Cover Up!                                                                         06 September 2024

Property Finder’s recent data points to a surge, by an increasing number of young families, to buy bigger apartments, (2 B/R apartments), and bigger villas, (4 B/R or larger villas). Demand is mostly driven by foreign investors and businessmen relocating to Dubai, with their families, and by current tenants to beat rising rents. In August, 41% of property buyers were looking for villas/ townhouses, (including 39% for a 3 B/R and 47% for 4 B/R or larger unit).  The 59% balance was in the market for apartments – 36% searched for 2 B/R units, 32% for 1 B/R and 14% for studios.  Most of the apartment buyers in Dubai wanted to buy in Jumeirah Village Circle, Dubai Marina, Downtown, Business Bay, and Palm Jumeirah, with villa buyers preferring units in Dubai Hills Estate, Al Furjan, Palm Jumeirah, Damac Hills 2 and Dubai South.

In the rental segment, 79% of tenants were seeking an apartment, with a 63:37 split between furnished and unfurnished. The remaining 21% were considering villas and townhouses, with 57% searching for unfurnished units. The top areas searched to rent apartments included Dubai Marina, Jumeirah Village Circle, Downtown Dubai, Business Bay and Jumeirah Lakes Tower. Dubai Hills Estate, Jumeirah, Damac Hills 2, Al Barsha and Umm Suqeim were popular among those looking to rent villas/townhouses.

According to Emirates NBD’s Residential Market Monthly, total Dubai residential units sold YTD have reached 104.3k, only 14k units shy of the total transactions recorded in 2023 and 31.5% higher on the year. The total value of YTD sales reached a record US$ 72.21 billion – 30.0% higher on the year, whilst August values of US$ 10.14 billion were 8.1% down on the month.

About two thirds of units sold in August 10.47k, were off plan properties, as that segment continues to increase its share of sales. To show how this has expanded, in 2017, there were 17.6k off plan sales – YTD 2024, the total is at 89k and could easily top 100k by year-end. JVC was the top performer in August with 1k sales, followed by 0.86k in Dubai South which recorded 1.3k sales in July and August but only 0.72k in H1. The third best performer in the month was Bu Kadra, located adjacent to Sobha Hartland, with 0.78k sales in the month and a total of over 1.9k YTD.

August villa transactions of 3k has followed the same trend it has all year, with stable demand continuing; 75.7% of sales, (2.27k units) were for off plan properties. It seems that transaction activity in this sector has slowed, as existing landlords are either holding on to their properties or are expecting a significant premium resulting in most buyers opting for off-plan projects.

The three favoured off-plan villa markets in August were the Athlon by Aldar project, Emaar’s The Valley and Dubai South – with the first two both posting sales of around 1k with the latter 0.67k. Damac Hills 2, Villanova and Al Furjan were the most active markets for ready villa transactions. YTD, it is estimated that a record 93k new units have been launched with two major differences – in 2024, the new launches had been focussed on existing master-planned communities or as stand-alone developments – and not concentrated across a few master-planned communities. The second point is that there has been an increase in supply from relatively smaller developers (in terms of past development track-record and completed stock).

Bigger asset price rises were seen in the villa market in August – at an average annual 23%, compared to 12% for apartments. It is reported that villa prices for new launches are at a premium of up to 30% when compared to the current average price points. The feeling is that when the new stock is handed over, there could be a knock-on impact on the older stock, with prices heading north in a catch-up exercise. For apartments, most of the price increases were witnessed across locations with limited new supply and negligible development potential.

Azizi Developments has finally announced the height of its Burj Azizi – at 725 mt, it will become the second tallest building in the world; estimated costs are in the region of US$ 1.63 billion. The project’s launch date is set for February 2025, with completion slated for 2028; the one hundred and thirty-one plus storey project will be located on SZR and will feature a one-of-a-kind all-suite seven-star hotel, inspired by seven cultural themes, along with a variety of residences including penthouses, apartments, and holiday homes. It will also offer a range of amenities, such as wellness centres, swimming pools, saunas, cinemas, gyms, mini markets, resident lounges and a children’s play area. The tower will include a vertical retail centre spread over seven floors, several high-end restaurants, a luxury ballroom, and a beach club, along with a one-of-a-kind observation deck and an adrenaline zone. Being Dubai, there has to be some world records broken and Burj Azizi will not disappoint by having the highest:

• nightclub (on level 126)
• observation deck (on level 130)
• restaurant in Dubai (on level 122,
• hotel room in Dubai (on level 118)

Dubai-based property brand Binghatti has launched is latest project ­— the forty-seven floor Binghatti Royale – featuring three hundred and fifty-four apartments, ranging from 1 B/R to 3 B/R units. Located in Jumeirah Village Circle, it will also include sixteen retail spaces, as well as an infinity pool, private suite pools, a kid’s pool, an outdoor gym, multi-purpose lawn, and padel/tennis courts. The project also features social spaces including a juice bar, an outdoor dining area and lush landscape areas. The launch comes in response to the soaring demand for Binghatti projects in the area following the rapid sell-out of back-to-back projects. Handover is expected in Q3 2025.

JP Morgan has been slow in following the footsteps of the likes of UBS, Deutsche Bank, and Lombard Odier who have already entered Dubai on the back of its growing importance as a global investment and innovation hub. These financial institutions have high hopes in the region’s potential as a haven for the world’s affluent population. The JP Morgan team is led by veterans Sebastian Botana de Beauvau and Carol Mushriqui, from Geneva and London, who will serve a diverse clientele, including individuals, family offices, charities, and family foundations in the GCC, with Dubai as its base. In June, UBS said it was strengthening its wealth management team in the ME with ten new hires, with other Western banks and Asian wealth managers following suit. The reasons that Dubai has become such an economic hotspot are manifold and there is no reason to believe that Dubai will not continue this upward trend. The current World Bank’s real GDP growth projections for the UAE for 2024 and 2025 are at 3.9% and 4.1%, respectively, as well as a ‘AA-’ Long-Term Foreign-Currency Issuer Default Rating by Fitch, which reflects the country’s moderate consolidated public debt level, strong net external asset position, and high GDP per capita.

There is every possibility that Primark could make a début in the ME after the Alshaya Group confirmed they were in talks with the retailer, known for its multinational fashion brands. Founded in Dublin, fifty-five years ago, it now operates over four hundred and fifty stores across seventeen markets. John Hadden, Alshaya Group’s CEO, commented that, “we are incredibly proud to partner with Primark to discuss potential opportunities to bring their stores to the region. For many years, shoppers across the region have asked for Primark and we are looking forward to the start of a successful partnership to help bring their exceptional in-store experience to the GCC.”

In H1, there was a 9.0% annual increase to 9.3 million tourists arriving in Dubai. Knight Frank noted that in the first five months of the year, the UAE’s 80% hotel occupancy was the highest recorded in the region.  The revenue per available room, (RevPAR) came in at US$ 155 by the end of H1. The country’s hotel stock, at 212k rooms, was also the largest in the region, with Knight Frank expecting this to rise 17% to 248k keys by 2026; on that premise, Dubai’s current stock of 154k rooms will reach 180k over the next three years.  Knight Frank estimates that the GCC’s total current stock of 464.5k will rise to over 544k.

The World Travel and Tourism Council has estimated that visitors to the UAE will spend an estimated US$ 52.2 billion this year, which ranks the country as the tenth biggest recipient of inbound tourism spending globally and the second largest in the ME, behind sixth-placed Saudi Arabia, with a US$ 68.3 billion spend.According toJulia Simpson, chief executive of the WTTC, the global travel and tourism sector’s contribution to the world economy is set to reach an all-time high of US$ 11.1 trillion, supporting a record three hundred and forty-eight million jobs.  However, she did warn of the possible impact of geopolitical threats, such as the with the Israel-Gaza war and the Russia-Ukraine conflict.

Euromonitor International also noted that Dubai was the third most visited city in the world, with 17.2 million visitors, behind Istanbul and London but ahead of Antalya, Paris, Hong Kong, Bangkok, New York, Cancún, and Mecca. It is estimated that the travel & tourism sector injected US$ 223.4 billion to the GCC’s GDP, underpinned by the 76.2 million tourist arrivals to the region, who together spent $135.5 billion – 43.5% higher on 2022. It also provides regional employment opportunities to 2.6 million people.  Latest figures indicate that the travel/tourism sector now accounting for around 11.7% of UAE’s GDP.

A fairly new arrival to the sector is the cruise industry, with the UAE, Oman, Qatar, and Saudi Arabia all inaugurating new cruise ship terminals. Total revenue topped US$ 200 million last year, with expectations that it could grow at an annual 9.9% rate over the next five years to reach over US$ 320 million. From 01 November, the Resorts World One will homeport in Dubai, via DP World’s Mina Port Rashid, to offer three weekly departures. Michael Goh, President, Resorts World Cruises said “our deployment in the Gulf will unlock new opportunities for Dubai and the Gulf as a premiere cruise region,” with Saud Mohammed Saeed Hareb, Cruise Tourism & Yachting Lead, Dubai Department of Economy and Tourism, commenting, that it “continues to play a pivotal role in the growth of Dubai’s tourism industry, aligning with the goals of the Dubai Economic Agenda, D33, to further consolidate Dubai’s position as a leading global city for business and leisure”.

After expanding at its slowest pace in thirty-four months in July, the UAE’s non-oil private sector growth regained momentum in August, nudging 0.5 to 54.2, supported by a pickup in new orders, output and sales growth, according to. the seasonally adjusted S&P Global UAE Purchasing Managers’ Index. Employment levels rose at a milder rate, as hiring growth weakened in August being the softest for seven months, with wage costs also increasing at the fastest pace since May. Furthermore, the output sub-index rose 1.0 on the month to 59.1, attributable to new business and project work; however, the rate of expansion was among the slowest in the past three years. Businesses surveyed remained confident about the outlook over the next twelve months.

Government data showed that last year, UAE non-oil trade reached a record high of US$ 954 million, (AED 3.5 trillion) – 12.6% higher on the year – whilst exports of goods and services also set a new record high of US$ 272 million, (AED 1.0 trillion). The S&P report noted that since there had been another sharp increase in input prices, it cautioned that ongoing price mark-ups have the potential to curb demand. Although the news was positive, and there had been a solid expansion, they were still weaker than the levels recorded earlier in the year, as fewer companies reported uplifts in activity.

Like most Gulf countries, Bahrain is keen to diversify its economy and reduce its dependence on oil by enhancing revenue in its non-oil sector, so as to support fiscal stability; the introduction of an international tax regime is one such means.  It also demonstrates Bahrain’s attempt to meet with global standards, aimed at curbing tax avoidance by MNCs and promoting a fairer global tax environment; this could make the kingdom a more attractive investment proposition on the global stage and can only enhance its international reputation. Furthermore, it is aligning more with recent tax decisions and initiatives seen in the other five GCC members.

It would seem that if Bahrain did not introduce the Minimum Top-Up Tax, MNCs would still be liable to pay it in their home jurisdiction which implements the income-inclusion rule. All this tax does is to ensure that an MNC’s profit, attributable from the operation of its Bahraini subsidiary, remains within the Bahraini tax net. The National Bureau for Revenue – a similar set up to the UAE’s FTA – has confirmed that the legislation is “fully aligned with the Organisation for Economic Co-operation and Development guidelines”, and that eligible businesses will need to register with it. The first filing of the global information return to report on the global minimum tax is not due until eighteen months after the first financial year, and will probably be based on the MNC’s consolidated financial statements.

To date, one hundred and forty jurisdictions have signed up for the OECD’s 2021 Pillar Two reform programme set up a global minimum corporate tax to ensure large MNCs pay a minimum 15% tax on profits in each country where they operate. The main raison d’être is to reduce the reason for profit-moving, whilst placing a floor under tax competition. The global minimum tax, which is based on Global Anti-Base Erosion (Globe) Model Rules, aims to reduce the incentive for profit shifting and places a floor under tax competition; the expectation is that this would bring an end to the race to the bottom on corporate tax rates. It remains to be seen what action is taken by the FTA here, and in the neighbouring states, as they try to align themselves with competing international markets and not seen as a tax pariah by the rest of the world. (There may be some reason why the UAE made recent amendments to its Federal Corporate Law to introduce a definition for top-up tax and multinational entities).

Having earlier been approved by the federal cabinet, and then by the Higher Committee Overseeing the National Strategy on AML and CFT, the new 2024-27 National Strategy for Anti-Money Laundering, Countering the Financing of Terrorism and Proliferation Financing has been released. The strategy, developed by the General Secretariat of the National Committee in collaboration with key stakeholders, has been built around eleven major goals, and introduces legislative and regulatory reforms aimed at mitigating the impact of illegal activities on society. Sheikh Abdullah bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Foreign Affairs, noted that “this initiative follows the Financial Action Task Force’s (FATF) decision to delist the UAE from its Grey List in February 2024, further underscoring the UAE’s unwavering commitment to upholding the highest international standard”. Key areas include risk-based compliance, national/international coordination, strengthening detection/investigation of illicit financial activities, optimising the use of resources, and addressing emerging risks from virtual assets and cybercrime. The strategy also emphasises improving transparency, data collection and analysis, as well as updating legal and regulatory frameworks to align with global standards. The General Secretariat of the National Committee will oversee its implementation and ensure adherence to UAE objectives.

Ducab Metals Business announced the doubling of its annual production capacity for aluminium to 110k tonnes and has increased its bare copper product capacity in response to surging global demand. The double benefit whammy is that it enhances Ducab Group’s subsidiary position, in the international metals market, and advances the UAE’s Operation 300bn industrial strategy. CEO Mohammad Almutawa, commented that “this expansion enhances our ability to meet international demand, elevates the ‘Made in the Emirates’ brand, and boosts our global competitiveness, all while supporting sustainable business growth and strengthening industrial resilience”. The expansion benefitted from the recent enlargement of DMB’s facilities by 51.0k sq mt, as well as the strategic acquisition of GIC Magnet — a leading global supplier of paper-insulated aluminium strips.

This week, DP World completed the purchase of Cargo Services Far East Ltd, a global supply chain provider headquartered in Hong Kong, that globally employs over 2.5k people. Founded in 1989, Cargo Services has established an extensive portfolio of solutions – such as origin purchase order management, ocean freight, air freight and warehousing for a diverse range of sectors. This includes sophisticated supply chain management services for global retail and high-fashion clients; it has also expanded its portfolio to provide specialised cruise logistics services globally. DP World now employs more than 115k, in eight hundred locations, and by the end of this year, it will operate more than two hundred freight forwarding offices, covering up to 95% of global trade flows. DP World’s Group Chairman, Sultan Ahmed bin Sulayem, commented, “Cargo Services’ logistics expertise and global network perfectly complement our own footprint, and will be yet another tool in our offering to customers. Together, we’ll create a powerful force propelling trade globally”.

More than 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 2020. The controls were removed in March 2021 to reflect the movement of the market once again. On Sunday, retail prices saw declines, hovering around 5%, after marginal price rises were registered in August. The breakdown of fuel prices for a litre for September is as follows:

Super 98          US$ 0.790       from US$ 0.831           in Sep (down by 4.9%)

Special 95        US$ 0.757       from US$ 0.798           in Sep (down by 5.1%)

Diesel               US$ 0.757       from US$ 0.804           in Sep (down by 5.8%)

E-plus 91         US$ 0.738       from US$ 0.779           in Sep (down by 5.3%)

One of China’s Big Four banks, the Agricultural Bank of China (DIFC Branch) has announced its second listing on Nasdaq Dubai – a US$ 400 million Floating Rate Notes, issued under the US$ 15 billion Medium Term Note Programme, due in 2027. Apart from this issue reflecting the bank’s strategic expansion into global markets, it also enhances the bourse’s fixed-income listing portfolio, which now stands at US$ 135.0 billion

Over the past five years, Emirates Central Cooling Systems Corporation PJSC has witnessed a 41% surge in the number of new customers, registered electronically from both public and private sectors. During H1, Empower posted an 11.0% rise in the number of bill payment transactions, via the electronic payment channels, to 427.1k transactions. As part of its efforts to facilitate business operations and enhance efficiency and productivity, Empower witnessed a 21.0% rise, to 19.7k applications, for No Objection Certificates during H1. Ahmad Bin Shafar, CEO of Empower, noted that the growth in Empower’s operations reflects “Dubai’s thriving economy and increasing demand for our services. Our customer base expanded to more than 138k in the first half of the year.”

The DFM opened the week, on Monday 02 September, one hundred and forty-eight points (1.0%) higher the previous three weeks and gained thirty-three points (0.7%), to close the trading week on 4,373 by Friday 06 September2024. Emaar Properties, US$ 0.08 higher the previous fortnight, gained US$ 0.07, closing on US$ 2.37 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 5.37 US$ 1.68 and US$ 0.35 and closed on US$ 0.64, US$ 5.53, US$ 1.67 and US$ 0.35. On 06 September, trading was at one hundred and nineteen hundred shares, with a value of US$ 73 million, compared to one hundred and fifty-one million shares, with a value of US$ 135 million, on 30 August.  

By Friday, 06 September 2024, Brent, US$ 0.94 lower (1.2%) the previous fortnight, tanked US$ 7.77 (9.9%) to close on US$ 71.06. Gold, US$ 44 (1.7%) lower the previous week, gained US$ (1.0%) to end the week’s trading at US$ 2,527 on 06 September 2024.

Another body blow for the aviation industry with reports that Cathay Pacific reported that one of its Airbus A350 planes had to turn back due to an “engine component failure”. Subsequently, forty-eight planes were inspected and, very worryingly, fifteen of them were found with faulty parts that needed to be replaced. The planes’ Trent XWB-97 engines were made by Rolls-Royce and all the carrier’s jets have been fitted with these engines, since Cathay received its first plane in 2016. The engineering giant has confirmed “it is committed to working closely with the airline, aircraft manufacturer and the relevant authorities to support their efforts,” and that it “will also keep other airlines that operate Trent XWB-97 engines fully informed of any relevant developments as appropriate.” Other major airlines, with A350s, include the likes of BA, Virgin Atlantic, Qatar Airways, Singapore Airlines and Japan Airlines. Earlier in the year, Rolls-Royce announced plans to invest heavily to improve its range of engines, including the Trent XWB-97.

The World Travel and Tourism Council has estimated that, this year, a record 10% of all money spent globally will be on travel – including on flights, cruises accommodation etc. It has forecast that the industry’s contribution to the global GDP will increase by 12.5%, on the year, equating to 10% of global GDP – a 7.5% rise since the previous record year of pre-Covid 2019. Travel spending in the US, Chinese and German economies is expected to contribute the most to GDP. In 2024, the sector is expected to support nearly three hundred and forty-eight million jobs in 2024, 4.1% or 13.6 million jobs more than in 2019.

Following events in France last week, Telegram has now been hit by South Korean police who have launched an investigation into messaging over deepfake crimes. It is reported that the probe will examine whether it had been abetting distribution of sexually explicit deepfake content, after South Korean authorities have called on Telegram and other social media platforms for cooperation in fighting sexually explicit deepfake content. Telegram has confirmed it was actively moderating harmful content on its platform, including illegal pornography, saying that “moderators use a combination of proactive monitoring of public parts of the platform, sophisticated AI tools and user reports in order to remove millions of pieces of harmful content each day.”

To make matters worse for exponents of free speech, Brazilian authorities have announced that it was suspending access to Elon Musk’s X social network in the country to comply with a judicial order, with the judge insisting that that social media needs hate speech regulations. It is obvious that the tech company has been struggling with dipping advertising revenue and that this decision will only exacerbate the problem. The judge has ordered that Twitter should be suspended in the country until it complied with all related court orders, including the payment of more than US$ 3 million in fines and the designation of a local representative, as required by Brazilian law. The dispute over X has its roots in a presidential order from earlier this year, which required the platform to block accounts implicated in probes into the alleged spreading of distorted news and hate. Although he closed X’s Brazilian offices, Elon Musk has ensured the platform was still available in the country “until this matter is resolved.”

In a further bid to increase the appeal of its best-selling yet aging EV, (first released in2020), Tesla announced that it is planning to launch a six-seat variant of its Model Y car in China from late 2025. There are reports that the company has already requested suppliers to prepare accordingly for a double-digit increase of Model Y output at its Shanghai factory; it has already seen an annual 6.0% increase in H1 domestic and overseas Model 3 deliveries. It is readily apparent that the EV-maker is facing increasing competition from its Chinese rivals which have already unveiled at least four Model Y competitors this year including the Onvo L60 from Nio and 7X from Zeekr, both with roomier interiors and at prices lower than those of flagship models. However, its Model Y crossover is still the best-selling EV in China, with H1 sales of 207.8k, with expectations that Q3 sales will be even higher; by year end, sales could also get a boost from the introduction of its Full Self-Driving feature.

Car company Volvo is not the first EV-maker to abandon a target to produce only fully electric cars by 2030, blaming changing market conditions for its decision to give up a target it had announced only three years ago; it now expects that at least 90% of its output will be made up of both electric cars and plug-in hybrids by 2030. After a flurry in activity in previous years, the industry is facing a slowdown in demand in some major markets and uncertainty due to the imposition of trade tariffs on EVs made in China. Whilst maintaining that “we are resolute in our belief that our future is electric,” but that “transition will not be linear, and customers and markets are moving at different speeds.” One delaying factor is that EVs are expensive and have become more so because of the end of many government subsidies, and the introduction of tariffs. Registrations of EVs across the EU dropped by nearly 11% in July.

A major blooper by Sony sees it pulling online shooter Concord from sale today, (06 September), just a fortnight after its launch, following its 23 August release exclusively for PlayStation 5 and PC that subsequently has reportedly struggled to attract players. Anyone, (and there were not that many) who paid US$ 52.50 (GBP 40) would be entitled to a full refund. It had taken eight years in its development stage, and now two weeks since its release, it has been withdrawn so that the Sony team can “determine the best path ahead” for its return. Very much like popular titles such as Overwatch and Valorant, Concord is a so-called hero shooter in the multiplayer market, where players are part of a team made up of characters with distinct abilities and can compete in straight-up death matches or other game modes that involve capturing an objective or controlling sections of the arena. On release, it was criticised for failing to offer a new take on the genre. The highest number of concurrent users playing Concord was only six hundred and sixty, whereas the most-played game, Counter-Strike 2, has consistently recorded more than one million players over the past two years.

In a tit for tat move following Canada setting a 100% tariff for imported Chinese EVs, (as well as steel and aluminium), Beijing has announced a probe of Canadian canola imports, escalating a trade fight between the two countries. Its minister of agriculture said plans for the canola investigation were “deeply concerning”, whilst the Chinese retorted that canola oil imports had jumped 170% since 2023, while prices had “continuously fallen”. It will also file a complaint with the World Trade Organisation over the EV tariffs, which it criticised as “discriminatory” and “unilateral”, with Canadian Prime Minister Justin Trudeau saying  China had “chosen to give themselves an unfair advantage in the global marketplace”. Canola, also known as rapeseed, is a major agricultural product in Canada, accounting for roughly 25% of all farm crop receipts, according to the Canola Council, an industry group. 90% of its canola is exported with the US being its main source market, followed by China; it is used for cooking, animal feed and some forms of energy.

Following the rise of remote work, attributable to the pandemic, business travel declined which dampened the sector’s growth and led it to lag behind leisure travel. This year, total expenditure on global business travel is forecast to top US 1.5 trillion in 2024 – a 6.2% hike compared to pre-pandemic 2019.  The leading largest market for business travel, the US, is expected to reach US$ 472 billion – 13.4% higher than the 2019 record – whilst second place China  is expected to grow 13.1% above 2019 levels.

On Sunday, the C919 reached a milestone by surpassing the 500k passenger mark since commercial operations began on 28 May; over the past three months, the C919 has logged over 10k flight hours and completed more than 3.7k commercial flights. Nearly two years ago, in December 2022, China Eastern Airlines received its first of seven C919s and has expanded its C919 fleet, now with five regular routes that connect Shanghai with Chengdu, Beijing, Xi’an and Guangzhou, as well as Beijing with Xi’an.

In H1, China State Railway Group Co Ltd posted that its H1 total operating revenue and net profit reached US$ 81.46 billion and US$ 239 million. Over the period, railway passenger trips topped a record 2.1 billion during the period – 18.4% higher on the year – with an average of 10.26k passenger train journeys, (up 9.4% on the year), whilst more than 1.92 billion tonnes of goods were transported by railways.  In H1, China-Europe freight trains transported more than 1.04 million 20’ equivalent units of goods – up 11% on the year. Fixed-asset investment in the sector reached a record US$ 47.39 billion, increasing by 10.6% on the year.

There are many observers wary of China’s growing influence in Africa, which will expand even further after the country’s President Xi Jinping released plans to step up China’s support across debt-laden Africa. Xi, noting that China and Africa account for 33% of the global population, has pledged funding of US$ 50.7 billion, (but specified that US$ 21 billion would be disbursed through credit lines and at least US$ 70 billion in fresh investment by Chinese companies), over three years, backing for more infrastructure projects, and the creation of at least one million jobs. The Chinese leader also added that China would increase cooperation with Africa in various sectors including industry, agriculture, infrastructure, trade and investment, and that “without our modernisation, there will be no global modernisation”. The world’s biggest bilateral lender promised to carry out three times as many infrastructure projects across resource-rich Africa.

For its financial year, ending 30 June 2024, there was no surprise to see embattled Qantas posting a 26.5% slump in its post-tax profit to US$ 844 million (AUD 1.25 billion), with its new chief  executive Vanessa Hudson, (who replaced the disgraced Alan Joyce), noting that the airline’s focus this year has been getting the “balance right in delivering for customers, employees and shareholders”; revenue rose US$ 14.78 billion, (AUD 21.9 billion), while net debt is at US$ 2.77 billion, (AUD 4.1 billion). Whilst Jetstar, its lower cost airline, saw a 23.0% hike in its earnings of US$ 335 million, the airline’s domestic routes down by US$ 715 million – underlying EBIT), and international, falling by 39.0% to US$ 382 million. The revenue decline was attributable to several factors including fares moderating, increased spending on customer initiatives and reduced freight revenue. Expenses included US$ 134 million in legal provisions over the year, including a US$ 86 million settlement with the Australian Consumer and Competition over its court case. Capex over the year was at US$ 2.09 billion, with the carrier investing in new Airbus A220 jet aircraft to replace its ageing fleet of Boeing 717s. It also registered a US$ 47 million provision for “ground handling outsourcing” after the High Court ruled it had illegally sacked some staff during the pandemic.

As expected, the carrier did not declare a dividend, but it announced an up to US$ 270.05 million, (AUD 400 million) share buyback. Over the year, Qantas has spent money on regaining” “lost” customers, by investing in passenger promotions and in-flight services, after a turbulent year of headlines over its COVID-19 travel credits scheme and several legal battles. It is patently obvious that the airline has still a long way to go to “restore trust and pride in Qantas as the national carrier is our priority”.

There is an ACCC case against Qantas, claiming that it has sold seats on flights that had already been cancelled, with the carrier agreeing to institute a remediation program for affected passengers, but the full compensation bill has not yet been finalised. It is also involved in a separate class action for not refunding tickets for cancelled flights during the pandemic. Last December, the Albanese administration passed their “Same Job Same Pay” legislation, which has impacted Qantas which has confirmed it will support the union’s three Fair Work Commission (FWC) applications for its short-haul cabin crew and a separate in-principle agreement for its long-haul cabin crew workforce. This is expected to cost US$ 40 million, with 2.5k international and 800 Qantas short-haul cabin crew receiving pay increases, equating to an average 30% hike in remuneration.

Although the median price for Australian residences rose last month by an annual 2.8%, (and 0.5% on the month), to US$ 541k, (AUD 802k), the market is slowing. The annual rise comes at a time when homeowners have continued to face the high cost of living and higher interest rates; the current rate of 4.35% is expected to start declining by the end of the month. The CoreLogic’s Home Value Index indicates variances in capital cities’ house prices, with monthly increases seen in Sydney (0.3%), Brisbane (1.1%), Adelaide (1.4%) and Perth (2.0%), whilst declines were noted in Melbourne (-0.2%), Hobart (-0.1%), Darwin (-0.2%) and Canberra (-0.4%) in August. Interestingly, the latest quarterly data sees growth rate in home values being 1.3% down from the same period in 2023, when there was a 2.7% growth rate.

The major casualty seems to be Melbourne which has more sellers than buyers, with the city continuing to drop down the list of median house price values and is now the third-lowest among the capital city markets, slipping below Perth and Adelaide. Furthermore, the last time Perth prices were higher than those of Melbourne was in 2015 whilst the latest data sees Adelaide having higher prices for the first time ever. Meanwhile, the three most expensive cities are Sydney, Brisbane and Canberra, with prices of US$ 796k, US$ 590k and US$ 570k.

On the rental front, it appears that growth is “slowing to a halt”, with the rent index unchanged for a second consecutive month in August, whilst the annual rate of growth is still very high at 7.2%. One of the factors behind this seems to be a drop in net migration to Australia from March to December 2023, whilst the Reserve Bank of Australia point to a slight uptick in household size, suggesting share housing and multi-generational housing may be on the rise.

With ongoing worries that the US is stepping into recession, global financial markets do what they do under these circumstances – they run for cover. Global bourses, including those in Asia and the US, have seen company share values tumble, on Tuesday, including Nvidia, with the chip conglomerate falling by 9.5%, knocking off US$ 297.7 billion from its market cap. Financial markets in Asia and the US have tumbled on concerns that the world’s largest economy could be headed towards a recession, not helped by US manufacturing activity remaining subdued. In New York, the S&P 500 index closed more than 2% lower, while the tech-heavy Nasdaq fell by over 3%. On Wednesday morning, Japan’s Nikkei 225, South Korea’s Kospi and the Hang Seng in Hong Kong all fell by 3.3%, 2.7% and 0.7%. As in New York, tech companies took the brunt of losses.

August US job growth – at 142k – was weaker than expected and could point to high interest rates having their intended impact, with the economy beginning to slip. Data released shows that the unemployment rate fell back 0.1% to 4.2% on the month, whilst the job gains in the previous two months were lower than initially estimated. August figures will have a bearing on whether the Federal Reserve tinker with the current interest rate of 5.3%, later in the month, for the first time in four years; the odds point to a rate cut and whether this will be 0.25% or 0.50% remains to be seen. With inflation dipping lower by the month – now at 2.9% – the Fed can see the economy slowing which should result in rate cuts before the economy slows into a recession. It is now under pressure to cut rates and ward off the possibility of further economic slowing. Construction and health care firms led the hiring last month, while manufacturers and retailers cut payrolls.

The fall-out from the Oasis dynamic ticket pricing continues after the cost of tickets for their reunion tour more than doubled while on sale. It seems that Culture Secretary Lisa Nandy has posted that surge pricing would be included in a government review of the secondary gig sales market, with many thousands sitting in virtual queues for several hours hoping to buy a ticket. Even if successful, the end result was that ticket prices were more than their face value at US$ 466 (GBP 355) –and not at US$ 194 (GBP 148). Ticketmaster introduced this demand-based in 2022 to stop touts and ensure more money goes to the artists. The company claims it is artists, their teams, and promoters who set pricing and choose whether dynamic pricing is used for their shows.

UK’s Competition and Markets Authority has now launched an investigation into Ticketmaster over the sale of Oasis tickets, adding that it would cover how “dynamic pricing” may have been used, and whether the ticket sale “may have breached consumer protection law”. The watchdog said it would be engaging with Ticketmaster and “gathering evidence from various other sources”, including Oasis’s management and event organisers. The CMA investigation will also consider whether:

• Ticketmaster has “engaged in unfair commercial practices”
• Oasis fans were given “clear and timely information” explaining that tickets could be subject to “dynamic pricing”, how it would operate and how much they would have to pay
• people were “put under pressure to buy tickets within a short period of time – at a higher price than they understood they would have to pay, potentially impacting their purchasing decisions”

Halifax posted that August UK house prices were 4.3% higher on the year, and 0.3% on the month, at US$ 384k, (GBP 293.5k), as the recent 0.25% interest rate cut, to 5.0%, has evidently boosted confidence in the market. The UK’s largest mortgage lender expects that, “with market activity picking up and the possibility of further interest rate reductions to come, we expect house prices to continue their modest growth through the remainder of this year.”

More than seven years after a fire engulfed Grenfell Tower, the enquiry has finally released its findings in a 1.7k page damming report. In 2019, the first phase of the inquiry’s report confirmed that combustible cladding was the primary cause of the rapid spread of the fire. The second and last phase concluded that the tragedy was the culmination of those in charge failing for decades to properly consider the risks of combustible materials on high-rise buildings, while ignoring the mounting evidence before them. As far back as 1991, following a fire on Merseyside, the deadly risks of combustible cladding panels and insulation had been   identified. It noted that the government was “well aware” of the deadly risks posed by combustible cladding and insulation a year before the Grenfell Tower fire, but “failed to act on what it knew”, and that there had been “systematic dishonesty” from cladding and insulation companies as well as “toxic” relationship between the tower’s residents and the Tenant Management Organisation which was responsible for running services. It also reported that:

• government officials were “complacent, defensive and dismissive” on fire safety, while cutting red tape was prioritised and that successive governments missed opportunities to prevent the tragedy
• there was an “inappropriate relationship” between approved inspectors and those they were inspecting
• Grenfell residents who raised safety concerns were dismissed as “militant troublemakers” and were failed ‘by dishonesty and greed’; there was “a toxic atmosphere” with the TMO “fuelled by mistrust of both sides”
• The TMO and the Royal Borough of Kensington and Chelsea were jointly responsible for managing fire safety at Grenfell Tower – but the years between 2009 and 2017 were marked by a “persistent indifference to fire safety”
• cladding and insulation firms involved in this work engaged in “deliberate and sustained strategies to manipulate the testing processes, misrepresent test data and mislead the market”
• “systematic dishonesty” from the companies resulted in hazardous materials being applied to the block including
  • Cladding company Arconic, “deliberately concealed” the danger of the panels used on the tower
  • Celotex, which supplied most of the insulation, similarly “embarked on a dishonest scheme to mislead customers”
  • Kingspan knew its insulation product failed fire safety tests “disastrously” but continued to sell it to high-rise buildings
  • the firms got away with this because the various bodies designed to oversee and certify their products repeatedly failed to monitor and supervise them

All the above-mentioned stakeholders must share responsibility, to some degree, for their involvement in the disaster, with the Counsel noting that there had been a “merry-go-round of buck-passing” – largely blaming each other for the disaster. Unfortunately, the inquiry cannot make findings of civil and criminal liability, so it is up to the Met Police, (which has its own problems) to continue with their investigations and hopefully bring charges on many of the “villains” involved so that justice finally have its day in court; this could take another seven years. On the back of events such as the Hillsborough football disaster and the tainted blood scandal in the 1980s, Iraq – weapons of mass destruction, phone hacking, Windrush, Greensill, the Post Office scandal, Covidgate and now Grenfell, it is patently obvious that successive UK governments, on many occasions, have been lacking in honesty, integrity, transparency and governance but are masters of Cover Up!