of the Business and Trade Select Committee, posted that the Institute of Directors business group had estimated that meeting that goal would require export growth of 3.5% per year – strangely, the Office for Budget Responsibility has estimated current growth at 0.1%. One of the two is going to be proved completely out of kilter – and no prizes for guessing which one!

In the UK, Which? has reported increasing number cases of “shrinkflation”, with the study also noting that 33% of people surveyed had also noticed skimpflation” on supermarket shelves. Examples of the former include mouthwash, tea, sausages, toothpaste and crisps, with one of the worst being Listerine Fresh Burst mouthwash, which shrank from 600ml to 500ml – but went up in price by US$ 0.66 in Tesco, equating to a staggering 46% increase in the unit price per 100ml. The latter relates to popular food items that have been downgraded with cheaper ingredients, including Tesco Finest sausages were reduced from 97% pork to 90%, Yeo Valley Spreadable Butter went from containing 54% butter to 50% butter and Morrisons Guacamole (150g) went from 80% avocado to 77%.

Following a deadly 2015 dam collapse, that claimed nineteen people, a Brazilian judge has ordered mining giants BHP, Vale and their Samarco iron ore 50:50 JV to pay US$ 9.67 billion  in damages. The collapse caused a giant mudslide that wiped out the village of Bento Rodrigues and also polluted the Rio Doce river, compromising the waterway to its outlet in the Atlantic Ocean (six hundred and fifty km away). The judge added that the money, which will be adjusted for inflation since 2015, will be put into a state fund and used for projects and initiatives in the area impacted by the dam collapse. A 2016 report released found that the collapse of the dam was due to design flaws. A small earthquake on the day of the dam burst may also have “accelerated” the failure. BHP and Vale also face a class action lawsuit in the UK with more than 700k claimants. In January 2019, another tailings dam owned by Vale collapsed in the same state near the town of Brumadinho, resulting in two hundred and seventy deaths. The message to the miners is Fool Me Once, Shame on You!