Waiting for the Great Leap Forwards!                                  03 May 2024

Amali Properties unveiled its first master-planned community, Amali Island on The World Islands, housing twenty-four villas, priced at between US$ 13.6 million and US$ 34.0 million, with one villa valued at over US$ 68 million; each villa will have up to fifty mt of exclusive beachfront. Designed by architects Elastic, the villas at Amali offer two architectural approaches – Minima and Grande – with each villa featuring private berths, with direct access to villas, and luxurious amenities such as rooftop terraces, outdoor firepits, teppanyaki bars, jacuzzies and multiple pools. The Amali Island project – spanning a total area of 1.2 million sq ft and linking two of The World Islands, Uruguay and São Paolo – offers seven distinct architectural styles.  Residents will also have exclusive access to their own 10k sq ft clubhouse, which includes, inter alia, a world-class spa and gym facilities, a gourmet restaurant, swim-up bar, cigar lounge, horizon and saltwater pools, yoga decks. Amali Island will also have private berths, a floating helipad, as well as a floating padel court. Amali Properties was founded in 2023 by Dubai billionaire and Damac Properties chairman Hussain Sajwani’s son Ali and daughter Amira.

J1 Beach, formerly known as La Mer South, is due to reopen in September, with Merex Investment announcing that work is nearing completion. The updated location will introduce three beach clubs, chosen from up to twenty applications, and ten licensed restaurants and in total will be home to thirteen luxury cuisine establishments in a stunning beachfront setting. The three clubs will be Gigi Rigolatto, with Italian elegance, Sirene Beach by GAIA, with authentic Greek Mediterranean flavours, and Bâoli, East Asian techniques combined with French and Mediterranean flavours. The facility will also have swimming pools, sunbeds, and even a jetty guest service, with the developer’s vision being to make J1 beach a Reportage Properties’ project.

Reportage, a leading UAE real estate developer, reported YTD estimated sales at US$ 572 million, having sales of over US$ 1.0 billion in 2023. Two of the company’s special offers on selected projects are a 10% discount on all of their projects, with a 10% down payment, and 1% monthly instalments until units handing off, a 5% discount, with a 5% down payment, and 1% monthly instalments. It has a thirty-five-project portfolio not only in the UAE but also in Egypt, Turkiye, Morocco and Saudi Arabia. It recently completed the Oasis Residence 2 project in Masdar City, which includes about three hundred and four residential units, and last year started handing over units in two other Abu Dhabi projects. It also completed the first phase of the Rukan Lofts project, which is being developed in the Dubailand area, in cooperation with the Continental Investment Company, as well as launching the 1.8k-unit Reportage Village, and the 653-townhouse Bianca project, in Dubai.

Abu Dhabi’s Aldar Properties has unveiled its second residential project in Dubai. In partnership with Dubai Holding, its Athlon Project will feature 1.5k units comprising three to six-bedroom villas and townhouses starting at US$ 762k. Athlon will have green spaces, parks and zones for sports and fitness as well as having ten km of tracks and trails, with its cycling loop directly connected to Al Qudra cycling track. Sales at the Athlon project will begin next Tuesday, 07 May. Their first project was Haven by Aldar, launched last October, and located near the Global Village entertainment centre, focusses on wellness.

Swank Development, a real estate developer from Portugal, has recently opened an office in Dubai, and plans to launch its first project in Meydan, Mohammad bin Rashid City. Swank’s first project in Meydan will be a gated villa community, offering a range of four to six-bedroom villas and mansions.

According to a recent survey by Bayut, apartments in Dubai Investments Park, Discovery Gardens and Liwan offer the best Q1 rental returns of up to 11.0% to property buyers in the affordable category. Dubai Sports City, Dubai Silicon Oasis, and Motor City have seen returns on investment of 10.0%, based on projected rental yields for apartments, with Green Community, Al Sufouh and Damac Hills giving rental returns of over 8.0%. When it comes to villas, International City gives average RoI of over 7.0%, followed by Damac Hills 2 and The Valley, with returns of 6.0% plus. Mid-tier villas in Jumeirah Village Triangle, JVC and Mudon have projected RoIs ranging between 6.0% – 8.0%. In the luxury villa segment, Sustainable City has ROIs of over 7.0%, whilst Al Barari and Tilal Al Ghaf present robust RoIs exceeding 6.0%. Its CEO, Haider Ali Khan reckons that, despite continuing global uncertainties, Dubai’s realty sector stands up well and that “the emergence of new master communities and innovative approaches to off-plan developments underscore Dubai’s resilience and appeal as a real estate hub”.

As per Bayut’s data analysis, affordably priced apartment rentals increased from 1.0% to 17.0%, while mid-tier segment apartments rose by up to 12.0%. Conversely, luxury apartment rentals have witnessed decreases of up to 4.0%.

Reasonably-priced villas have generally become cheaper by up to 3.0% with rental houses in Mirdif recording upticks of 1.0% to 7.0%. Mid-tier villa rentals have recorded increases in the range of 2.0%to 17.0% with properties in Jumeirah Village Circle and Town Square posting price decreases of under 2.0%. Luxury villa rentals have surged by 13.0%, although four-bedroom homes in Al Barsha and Damac Hills have become relatively more affordable by 12.0% to 14.0%.

In the affordable sector, Deira and Al Nahda are the more popular choices for apartments, while, for villas, Damac Hills 2 and Mirdif stand out. In the mid-tier segment, Jumeirah Village Circle and Bur Dubai apartments continue to be highly sought, as do properties in JVC and Arabian Ranches 3 for villas. In the luxury category, Dubai Marina and Business Bay top the list for apartment rentals, along with Dubai Hills Estate and Al Barsha for high-end villa rentals.

The UAE’s property market continues to record strong growth on the back of government initiatives and the expansion of its economy. According to consultancy ValuStrat, in Q1, there was “significant” growth in Dubai’s real estate sector, with villa and apartment prices registering annual increases of 29.6% and 20.1%. Valustrat considers that Dubai’s real estate cycle is expected to head towards a “new phase”, with a projected resurgence in the apartment market and tempered growth for villas.

According to the consultancy, in Q1, the Dubai real estate market posted significant growth across its residential and commercial sectors. The capital values in the residential segment were 6.4% higher on the quarter and 24.7% on the year to 167.5, compared to the base of 100 points in Q1 2021. This growth was driven by a 5.7% quarterly and 20.1% annual increase in apartment valuations. Top annual performers were Discovery Gardens (32.6%), The Greens (29.8%), Palm Jumeirah (29.0%), The Views (24.8%), Town Square (24.5%), Al Quoz Fourth (24.1%), and Dubai Production City (23.9%). Villas witnessed an annual increase of 29.6%, reaching a decade high in prime villa values.  In Q1 2024, villa valuations grew 7.7%, on the quarter, with the highest annual performers beng Jumeirah Islands (32.2%), Palm Jumeirah (31.9%), Dubai Hills Estate (30.6%), and Mudon (27.2%).

Prices of prime properties in Dubai grew 26.7% on the year and 7.3% on the quarter, to a record 173 points, compared to 100 base points as of Q1 2021. Highly desired prime villas reached a new 10-year high of 211.8 points with annual capital gains of 33.1% and 8.5% on the quarter. Capital gains in the luxury apartments sector were 21.6% annually and 6.2% higher, when compared to the previous quarter, attaining a record 149.4 index points.

Residential asking rents jumped 11.7% on the year, and 3.0% on the quarter since the previous quarter. Apartment and villa rentals rose 4.4% and 1.3% on the quarter and 16.4% and 6.1% on the year to US$ 23.4k and US$ 110.0k. Residential occupancy in Dubai was estimated at 87.7%. There are 46.6k new builds entering the market this year, with estimated completions of 5.8k apartments and 1.0k villas in Q1. Interestingly, it is estimated that 86.0k apartments and 21.2k villas are currently under construction with promised handovers by 2028. For off-plan homes, the average price was 5.3% higher at US$ 736k, with the citywide average transacted price for off-plan properties at US$ 5,444 per sq mt (US$ 506 per sq ft).

Moreover, there was a significant uptick in the office sector, with valuations soaring by 29.9% annually and 4.3% quarterly – the twelfth consecutive quarter of growth. The pertinent ValuStrat Price Index reached a record 194.2 points, compared to the 100-point base set in Q1 2021. The weighted average price for office space was US$ 435 per sq mt (US$ 403 per sq ft). Continued double digit annual growth was seen in DIFC (38.7%), Jumeirah Lake Towers (36.1%), Business Bay (33.3%), and Barsha Heights (24.2%).

This week saw the ground-breaking ceremony of the Immersive Tower by DIFC, located within the heart of the financial district. The US$ 300 million, thirty-seven storey mixed use tower, conceptualised by AEDAS and developed by DAR Group, encompasses 58.6k sq mt of office space and approximately 10.6k sq mt of retail space while over 680 sq mt has been earmarked for amenities; it has a total built up area of 115k sq mt. Scheduled for completion in Q2 2027, the new commercial property is designed to suit the needs of the workplace of the future. In addition to office units – ranging in size from 60 sq mt to 158 sq mt – tenants will also have access to a Members’ Club, located across the 26th, 27th and 28th floor. Last year, commercial space in DIFC witnessed high demand and closed the year with 92% occupancy. The first residential project by DIFC to open for sale in 2023, DIFC Living, fully sold out within forty-eight hours – a sure indicator of the robust demand for residential property in the heart of DIFC.

Although no agreements are in place, China’s H World International is planning to introduce its Ji Hotel brand into the Dubai market. It is a subsidiary of H World Group – one of the country’s biggest multi-brand hotel chain management groups – and its portfolio includes European brands such as Steigenberger, IntercityHotel, Maxx and Jaz in the City. The company is “aggressively” looking to re-establish a Steigenberger’s presence in Dubai, having been deflagged from its location in Business Bay in 2021, and could have at least ten properties in the emirate over the next decade. H World Group operates 9.4k hotels in eighteen countries and has a market cap of US$ 12.0 billion.

Established in 2010 as a midscale brand, there are about 2k Ji Hotels in China and its first international foray was the Ji Hotel Orchard Singapore – opened in 2019. Ji Hotel uses a plug-and-play model – or modular – where the rooms’ interiors are part-assembled in China and then installed at the property within one hour. There are five modules designed to fit each room – bedside/headboard, toilet/shower, sink/mirror, TV/entertainment and desk area. This allows HWI to change and upgrade the interior every few years, and it is currently on its fifth design cycle. It would be looking at JVs for its Dubai plans, unlike its franchising strategy seen in China. HWI currently has one property in the city, the IntercityHotel at Dubai Jaddaf Waterfront, which opened in 2021.

An agreement between Dubai South and AGMC, one of the leading importers of luxury vehicles in the country, will see a new US$ 136 million showroom and service centre at Dubai South being built to serve customers of its automotive brands. Spanning 33k sq mt and located at The Business Avenue, a flagship location near the VIP Terminal and Al Maktoum International Airport, the new state-of-the-art facility, will feature BMW, Mini, Rolls Royce, and other brand vehicles and a fully-fledged service centre to provide customers with after-sales and maintenance services. Dubai South,the largest single-urban master development focusing on aviation, logistics and real estate, is also located close to Jebel Ali Free Zone and Expo.

With Emirates expecting delivery of sixty-five A350s on order from Q3 and a mix of two hundred and five 777-9s and 777-8s next year it is ratcheting up recruitment amid a change in its pilot recruitment strategies, which include higher salaries, new roles and a radical change to eligibility. This year, HR will host roadshows in more than twenty-six cities in over eighteen countries, focussing on three categories.

First Officers who are non-typed rated. Such pilots have normally only experience on turbo props and smaller jets. They will be fully trained to be able to fly all the carrier’s wide body fleet of one hundred and forty-four Boeing planes and will be in a position to fly two hundred and five of the new Boeing 777-Xs when these aircraft enter the fleet from 2025.

Accelerated Command Pilots. ACP was only available for its fleet of Airbus 380s but now has been extended to its fleet of Boeing 777s. It presents an opportunity for motivated captains, flying narrow-body aircraft, to graduate to wide-body on Emirates’ fast track promotion programme.

Direct Entry Captains. It is recruiting senior experienced pilots, already flying on wide-bodied aircraft, to command its A350 fleet of sixty-five aircraft, as well as its fleet of 380s. It has also increased the base salary for the new recruits on both the A350s and A380s.

The Dubai carrier currently has 4.4k pilots, having recruited four hundred and twenty last year. It is now offering enhanced salary packages for First Officers with experience of over 4k flying hours on modern Airbus fly-by-wire or Boeing aircraft.

Last week, DP World signed a significant partnership agreement in Malaysia, (its first in that country), and opened two new facilities in the Philippines. In moves that will bolster Dubai’s trade and logistics connectivity in SE Asia, the Malaysian deal was with Sabah Ports – a wholly owned subsidiary of Malaysia’s publicly-listed Suria Capital Holding Bhd – to establish a partnership to manage Sapangar Bay Container Port in Sabah. This will see a doubling in the port’s capacity and aims to enhance the state into a pivotal trade hub within East ASEAN Growth Area. In the Philippines, DP World has upgraded the Batangas Passenger Terminal, located 110 km from Manila, which has doubled in capacity to eight million passengers a year and has become country’s largest inter-island hub, enhancing connectivity between mainland Luzon and the surrounding island provinces. The newly opened Tanza Barge Terminal, handling up to 240k TEUs a year, will save approximately 150k truck trips annually, as well as providing a direct sea link to Manila. In 2021, DP World established Singapore as its Asia Pacific headquarters and currently, it operates ports and terminals in Australia, China, Indonesia, Malaysia, the Philippines, South Korea, Thailand and Vietnam.

According to a Boston Consulting Group report, Dubai has been placed as the third most popular destination for professionals to relocate to, behind London and Amsterdam but ahead of Abu Dhabi and New York. The other top ten locations were taken by Berlin, Singapore, Barcelona, Tokyo and Sydney. The Dream Destinations and Mobility Trends report analysed the work preferences of 150k people in one hundred and eighty-eight countries between October and December 2023. It also noted that Australia, US and Canada were the three most sought-after countries for professionals to move to for work.

Another study by Robert Half noted that the country’s jobs market has recovered well from the pandemic, mainly due to proactive government measures to attract skilled workers and incentivise companies to set up or expand their operations. It also suggested that the UAE is shifting to an employers’ market, with an increasing number moving in because of economic problems in their own countries. It notes that many candidates are willing to accept lower remuneration to gain a foothold in the labour market, with the influx of talent leading to greater competition.

The country’s non-oil private sector continued to expand in April, albeit at a slower pace mainly due to disruptions from the mega storm last month which saw the heaviest rainfall ever seen since records began in 1949; the S&P Global PMI dipped 1.3 to 55.3 – its weakest level since last August – but still well above the 50.0 threshold between expansion and contraction. New orders last month increased at their slowest pace since February 2023, and notwithstanding the adverse weather, overall growth is still in positive territory because of help from the buoyant domestic economic conditions. Again because of the weather, which caused major disruption as roads and buildings flooded, transport services stalled and several businesses were forced to close, there was a sharp slowdown in new business gains – but unsurprisingly a sharp rise in backlogs of work. Intense competition for new work resulted in falling average prices charged for the sixth consecutive month in April.

Meanwhile, April’s S&P Global Dubai PMI was 2.9 lower at 55.1 – the lowest in eight months – driven by a sharp slowdown in new business growth. Backlogs of work increased considerably in April, which was linked to temporary business disruptions and elevated pressure on operating capacity. Respondents noted robust domestic economic conditions and the impact of long-term business expansion plans, alongside competitive pricing strategies, have helped with the strong domestic economic growth. April saw higher staffing numbers, attributable to new projects and strong demand condition. There was an accelerated rise in purchasing activity and although there was robust inputs demand, with stocks of purchases rising at the slowest pace since March 2022, there were marked rises in staff costs and purchasing prices, (because of an increase in raw material costs), margins were further cut because average prices were reduced, with price discounting being attributed to competitive market conditions and efforts to boost sales. Business confidence remains upbeat, despite the weakening Index over the previous three months.

A week after signing a similar agreement with Columbia, the UAE and Ukraine have signed a Comprehensive Economic Partnership Agreement which aims to enhance bilateral trade flows by cutting tariffs, removing barriers and improving market access for both merchandise and service exports. The agreement follows an impressive increase in bilateral non-oil trade, which climbed 43% to reach an all-time high of US$ 53 million in 2023 – more than double the total achieved in 2021. Like other CEPAs, (that have already been signed with Cambodia, Congo-Brazzaville, Costa Rica, Georgia, India, Indonesia, Israel, Kenya, Mauritius, South Korea and Turkey), it will also open pathways for investment and joint ventures in sectors such as energy, environment, hospitality, tourism, infrastructure, agriculture and food production. It will also support the rebuilding of key industries and infrastructure in Ukraine, while also helping to strengthen supply chains to the MENA region for major exports such as grains, machinery and metals. Such agreements have helped boost the country’s non-oil foreign trade, which, last year reached a record US$ 708.4 billion, (AED 2.6 trillion) and (AED 3.5 trillion including trade in services) in 2023. Last year, the UAE and Ukraine shared US$ 386 million in non-oil trade, with joint FDI stock standing at US$ 360 million by the end of 2022.

In the latest Leading Maritime Cities report, compiled by Singapore’s DNV and Menon Economics, Dubai retained its leading position in the Arab world, whilst moving two places, on the global scale, to eleventh as an international maritime hub. The five key factors behind Dubai’s rise include shipping centres, maritime technology, ports/logistics, attractiveness/competitiveness, as well as financial/legal aspects. The report also highlighted Dubai’s accent on green technology in the maritime sector. Singapore has retained its position as the leading maritime city in the world for 2024.

Eight years ago, the federal government liberalised fuel prices so that they could be aligned with market rates until the onset of the pandemic which saw prices frozen by the Fuel Price Committee. In March 2021, prices were amended to reflect the movement of the market once again. With prices having risen every month in the quarter to 30 April, the trend continues into May 2024, (except for diesel). The breakdown in fuel price per litre for May is as follows:

• Super 98: US$ 0.858, to US$ 0.910 in May (up by 6.0%)                    YTD from US$ 0.768 – 18.5%

• Special 95: US$ 0.826, to US$ 0.877 in May (up by 6.3%)                  YTD from US$ 0.738 – 18.8%

• Diesel: US$ 0.837, from US$ 0.842 in May (down by 0.6%)               YTD from US$ 0.817 – 3.1%

• E-plus 91: US$ 0.807, to US$ 0.858 in May (up by 6.3%)                   YTD from US$ 0.719 – 19.3%%

The Central Bank of the UAE posted a February 11.0%, on the year, increase in cash deposits (equivalent to US$ 19 billion), to US$ 198 billion, with monthly cash deposits and quasi-monthly increases up 1.92% to US$ 194 billion and 27.4% to US$ 269.0 billion respectively. (Quasi-cash deposits are term deposits and savings deposits in dirhams for residents in addition to deposits by residents in foreign currency). Government deposits jumped 11.1% on the year to US$ 105.5 billion, as money supply rose 12.8% to US$ 33.7 billion.

Following the US Federal Reserve’s decision to maintain its Interest Rate on Reserve Balance unchanged, the Central Bank of the UAE has followed suit and has decided to maintain the Base Rate applicable to the Overnight Deposit Facility at 5.40%. The CBUAE has also decided to maintain the interest rate applicable to borrowing short-term liquidity from the CBUAE at 50 bp above the Base Rate for all standing credit facilities.

Dubai Aerospace Enterprise Ltd announced a 9% increase in its total Q1 revenue, on the year, to US$ 344 million, resulting in a 5.2% drop in profits before tax of US$ 70 million. Firoz Tarapore, DAEs CEO, stated, “strong demand for aircraft leasing and maintenance services drove total revenue growth”, and that “our order book positions until 2026 are committed on long-term leases to top rated airline customers”. Cash Flow from Operations increased by 14% and Available Liquidity climbed to US$ 5.0 billion.

e& posted its consolidated financial results for Q1 2024, with consolidated revenue 9.0% higher at US$ 3.87 billion, and consolidated net profit increasing 7.0% to US$ 626 million, on the year The group’s consolidated EBITDA rose on the year by 3.0% to US$ 1.74 billion, resulting in an EBITDA margin of 45.0%.The number of e& UAE subscribers reached 14.5 million in Q1 2024, while consolidated group subscribers were up 5.0%, topping 173 million,

Emirates Integrated Telecommunications Company posted an impressive a 62.7% surge in Q1 net profit to US$ 164 million, as revenue nudged 4.1% higher to US$ 975 million. EBITDA at US$ 433 million, was up 4.1% on the year, with a 44.3% margin – 4.6 points higher. Capex was at US$ 98 million, while operating free cash flow (EBITDA – Capex) for the year was up 28.2% to US$ 327 million. The company’s mobile customer base grew, at an annual 5.7%, to 8.7 million subscribers, with net additions of 108k, (1.7 million post-paid customers with net additions of 47k subscribers and seven million prepaid customers with net additions of 61k). Meanwhile the fixed customer base rose by a 11.1%, year-over-year, to 616k subscribers, with net additions of 12k subscribers over the quarter. Mobile service revenues grew 7.4%, to US$ 437 million, primarily driven by higher post-paid revenues. Fixed services revenues topped US$ 262 million, an annual 2.7% annual growth mainly driven by Home Wireless and enterprise broadband plans. Other revenues were broadly stable at US$ 277 million, as higher interconnect and inbound roaming revenues offset the reduction in hubbing revenues.

TECOM Group posted a 15% year-on-year increase in Q1 net profit to US$ 80 million, as revenue rose 10.0% to US$ 154 million, attributable to occupancy rates across the commercial and industrial leasing portfolio reaching an all-time high of 91%. Q1 EBITDA increased 10% YoY to US$ 120 million, while EBITDA margins remained at 78%. Funds From Operations stood at US$ 113 million, representing a 15% annual increase on improved collections and increased performance of income-generating assets.

This week, Spinneys announced that it would raise the number of shares allocated to the UAE Retail Offering of its IPO, due to high investor demand, from 5% to 7%, (forty-five million shares to sixty-three million); the total size of the offering remains unchanged at nine hundred million shares, representing 25% of the company’s total issued share capital. The IPO subscription period closed on Monday 29 April for the UAE Retail Investors, and a day later for Professional Investors. Trading on the DFM is expected to commence next Thursday, 09 May. Spinneys confirmed that the final offer price for its shares has been set at US$ 0.417, (AED Dh1.53) per share, at the top end of the previously announced offer price range of the IPO. This means that offer proceeds came in at US$ 375 million, (AED 1.38 billion), and values Spinneys at (AED 5.51 billion) and implies a market capitalisation at listing of US$ 1.50 billion, (AED 5.51 billion). The IPO was oversubscribed by sixty-four times in aggregate.

Dubai Financial Market has posted its Q1 consolidated financial results showing a 64.4% surge in revenue to US$ 40 million and a 170.8% increase in net profit before tax to US$ 26 million. Total revenue included US$ 17 million in operating income and US$ 23 million in investment returns and other income, whilst total expenses excluding tax reduced by 4.2% reached to US$ 14 million. Q1 trading was 31.6% higher at US$ 6.81 billion, whist the General Index was up 4.59%, whilst the market capitalisation increased 6.0% to US$ 198.91 billion from its level at the end of 2023. Sector wise, foreign investors accounted for 47% of trading value in Q1, with net purchases of US$ 354 million, and having 20% of the market cap by 31 March. In Q1, DFM attracted 44.3k new investors, of which 85% were foreign investors.

The DFM opened the week on Monday 29 April, 114 points (2.7%) lower the previous four weeks and shed 5 points (0.1%) to close the trading week on 4,143 by Friday 03 May 2024. Emaar Properties, US$ 0.10 lower the previous fortnight, shed US$ 0.09, closing on US$ 2.13 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 4.56, US$ 1.50, and US$ 0.37 and closed on US$ 0.65, US$ 4.55, US$ 1.54 and US$ 0.37. On 03 May, trading was at 90 million shares, with a value of US$ 61 million, compared to 112 million shares, with a value of US$ 59 million, on 26 April 2024.

The bourse had opened the year on 4,063 and, having closed on 30 April at 4,156 was 93 points (2.4%) higher. Emaar started the year with a 01 January 2024 opening figure of US$ 2.16, to close the quarter at US$ 2.13. Four other bellwether stocks, DEWA, Emirates NBD, DIB and DFM started the year on US$ 0.67, US$ 4.70, US$ 1.56 and US$ 0.38 and closed YTD at US$ 0.64, US$ 4.60, US$ 1.51 and US$ 0.38.  On 31 March, trading was at 153 million shares, with a value of US$  million, compared to 138 million shares, with a value of US$ 58 million, on 31 December 2023.

By Friday, 03 May 2024, Brent, US$ 1.73 higher (2.0%) the previous week, lost US$ 6.72 (7.5%) to close on US$ 82.78. Gold, US$ 64 (2.7%) lower the previous week, shed US$ 47 (2.0%) to end the week’s trading at US$ 2,303 on 03 May 2024.

Brent started the year on US$ 77.23 and gained US$ 9.77(12.7%), to close 29 March 2024 on US$ 86.33. Meanwhile, the yellow metal opened 2024 trading at US$ 2,074 and gained US$ 229 (11.0%) to close YTD on US$ 2,303.  

In March, global air cargo markets continued their recent double-digit growth, with a 10.3% increase, (in cargo tonne-kilometres, on the year), in demand – and 11.4% for international operations. Capacity, measured in available cargo tonne-kilometres also rose, increased by 7.3% (10.5% for international operations). The Q1 statistics were even better than the exceptionally strong Q1 2021 performance during the COVID crisis. Key operational environment factors included:

• global cross-border trade and industrial production increased by 1.2% and 1.6% in February
• the manufacturing output PMI climbed to 51.9 in March, indicating expansion. However, the new export orders PMI remained slightly below the 50 threshold indicating growth expectations, rising to 49.5
• inflation rates varied in March, with rates falling in the EU (2.6%) and Japan (2.7%), rising in the US (3.5%), and China experiencing slight deflation (-0.01%)

Regional performance in March:

• Airlines in Asia-Pacific, North America, Europe, ME and Latin America experienced 14.3% year-on-year demand growth for air cargo, with notable increases on the Asia-Europe route (17.0%) and within Asia (11.8%). Capacity increased by 14.3% year-on-year
• North American carriers saw modest 0.9% year-on-year demand growth, with decreases in March capacity (-1.9%)
• European carriers witnessed 10.0% year-on-year demand growth, with intra-European air cargo and Europe–ME routes as notable performers. March capacity increased by 8.0% year-on-year
• ME carriers reported the strongest growth at 19.9% year-on-year, with significant expansion in the Middle East–Europe market. March capacity increased by 10.6 percent year-on-year
• Latin American carriers experienced 9.2% year-on-year demand growth, while African airlines saw 14.2% annual growth, despite a contraction in the Africa–Asia market compared to February

Having cancelled all flights last Tuesday, Bonza, Australia’s newest budget airline went into voluntary administration, leaving thousands of passengers stranded around the country. The company has appointed Hall Chadwick as voluntary administrators for its operating and holding company. In 2021, the carrier became the first new launch, since 2007, and started flights last year, in air space dominated by Qantas and Virgin Australia, which account for 95% of the country’s domestic aviation market. It is reported that on Tuesday, its fleet of eight Boeing 737 Max fleet was repossessed by creditors. As soon as it started flying, it was beset by problems such as aircraft shortages, inability to find to find slots in the lucrative Sydney market and low patronage, with the latter seeing prices on several routes being slashed.

With a UK judge announcing that he had done “all that he reasonably could do” to fulfil his financial obligations, Boris Becker’s bankruptcy has officially ended. The former Wimbledon champion was declared bankrupt in June 2017, owing creditors almost US$ 62 million and the court was told that

he still owed about US$ 53 million – but lawyers said the 56-year-old had reached a settlement agreement with the trustees appointed to oversee his finances. The German tennis player was jailed in 2022 for hiding US$ 3 million in assets to avoid paying any liabilities but his lawyers noted that he will provide a “substantial sum” into the bankruptcy estate. Although bankruptcy orders end after a year in England and Wales, a judge suspended the automatic discharge of the order in 2018 because Becker was “failing to comply with his obligations”; this has now been lifted.

April UK house prices fell by 0.4% on the month, and 4.0% from its summer 2022 peak, to US$ 328k, as potential buyers continued to face pressure on affordability; on an annual basis, the pace of house price growth slowed from 1.6% in March to 0.6% in April. Nationwide noted that the rising cost of borrowing was the main driver behind this latest fall. The figures are based on the building society’s own mortgage lending, which does not include buyers who purchase homes with cash or buy-to-let deals. Surprisingly, cash buyers account for about a third of UK housing sales. This comes after several major financial institutions upped new fixed-rate mortgage deals because the dial has turned, with many now expecting rate rises rather than rate falls. Yesterday, Halifax became the latest by raising most of its mortgages by 0.2%. It is estimated that 1.6 million mortgage holders will see their relatively cheap fixed-rate deals expiring to be replaced by a more expensive repayment plan.

Still reeling from an seemingly arrogant, ignorant and inept senior management set-up  over recent times, the Post Office has turned to Nigel Railton  to become its interim chairman for twelve months. The former boss of Camelot was appointed by Business Secretary Kemi Badenoch after former incumbent Henry Staunton was sacked in January. He takes on the role as hundreds of sub-postmasters are still waiting for compensation over the Horizon scandal. The new Post Office chairman also chairs Argentex Group, a London-listed provider of currency management services, and is a trustee of the Social Mobility Foundation.

In a new strategy reducing the number of its restaurants, by two hundred and thirty-eight, in favour of building more hotel rooms, Premier Inn owner Whitbread is to cut 1.5k jobs, equating to 4.1% of its 37k workforce. It plans to sell one hundred and twenty-six of its less profitable restaurants, with twenty-one sales already having been agreed, and close one hundred and twelve restaurants and convert the space into new hotel rooms. It said the branded restaurants it plans to turn into hotel rooms made a loss of US$ 24 million in the year, while the restaurants it is selling made a loss of US$ 11 million. Whitbread said the changes would add more than 3.5k hotel rooms across its estate, and that the new hotel rooms would be served by unbranded restaurants. The cuts will leave it with one hundred and ninety-six branded restaurants, and three hundred and eighty-seven restaurants that are unbranded and part of the hotel. The food chains will be affected across the board, and closures will depend on where the restaurant is sited, rather than its brand. The moves are part of a three-year US$ 188 million cost-cutting programme. The cuts come after Whitbread’s pre-tax profit rose 21% to US$ 566 million for the year to 29 February.

Latest figures show Aldi’s market share has fallen – by 0.4% to 10.4% – as people seemingly head back to traditional supermarkets for their shopping. The NIQ survey was taken in the twelve weeks, ending 20 April, and indicated that sales rose just 1.3% in the period. Over the same period, Lidl, (which saw its market share climb to 8.2%), Sainsbury’s, Tesco and Morrisons saw growth figures of 9.5%, 6.6%, 5.8% and 4.4%.

Sergey Brin, one of the company’s co-founders, owns more than seven hundred and thirty million Class B and C shares, entitling him to a pay-out of US$ 146 million; the owner of Google confirmed that it intends to pay quarterly cash dividends in the future, but it will depend on “review and approval by the company’s board of directors”. Revenue was 15.0% higher at US$ 80.5 billion, whilst its Q1 net profit surged 57.2% to US$ 23.7 billion, attributable to enhanced business in Search, YouTube and advertising divisions. Operating income soared 46.2%, on the year, to about US$ 25.5 billion. Earnings per share jumped 61.5% to US$ 1.89, whilst its cash and marketable securities stood at more than US$ 108 billion as at 31 March. On the news, its share value soared 14.1% to US$ 180.20 in after-hours market trading.

The US and EMEA markets accounted for 77.5% of Q1 revenue, with figures of US$ 38.7 billion and US$ 29.5 billion. Services business, including advertisements, Android, Chrome, hardware, Maps and Google Play, accounted for nearly 87.4%, (US$ 70.4 billion), of the company’s total sales – 13.6% higher compared to Q1 2023; advertising revenue from Search, YouTube and other businesses increased 15.2% to more US$ 54.2 billion over the same period. Cloud business, including the company’s infrastructure and data analytics platforms, collaboration tools and other services for enterprise customers, rose 28.4% to nearly US$ 9.6 billion.

Following UK government action, in January, to stop the sale of The Daily and Sunday Telegraph newspapers to an Abu Dhabi backed RedBird IMI bid, the papers are up for sale again. Since then, legislation has been put forward to ban foreign states from owning UK newspapers and news magazines, with RedBird confirming it would halt the takeover and put the media firm up for sale. It noted that its plans were “no longer feasible” and would now look to secure the “best value” for the titles, which include the Spectator magazine, and stating that “we have held constructive conversations with the government about ensuring a smooth and orderly sale for both titles.” UK Culture Secretary Lucy Frazer said she had “raised concerns about the potential impact of this deal on free expression and accurate presentation of news” but added that she would “allow the parties to conduct an orderly transition”. The sale came about because the papers were seized by Lloyds Banking Group from long-time owners, the Barclay family, which had failed to pay back a loan of more than US$ 1.25 billion. The bank started an auction process but at the last minute the Barclay family paid off their debt with money lent by Sheikh Mansour bin Zayed al-Nahyan, and in return, the Barclay family agreed to transfer ownership to the Gulf-backed consortium.

After five years at the helm of Europe’s biggest bank, HSBC, its group chief executive Noel Quinn has surprisingly announced his retirement after working there for thirty-seven years; he will remain at the bank until a replacement is found. Last month, it announced a 1.8% drop in Q1 pre-tax profits to US$ 12.7 billion, and an interim pay-out of US$ 0.10 per share, as well as a planned US$ 3.0 billion buyback of its shares. In a bid to focus more on faster-growing markets in Asia, it has recently sold the off its operations in Canada and announced plans to do the same with its business in Argentina.

Changpeng Zhao resigned from Binance last November and pleaded guilty to violating US money laundering laws, with the firm he founded ordered to pay US$ 4.3 billion, after a US investigation found it helped users bypass sanctions. Although Judge Richard Jones said Zhao put “Binance’s growth and profits over compliance with US laws and regulations,” and prosecutors had sought a three-year sentence for the former Binance boss, he was only sentenced to four months’ detention. Furthermore, US officials said in November that Binance and Zhao’s “wilful violations” of its laws had threatened the US financial system and national security, and that “its wilful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform.” Nigerian authorities are currently investigating the company, registered in the Cayman Islands.

It is reported that Philips has reached a US$ 1.1 billion  deal to settle lawsuits in the US relating to potentially faulty breathing devices, manufactured by its US subsidiary Philips Respironics.  Three years ago, it was found that foam fitted in breathing machines, used to treat sleep apnoea and other disorders, could degrade, releasing potentially toxic particles into masks worn by patients. More than five million machines were ultimately recalled worldwide, and, in January, the US Food and Drug Administration said it had received 116k reports of problems, while five hundred and sixty-one deaths had been linked to the devices. (That being the case, it seems that Philips came out well from this episode). The Dutch medical products maker stated that it did not “admit any fault or liability, or that any injuries were caused” by the devices. Last month, Philips Respironics reached an agreement with the Department of Justice in a US court, a “consent decree” under which it will face regular inspections of its US facilities for the next five years. The latest settlement covers a class action lawsuit as well as individual personal injury claims in the US.

In a bid to resolve nearly all of the lawsuits it faces over claims that its talc products, including baby powder, caused cancer, Johnson & Johnson plans to offer US$ 6.48 billion over twenty-five years to former customers with ovarian cancer claims; this represents the vast majority of the more than 59k lawsuits it faces. In total it is setting aside about US$ 11 billion to address the talc litigation, with this being the third settlement offer the company has put forward to try to address the claims from former customers, which have weighed on the company’s reputation and stock price. Again noting that none of the cases against it had “merit”, it is keen to settle the long running saga. In 2023, it proposed to pay nearly US$ 9.0 billion for a more comprehensive deal, which would have addressed lung cancer and mesothelioma claims, as well as litigation from state attorneys general in the US. The company said it was working separately to resolve those matters and had addressed 95% of the mesothelioma claims. Johnson & Johnson said the US$ 6.48 billion sum was “far better recovery than the claimants stand to recover at trial” and that the slow nature of the legal process meant most of those effected would never have “their day in court”. It also announced a tentative US$ 700 million settlement with the states in January.

It is reported that Goldman Sachs is to abolish the existing pay ratio, imposed under EU rules, and which the Sunak government recently decided to scrap. The removal of the artificial cap will allow the bank to reward its best-performing staff by making multimillion pound payouts. Richard Gnodde, chief executive of Goldman Sachs International, said it had decided to bring its remuneration policy in the UK in line with its operations elsewhere in the world. He added that the shift would “mean lower fixed pay, but a higher proportion of discretionary compensation”, adding that it “also reflects the prudential objective of our regulators”. The removal of the cap means several hundred UK-based Goldman staff will now be eligible for variable pay worth up to 25 times their base salaries, according to insiders. Goldman is among the first major investment banks to signal its intention to pursue a revised approach to remuneration in the wake of the cap’s abolition by UK regulators last October. Other firms are also understood to be reviewing their UK compensation practices in light of the cap’s abolition.

Noting that UK, Europe and the US accounted for only 7% of its total revenue, grocery delivery firm Getir has said it will be leaving them to focus on its core market in Turkey where it generates the bulk of its revenue. It had earlier quit Italy, Spain, France and Portugal, and had auctioned off much of its equipment in the UK. The company had expanded quickly in Europe and had a payroll of 23k after three years but there had been speculation that its UK operations were in financial trouble. Since its entry into the UK in 2021, Getir had grown to become a multi-billion-dollar food delivery firm in just a few years. It confirmed that it will focus on its core market in Turkiye where it generates the bulk of its revenue and that FreshDirect, its US subsidiary, will continue its operations. It added that it had raised investment from Abu Dhabi’s Mubadala and US company G Squared to fund its exit from the Western market.

Claiming to be the world’s largest fast-charging network, Tesla’s Superchargers can be found all over the world. This week it was announced that the EV maker has sacked its entire Supercharger division, as part of strategy to cut 10% of the workforce, with Elon Musk noting that the company needed to be “absolutely hard core” about cost reduction. William Jameson, strategic charging programs lead at Tesla, noted that Mr Musk had “let our entire charging org go”, whilst the man himself wrote that he still planned to grow the Supercharger network, “just at a slower pace for new locations.” Last year, seven large car manufacturers including Mercedes, Honda, BMW and Hyundai-Kia, set-up a JV to build a rival fast-charging network. The quality and reach of the Supercharger network has long been a huge advantage for Tesla and was indeed a key selling point for potential buyers. However, with regulators in both Europe and the US pushing the firm to open the Supercharger network to owners of other electric vehicles, it will offer less of an advantage in the future. Tesla’s network of chargers is widely seen as industry leading, and recently it cut deals with several rival carmakers in North America to adopt its “NACS” charging standard so that their vehicles could use the network.

With declining global sales, the EV sector is going through a rough patch with slowing demand and the resulting price war in the world’s largest car market as carmakers try to maintain their sales numbers and margins. The latest is car giant BYD that saw Q1 profits slump by more than 47%, (on the quarter), to US$ 630 million, as sales of its battery-only vehicles slumped by more than 43.0% to 300k units; last year it exported 240k units.  BYD and its rivals have been involved in a price war in China, as they compete for market share at a time of slower domestic economic growth. At the end of 2023, Tesla regained its crown as the world’s biggest seller of EVs, as it continues to cut prices (and margins) and tries to expand into new global markets.

It is no surprise to hear that China is once again flexing its muscles on the world’s economic stage. Just a decade ago, a Chinese company bought the country’s first stake in an extraction project within the “lithium triangle” of Argentina, Bolivia and Chile, which holds most of the world’s lithium reserves. Since then, the Chinese have gone on a spending spree and now  own an estimated 33% of the lithium at projects currently producing the mineral or those under construction. The BBC Global China Unit has identified at least sixty-two mining projects across the world, in which Chinese companies have a stake, that are designed to extract either lithium or one of three other minerals key to green technologies – cobalt, nickel and manganese. According to the Chatham House think tank, China has long been a leader in refining lithium and cobalt, with a share of global supply reaching 72% and 68% respectively in 2022. There are quite legitimate concerns that China’s dominance may well have a negative impact in the future. The fact that it has made more than half of the electric vehicles sold worldwide in 2023, has 60% of the global manufacturing capacity for wind turbines, and controls at least 80% of each stage in the solar panel supply chain, are more than enough to start alarm bells ringing.

The prodigal son of the EU, Hungary, continues to upset the status quo of the bloc; its strong ties with Russia continue to draw the administration’s criticism and now its increasing cooperation with China is raising eyebrows in Brussels.  The country’s foreign minister, Peter Szijjarto commented that “we do not intend to become the world leader,” about his country’s ambitious plans for manufacturing EV batteries, “because the world leader is China”; it has a 79% share of the lithium-ion global battery manufacturing capacity, ahead of the US on 6%, with, to the surprise of many, Hungary with 4%, with aims to soon move into second place. To say it has embraced China would be an understatement, as Hungary’s prime minister, Viktor Orban, has commented that his government has trumpeted its “opening to the East”. In a bid to tempt Chinese investment into the country, it has promised CATL US$ 855 million in tax incentives and infrastructural support to clinch the deal – more than 10% of the US$ 781 million investment. China already has a presence in the country, with its biggest battery maker, CATL’s factory in the east of the country, whilst last year, SemCorp separator foil factory and the Chinese EcoPro cathode plant also opened. Near to the country’s BMW factory, another Chinese battery maker, Eve Energy, has started operations, whilst work has started for a “gigafactory” for China’s BYD electric cars. By this summer, there will be seventeen flights a week between Budapest and Chinese cities, whilst, last year, China became the single biggest investor in Hungary with US$ 11.5 billion. South Korean and Japanese factories have already started manufacturing batteries or battery components there.

Noting a “lack of further progress” toward lowering inflation, the Federal Reserve’s key rate remains steady in the range of 5.25% to 5.50% – continuing to hover at its highest level in two decades. Its ‘raison d’être’ is that high borrowing costs help to cool the economy and reduce the pressures pushing up prices. However, inflation remains stubborn, at 3.5%, and is staying above the Fed’s 2.0% target, with many analysts, who had signalled Q2 rate rises earlier in the year, having to change their minds, with a minority now looking at a rate hike this year.

Minor signs that the US economy may be cooling came with this week’s job numbers. The Labor Department noted that the unemployment rate nudged 0.1% higher to 3.9%, with employers adding 175k new positions – the fewest number seen since last October, and for the first time in months that growth was weaker than analysts expected. Average hourly earnings rose 3.9% over the twelve months to April, a slower pace from the previous month. Some analysts seem to consider that this could convince the Federal Reserve to actually cut rates later in the year if this trend were to continue in the coming weeks.

The Organisation for Economic Co-operation and Development predicted that UK GDP will rise by 1% in 2025. The six other nations do not fare much better, with growth rates of between 1.1% to 1.7%. The organisation blamed the after-effects of a succession of interest rate rises in the UK for the lethargic performance, noting that the UK economy would be “sluggish” this year. The UK economy is now forecast to expand by 0.4% this year, a downgrade from the OECD’s previous projection for 0.7% growth, with Germany the only country with a lower growth level and on par with Japan. The US is forecast to see its GDP rise 2.6%, with all the others, (except for Canada’s 1.1%) all well below 1.0%. The global body also noted that UK tax receipts would “keep rising to historic high of about 37% of GDP”. The government has cut NI twice last year, totalling 4%, but the OECD said this “only partially offsets the ongoing fiscal drag from frozen personal income tax thresholds”. It also said that last year’s 6% hike in corporation tax is “less than fully compensated by allowing businesses to deduct the full cost of investing in machinery and equipment from their tax bill”.

The Organisation for Economic Co-operation and Development has warned the UK that the current high rates of 5.25% should remain until the rate of price rises eases further and stays there. The OECD anticipates inflation will be “elevated” at 3.3% in 2024 and 2.5% in 2025 – still above the Bank’s 2.0% target.

HH Sheikh Mohammed bin Rashid, as Ruler of Dubai, reviewed the strategic plan of the Dubai Aviation Engineering Projects and approved designs for the new passenger terminal at Al Maktoum International Airport which on completion will be the largest in the world; when fully operational, the new terminal will ultimately enable the airport to handle an annual passenger capacity of two hundred and sixty million. It will comprise five parallel runways, with a quadruple independent operation, west and east processing terminals, four satellite concourses with over four hundred aircraft contact stands, uninterrupted automated people mover system for passengers, and an integrated landside transport hub for roads, Metro, and city air transport. Following a visit to the Dubai Aviation Engineering Projects, HH Sheikh Mohammed noted that “today, we approved the designs for the new passenger terminal at Al Maktoum International Airport and commencing construction of the building at a cost of AED 128 billion, (US$ 34.9 billion), as part of Dubai Aviation Corporation’s strategy. “It will be five times the size of the current Dubai International Airport, and all operations at Dubai International Airport will be transferred to it in the coming years.” He also added that “as we build an entire city around the airport in Dubai South, demand for housing for a million people will follow. That being the case, the location will need up to 240k housing units over the next ten years.

“It will host the world’s leading companies in the logistics and air transport sectors. We are building a new project for future generations, ensuring continuous and stable development for our children and their children in turn. Dubai will be the world’s airport, its port, its urban hub, and its new global centre.” The world’s largest airport, covering an area of seventy sq km, will also be able to handle in excess of twelve million tonnes of cargo per annum. Accompanying the Dubai Ruler, Sheikh Ahmed bin Saeed stated, “It is expected that the first phase of the project will be ready within a period of ten years, with a capacity to accommodate one hundred and fifty million passengers annually.” It seems inevitable that DXB will no longer exist and would be valuable land for the redevelopment of the whole of Al Garhoud. There is no doubt that the Al Maktoum International (AMI) is planned in such a way as to represent a leap into the future! The world is Waiting for the Great Leap Forwards!