According to panellists at JLL’s “Navigating the growth spectrum: Exploring Strategies for sustained success”, Dubai’s real estate sector is expected to continue its upward trajectory in 2024, despite a softening global outlook, and on track to deliver approximately 34k units, compared to an estimated 42k last year – an indicator that the pace of increase is slowing.  (Meanwhile, Property Monitor expects 40k units to be handed over by the end of 2024, after 100k were launched last year, with most of that total not hitting the market until the end of 2025 at the earliest). The triple factors that continue to keep the market hot are robust economic fundamentals, government initiatives, and increased investor confidence; all this in an era of continuing inflationary pressures, with escalating land prices and construction costs. The JLL experts noted that “the positive sentiment and performance of various macroeconomic indicators reflect trust and resilience both in the UAE and GCC markets, even as Dubai continues its run as a dominant force in the region’s property sector.”

Looking at other assets in the property sector, the panel noted that “buoyed by its high desirability index, residential, hospitality, and office remain the top-performing segments in the UAE. Commercial real estate represents a competitive landscape with supply-demand gaps for high-quality spaces. Core asset classes continue to generate interest in the UAE’s capital market and the aggressive pricing strategy, pursued by asset managers, witnessing prime office and hospitality yields about to break the 7.0% threshold.” In the office market, robust demand for office space continued in a sellers’ market, rents continued maintained growth, due to the limited availability of quality space, and rising inquiries from occupiers. Despite a growing preference for quality over quantity, Grade A offices were limited in supply. As a result of the introduction of progressive government visa, changing work patterns and remote working opportunities, there was a surge in demand for flex offices.

With development in the emirate’s most prime areas – including the likes of Downtown, Maritime City, Jumeirah Village Circle, Meydan City, Arjan and Business Bay – having almost reached capacity, the law of supply and demand comes into the equation which means that the prices of plots of land are heading north. An increase in land values, allied with the rise in building costs, can only have one conclusion – villa/apartment prices have to move higher. S&P analysts said that the Dubai developers’ financial health is improving “due to record pre-sales and faster cash collections,” but have warned that oversupply risks “could precipitate a cyclical reversal.” This observer notes that any slowdown is still some way off because many of the projects post Covid will have a gestation period of thirty months optimum and the majority will only be ready for hand off late 2025-early 2026. Whether the cooling off takes place then will depend on several factors – the population growth, the increase in the number of short-term lets, the number of two-home families, people working in Dubai and currently living in other emirates deciding to move because of the daily ‘traffic carnage’ and the rise of overseas, (and indeed local), investors.

Dubai’s Department of Economy and Tourism posted that in January, the emirate’s hotel revenue reached US$ 560 million – 16.5% higher than a year earlier. In the month, the total number of hotel nights reached 3.84 million, up 10.5% on the year, and the average return per room was US$ 146.

Under the directives of HH Sheikh Mohammed bin Rashid, Nakheel and Meydan are set to become part of Dubai Holding, under the leadership of HH Sheikh Ahmed bin Saeed in an effort to sustain and advance growth through a unified and integrated vision that builds on gains, spurs efforts and boosts Dubai’s global competitiveness. The Board of Directors of both Nakheel and Meydan Company will be abolished. The Dubai Ruler noted that “today we directed the inclusion of Nakheel and Meydan companies under the umbrella of Dubai Holding, forming a global economic entity with a diverse portfolio in sectors such as technology, media, hospitality, real estate, retail, and more”. He added, “The goal is to create a more financially efficient entity, owning assets worth hundreds of billions, and comprising global expertise across various sectors with which we can compete regionally and globally, achieving our national objectives, and realising the Dubai Economic Agenda D33”.

Established twenty years ago, Dubai Holding’s portfolio includes Jumeirah Group, Dubai Properties, Tecom Group, Arab Media Group, Dubai International Capital, Dubai Group, EITC, Meraas, Wild Wadi Waterpark, The Emirates Academy of Hospitality Management and Dubai Park & Resorts. Investments and joint ventures under the Dubai Holding portfolio include Dubai Hills Estate, du, Rove Hotels, and Dubai Waste Management Centre. It has always targeted to create an innovation-driven knowledge-based economy. Today, it has assets valued at US$ 32.4 billion across twelve nations. Tecom Group alone owns and operates ten sector-focused business clusters, with Dubai Internet City and Dubai Media City being the flagships with the other eight being Dubai Outsource City, Dubai Studio City, Dubai Production City, Dubai Knowledge Park, Dubai International Academic City, Dubai Science Park, Dubai Industrial City and Dubai Design District (d3). Projects under Meraas Holding and Merex Investment – a joint venture with Brookfield Asset Management – are also partly under the Dubai Holding umbrella. These include City Walk, La Mer, and Bluewaters Island.

Sheikh Hamdan bin Mohammed, chairing the first meeting of the reconstituted Executive Council of Dubai since its reconstitution, approved a portfolio of PPP projects of the Dubai Government valued at US$ 10.90 billion. Encompassing a gamut of projects, as part of its PPP strategy, the new portfolio targets to further enhance cooperation and inspire new collaborations between the Dubai public and private sectors; its main ambitions are for Dubai to become a strong, vibrant hub for global economic development and a platform for emerging sectors. Over a three-year period, until 2026, the new PPP projects portfolio will cover ten fundamental economic sectors. The Department of Finance (DoF) has built a comprehensive performance framework programme to ensure accurate management of the PPP ecosystem performance,  revolving around five strategic objectives:

• ensuring compliance with the PPP Law, policies and guidelines throughout the partnership lifecycle
• encouraging government entities to adopt the PPP model
• encouraging private sector participation in public sector projects
• stimulating innovation in project financing, development and operation through private sector participation
• pushing towards the adoption of environment, social and governance

practices in the PPP ecosystem

Over the past year, the Central Bank of the UAE has overseen record levels of growth in assets, credit, deposits and investments, and maintained strong levels of capital efficiency, provisions and reserves, to ensure compliance with the highest standards of governance, transparency and risk management.  All the cumulative indicators, year on year, for banks operating in the country have headed north:

Total Assets                                     11.1%                                 US$  1.11 trillion
Gross Credit                                       6.0%                                 US$ 542.78 billion

Total of all Deposits                          13.5%                                 US$ 687.19 billion
Aggregate Capital/Reserves               5.2%                                  US$ 133.16 billion

Total Capital Adequacy Ratio             17.9%

Foreign Assets of the Central Bank    16.7%                                 US$ 185.61 billion

Liquid Assets                                         29.0%                                 US$ 202.18 billion

Tier1 Capital Adequacy Ratio               16.6%
CET 1 Capital Ratio                                14.9%

It expects that there will be further growth this year, with the upward momentum continuing, despite all the global geopolitical and economic challenges and changes.

Money Supply M1, which comprises Currency in Circulation outside Banks (Currency Issued – Cash at banks) plus Monetary Deposits, increased by 12.4% to US$ 225.97 billion. Money Supply M2 (M1 plus Quasi Monetary Deposits (Resident Time and Savings Deposits in Dirham, plus Resident Deposits in Foreign Currencies), grew by 18.8% reaching US$ 551.34 billion. Money Supply M3 (M2 plus government deposits at banks and at the Central Bank) rose by 16.0% at US$ 666.27 billion.

Following an independent 2019 investigation that found that NMC had not reported more than US$ 4.0 billion in debt, UAE-based hospital operator, NMC Healthcare, was placed into administration in April 2020. Almost four years later, it has signed an out-of-court settlement with Dubai Islamic Bank to resolve all ongoing and pending legal disputes between them and any associated third parties. Details of the agreement were not disclosed but it appears that DIB will receive a cash consideration and Holdco notes to settle certain claims, which will entitle the bank to become an economic owner of NMC Holdco, NMC Healthcare’s new holding company. NMC Holdco owns the restructured NMC operating companies through its wholly owned subsidiary, NMC Opco, which owns and runs eighty-five healthcare facilities in the UAE and the ME region. Legal claims were filed in the UK and Abu Dhabi against NMC founder BR Shetty, M Prasantanghat and the Bank of Baroda, in a US$ 4 billion case alleging fraud.

Borse Dubai, the holding company for the DFM and Nasdaq Dubai, and owned by the Investment Corporation of Dubai, is to sell about twenty-seven million shares, at US$ 59 a piece, in a secondary offering, with the holding company of the DFM selling almost a third of its stake in Nasdaq, the New York-based exchange operator for US$ 1.59 billion. Borse Dubai will receive all of the proceeds from the secondary offering, and the transaction remains subject to market conditions, and on conclusion, it is expected to hold about 62.4 million shares, equating to 10.8% of Nasdaq; it has also agreed to an eighteen-month lock-up of its remaining stake. Borse Dubai invested in Nasdaq in 2008, as part of a complex deal, where Nasdaq acquired the Dubai company’s shareholding in Sweden’s OMX.

On its opening day of trading on Thursday, shares of Parkin debuted on the DFM and saw its value soar by 30.0% from its opening of US$ 0.572, (AED2.10), to US$ 0.744, (AED2.73); thirty-six million shares changed hands; it closed the week on US$ 0.755, (AED 2.77). The company was established last year to oversee parking operations in the emirate. The Dubai Investment Fund had sold 749.7 million ordinary shares of Parkin, 24.99% of the total issued share capital, in the IPO which closed on 14 March, with the final offer price implying a market cap of US$ 1.72 billion; its IPO was oversubscribed by 165 times.

 The DFM opened the week on Monday 18 March 9 points (0.2%) higher the previous week, gained 18 points (0.4%) to close the trading week on 4,262 by Friday 22 March 2024. Emaar Properties, US$ 0.01 higher the previous week, gained US$ 0.04, closing on US$ 2.28 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.66, US$ 4.85, US$ 1.57, and US$ 0.36 and closed on US$ 0.67, US$ 4.81, US$ 1.60 and US$ 0.39. On 22 March, trading was at 275 million shares, with a value of US$ 418 million, compared to 424 million shares, with a value of US$ 201 million, on 15 March 2024.

By Friday, 22 March 2024, Brent, US$ 3.46 higher (4.2%) the previous fortnight, gained US$ 0.17 (0.2%) to close on US$ 85.56. Gold, US$ 217 (7.1%) higher the previous four weeks, gained US$ 82 (3.9%) to trade at US$ 2,083 on 22 March.

Hui Kaa Yan and Evergrande, the Chinese property giant he founded, have been accused of inflating revenues by a massive US$ 78 billion in the two years before the firm defaulted on its debt. The China Securities Regulatory Commission has fined the company’s mainland business, Hengda Real Estate, US$ 584 million, and its owner over US$ 6 million, and laid much of the blame on him for allegedly instructing staff to “falsely inflate” Hengda’s annual results in 2019 and 2020. Last September, Mr Hui, who was once the richest person in the country, was put under police surveillance, as he was investigated over suspected “illegal crimes”, and, in January, the company was ordered to liquidate by a Hong Kong court. With a debt totalling over US$ 300 billion, the liquidators will investigate Evergrande’s overall financial position and identify potential restructuring strategies. Normally this would involve, inter alia, selling off but it is highly likely that this will not happen, as the Chinese government may be reluctant to see work halt on property developments in the country, where many would-be homeowners are waiting for homes, they have already paid for. The other factor to bear in mind is that the property sector accounts for over 33% of the Chinese economy and, if that were to see a major slowdown, it would have a knock-on effect not only on the domestic, but also the global, economy. The building sector has had major liquidity problems, ever since 2021, when authorities introduced measures to curb the amount big real estate developers could borrow. Latest data indicate that property investment in China fell 9% in January and February from a year ago, whilst new construction starts also dropped by 30% – their worst fall in more than a year.

The US Department of Justice is suing Apple, accusing the tech giant of maintaining an illegal monopoly on smartphones, with the lawsuit citing five examples of Apple suppressing technologies that would have increased competition – so-called “super apps,” cloud stream game apps, messaging apps, smartwatches and digital wallets. Attorney General Merrick Garland described the company’s behaviour as “exclusionary, anticompetitive conduct that hurts both consumers and developers”, and that “they stifle innovation, they hurt producers and workers, and they increase costs for consumers”. Apple’s share of the US smartphone market is at a stifling 65%. It claims that Apple encourages banks to participate using their digital wallet but at the same time “exerts its monopoly power” to block them from developing similar products for iPhone users. The lawsuit also adds if an iPhone user messages a non-iPhone user through Apple Messages, the text is only a green bubble, it is not encrypted, videos are pixelated, and users cannot edit messages or see typing indicators. Apple is also in the headlights of the EC regulators who are expected to announce investigations in the coming days into whether it has breached Europe’s Digital Markets Act. Apple shares were down 3.5% in US morning trading.

Following the release of its latest B200 “Blackwell” AI chip, which is thirty times speedier at some tasks than its predecessor, it is almost certain that Nvidia the firm will increase its already 80% dominant market share. Furthermore, the firm, which is the third-most valuable company in the US, behind only Microsoft and Apple, has seen its share value surge 240% over the past twelve months when its market value touched US$ 2.0 trillion in February. Nvidia said major customers, including Amazon, Google, Microsoft and OpenAI, are expected to use the firm’s new flagship chip in cloud-computing services and for their own AI offerings. It has also outlined a new series of chips for creating humanoid robots, as it enters a period of intense competition, from the likes of AMD and Intel, but noted that “even if Nvidia loses some share, they can still grow their overall business because there’s just a lot of opportunities for everybody”.

In a class action brought on behalf of over 8k Australian taxi and hire car owners and drivers, Uber has agreed to settle a lawsuit, valued at US$ 178 million. The class action, filed in 2019, alleged they lost income when the ride-hailing giant “aggressively” moved into the country. The law firm, Maurice Blackburn, noted that “Uber fought tooth and nail at every point along the way,” and that “this case succeeded where so many others have failed”.   .   .   . “what our group members asked for was not another set of excuses – but an outcome – and today we have delivered it for them.” The court still needs to approve the proposed settlement as being in the best interests of group members. The San Francisco-based Uber, founded in 2009, operates in around seventy countries and more than 10k cities globally.

The German Football Association’s (DFB) has decided to switch the supplier of the national team’s kit to US firm, Nike as from 2027. Its previous kit supplier was the German company Adidas, who had been its supplier for the past seventy years. Although many politicians and the German footballing world appeared stunned with the news, the DFB said the deal made financial sense and would support grassroots German football. Reports indicate that the Nike offer of US$ 108 million a year was more than double that of its German counterpart. Adidas will now be looking over their shoulder and becoming concerned about their fifty-year link with FIFA going the same way.

Whilst sales at rivals, LVMH and Hermès, remain resilient as they both post higher than expected 2023 sales, Kering, the owners of Gucci, is expecting Q1 sales to be 20% lower because of a slowdown in Asia, especially in China which accounts for 33% of its total revenue. The overall sector has grown over the past decade, but recent sales have not been as impressive. Kering, whose other brands include Yves Saint Laurent, Balenciaga and Bottega Veneta,  has noted that its profit warning “reflects a steeper sales drop at Gucci, notably in the Asia-Pacific region”. With annual 2023 profits having fallen by 17%, it was no surprise to see its share value had also slumped – by 23%. Last year, Kering overhauled Gucci’s top management by appointing Jean-François Palus as its chief executive officer and Sabato De Sarno as its creative director; 2024 will see whether this will result in improved financials.

There are reports that Ted Baker is heading for administration, as it commented that “damage done” during a tie-up with another firm was “too much to overcome”. It seems that No Ordinary Designer Label (NODL), Ted Baker’s holding company in the UK and Europe, had “built up a significant level of arrears” during a tie-up with Dutch firm AARC. The partnership with AARC, which ran Ted Baker’s shops and online business in Europe, ended in January. Authentic Brands Group, the Ted Baker brand owner since 2022, confirmed it will continue to trade and customer orders will be fulfilled, and that it was in “advanced discussions” with several potential buyers.  Authentic, which owns brands including Reebok, Hunter and Juicy Couture, as well as licensing agreements in place for stores in cities in Asia and the ME, bought Ted Baker two years ago in a US$ 268 million deal. Although Ted Baker “will continue to trade online and in stores, “there are no indications about the future of its almost 1k staff numbers and its forty-six stores.

As part of an extensive three-year cost-saving plan, Marmite and Dove soap-owner Unilever is planning to cut global staff  numbers by 7.5k, (out of a total of 128k), and that it would split off its ice cream business which includes the Wall’s, Ben & Jerry’s and Magnum brands which will start immediately and should be completed by the end of next year. The redundancies will primarily involve office staff and is expected to save US$ 868 million over the next three years. The company chairman noted that “the separation of ice cream and the delivery of the productivity programme will help create a simpler, more focused, and higher performing Unilever,” and “it will also create a world-leading ice cream business, with strong growth prospects and an exciting future as a standalone business.” There appears to be two options available – either a demerger, which would mean current shareholders receiving shares in a newly listed entity, or a direct sale.

There are reports that London-listed Naked Wines has hired Interpath to advise it on options for its debt facility, after a share price slump, in the midst of tough trading conditions. Over the past twelve months, its shares have slumped by over 30%, giving it a market cap of of around US$ 63 million. Last month, it named Rodrigo Maza, its UK chief, as its new group CEO, reporting directly to the company’s founder and chairman, Rowan Gormley. The company, which, works with hundreds of independent winemakers and has nearly one million customers, is confident that it will be able to “to secure a similar-sized facility that has less limitation on utilisation and more flexible covenants”.

Thames parent company, Kemble Water, has seen accounting experts appointed by a group of its creditors to advise them how to recover US$ 242 million owed by the water company. The debt is held by the UK’s biggest water utility, with fifteen million customers, and falls due next month. Some reports indicate that a syndicate of financiers, which is owed the sum by Kemble Water, under which Thames’s regulated operations sit, has drafted in a big four accountancy firm amid growing concerns about the company’s survival; last December, the utility’s senior management told a MPs’ hearing that it was “not currently” able to repay the funding. In recent times, it has been beset by problems because of the “generous” dividends given to shareholders, poor record on leaks, sewage contamination and executive pay. It thinks that a 40% hike in consumer bills, and a delay in its capex plans, may help with payments.

Marks & Spencer is close to a deal with HSBC, whose UK arm owns M&S Bank, to overhaul its banking arm as a financial services and loyalty ‘superapp’. Their current contract expires shortly and there is hope that a new deal can be put in place before then. M&S Bank has more than three million customers, offering personal loans, travel insurance, store payment cards and a buy now pay later credit product. Under the existing agreement, M&S is entitled to a 50% share of the bank’s profits, subject to certain deductions. The retailer’s long-term target is to set up a ‘superapp’, encompassing payments, financial services and its Sparks loyalty programme. This announcement comes weeks after both Sainsbury’s and Tesco pulled out of the banking sector. The former’s advisers are still seeking a buyer, whilst Tesco is in line to sell its bank to Barclays in a deal worth an initial US$ 764 million.

The US central bank has left its key interest rate unchanged again, at the range of 5.25% – 5.50%, while it looks for more evidence that inflation is coming under control. Many other central banks – including the CBUAE, BoE, ECB and RBA – did likewise, but Turkey pushed rates up 5% to 50% whilst the like of Egypt and Nigeria saw their rates rising above 20%. Noting that it would expect to cut rates sometime this year, the Fed is proceeding cautiously and will wait until it is sure that the economy is growing, the labour market strong and inflation continues to head south. To date, despite high interest rates, the US economy has performed well – compared to many others – with its 2024 forecast 50% higher, at 2.1%, compared to the previous estimate last December at 1.4%. Furthermore, it is quickly heading to its inflation target rate of 2.0%, with officials expecting the rate to fall to 2.4% by year-end; last month, it nudged 0.1% higher to 3.2%.

For the first time since 2008, Japan’s central bank has raised the cost of borrowing, by increasing its key interest rate from -0.1% to a range of 0%-0.1%. It comes as wages have jumped after consumer prices rose. It also abandoned a policy, (started in 2016 when negative rates were first introduced), known as yield curve control, which saw it buying Japanese government bonds to control interest rates; this policy has for long been criticised because it kept long-term interest rates from rising. Earlier in the month, Japan’s biggest companies agreed to raise salaries by 5.28% – the biggest wage hike in more than three decades – which had resulted in wages flatlining since then, as consumer prices rose very slowly or even fell. This month, the country had avoided falling into a technical recession after its official economic growth figures were revised upwards to 0.4% in Q4.

Last Monday, Pakistan’s central bank held its key interest rate at 22.0% as inflation risks continued to loom; rate cuts are expected to commence in Q2. Inflation hit a record high of 38.0% last June, mainly attributable to new taxation measures imposed to comply with the IMF’s demands for a rescue programme. In January 2024, the central bank had raised the average inflation forecast for the fiscal year ending in June to 23%-25%, from a previous projection of 20%-22%, due to rising gas and electricity prices. The inflation rate last month rose 23.1%, on the year, its slowest since June 2022, partly due to the “base effect”. But the bank noted that it still remained high and subject to risks. The State Bank of Pakistan’s (SBP) monetary policy committee has taken a cautious approach and is looking at bringing “inflation down to the target range of 5–7% by September 2025.” Next month sees the expiry of a US$ 3.0 billion standby arrangement with the IMF.

The UK Office for National Statistics Government posted that February borrowing, at US$ 106.25 billion, was higher than expected, (but lower by US$ 4.30 billion than the same month in 2023), partly due to higher benefits payments such as cosy-of-living support, but also offset by growth in tax receipts exceeding growth in spending. Last month, public debt equated to 97.1% of the country’s GDP, which remains at levels last seen during the early 1960s. Despite a key government pledge that debt should fall as a percentage of GDP over the next five years, according to the Office for Budget Responsibility (OBR) – an independent body that looks at the government’s plans on tax and spending – that pledge is on track to be met, debt is forecast to keep rising until 2028-29.

UK February price rises eased 0.6%, on the month, to 3.4% – its lowest level since September 2021 –  and by more than the much anticipated 3.6%, raising expectations that the BoE may start cutting interest rates sooner than expected, probably by July at the latest The Office for National Statistics noted that easing food price inflation was largely behind the fall and although it has recovered well from its December 2022 high of 11.0%, led mainly by surging energy costs, it is still above the central bank’s 2.0% target In line with others, the BoE raised interest rates aggressively in late 2021 from near zero to counter price rises first stoked by supply chain issues during the coronavirus pandemic and then the Ukrainian crisis, which pushed up food and energy prices The BoE was extremely slow to tackle the problem of inflation and came late in the day to the party by being almost forced to raise rates which have eventually contributed to bringing down inflation worldwide.

The Tax Office is chasing more than US$ 22.31 billion (AUD34 billion) worth of debts owed by small businesses and self-employed Australians; these had been put on hold during Covid. Sometimes, using aggressive enforcement action to collect the money, the ATO is pushing some businesses over the edge, with the inevitable result of a marked rise in insolvencies, which could top levels last seen during the 2008-2009 era of GFC. The rate of company insolvencies in the past financial year is tracking 36% higher than last year and 25% higher than pre-Covid levels; over the past four months alone, they are now 49% higher than last year. These actions include the agency reporting tens of thousands of small businesses with debts to credit reporting agencies, issuing garnishee notices, which can result in the money being taken directly out of a business owner’s bank account, and the agency initiating wind-up applications. Many have been also hit by the double whammy of a slowing economy, including construction, hospitality and retail, and the fact that they still owe other creditors, apart from the ATO. Total collectable debt owed to the ATO jumped 98.5% to US$ 34.35 billion as of December 31, 2023, compared to the same period four years earlier in pre-Covid 2019. Small business account debt accounts for US$ 22.35 billion of total collectable debt. One thing is certain, Australia is the last place to think What If We All Stopped Paying Taxes?