History Repeats Itself?                                         20 September 2024   Reports indicate that Emaar is to build a new super tower and that it could be on par to compete with its sister tower, Burj Khalifa, to become the world’s biggest building – if it is to top 828 mts. Early design concepts reportedly include bold and futuristic visions — ranging from glass tube-style structures to rocket-inspired forms — further cementing Dubai’s ambition to stay at the forefront of global architectural innovation. Location details have yet to be released.  ( Rumour-mongers are out in force indicating that this news could be a precursor of a pending recession, as coincidentally happened around the time of the building of the Burj Khalifa and the GFC). Danube Developers recently introduced Bayz 102, a new project. Situated in Business Bay, this towering structure will rise one hundred and two levels and will come with a helipad for air taxis. It will provide residents with over forty amenities, such as a health club, swimming pool, sky bar, sports arena and outdoor cinema – features that are becoming increasingly popular with developers.   Dutco Construction Co LLC has been awarded a US$ 232 million contract by Meraas, to construct the twenty-seven-storey residential Bvlgari Lighthouse on Jumeirah Bay Island; construction is soon expected to start, with marine works now completed, and completion is slated for Q2 2027. Designed by the renowned architecture firm Antonio Citterio Patricia Viel, Bvlgari Lighthouse is poised to become one of Dubai’s most prestigious addresses, adding a touch of elegance to the island. Inspired by the Italian jeweller’s legacy, the Bvlgari Lighthouse will feature opulent four- and five-bedroom penthouses, along with a unique eight-bedroom Sky Villa on the top three levels, which will include expansive private rooftop gardens, a private pool, and stylish lounge areas.   Over the next six months, SOL Properties, the real estate development arm of the Bhatia Group, will launch of a series of high-end projects, with an anticipated Gross Development Value of US$ 3.27 billion. It has acquired four million sq ft of prime land for ultra-luxury projects and affordable luxury projects, with two ultra-luxury developments, valued at US$ 2.23 billion, in the West Crescent of Palm Jumeirah and the Fairmont Residences Solara Tower Downtown Dubai. Two million sq ft of land has been bought for affordable luxury projects in Jumeirah Village Circle, Jumeirah Village Triangle, along with a 500k sq ft plot in Abu Kadra. Recently, the developer has completed and handed over the affordable luxury project, Oakley Square Residences in JVC, which has been fully sold.   Having launched a new development company – Beyond – Omniyat Group has unveiled an eleven million sq feet strategic project on the Jumeirah coastline, of which eight million square feet will be dedicated to Beyond, a development company focused on the wider luxury real estate market. Mahdi Amjad, founder and executive chairman of Omniyat, commented that, “Omniyat is proud to partner with Dubai Maritime City to bring this visionary development to life”.   Recent studies show that property owners are opting for short-term rentals in prime locations because of strong occupancy and higher returns, and that there is growing demand in the emirate, attributable mainly to digital nomads and visitors from European and Asian countries. Anna Skigin, CEO of Frank Porter, noted, “listings are growing across the UAE as more and more guests come to experience the region.” Although rates continue to remain stable, with a slight increase due to more listings coming into the market and competitive rates from hotels, they are still higher, at a nightly average of around US$ 136, compared to many other global locations. However, rates in Dubai are still significantly higher than in the rest of the world, averaging around US$ 136 per night, but ranging from US$ 54 to US$ 27k. The fact that Dubai is a tourist, financial and global hub makes the emirate even more appealing to a raft of international visitors; add to that, the allure of staycations among residents, also boosting the popularity of this sector. It is estimated that UAE, Indian, Bangladeshi, Pakistani and GCC residents make up about 70% of visitors and business owners. According to Frank Porter, the most popular areas for short-term rentals are Dubai Marina, Jumeirah Beach Residence, Downtown, Jumeirah Village Circle, and Palm Jumeirah. Owners can earn a nightly average of US$ 1.22k per night, with Dubai Marina, Jumeirah Beach Residence, Palm Jumeirah, and Downtown Dubai providing the highest rate per night for short-term rentals. Frank Porter also estimates that the short-term rental market provides a 20% higher return than long-term rentals, noting that “long-term lets, and other types of investment such as bonds and stocks tend to be more rigid and have a lower level of flexibility.”   In an attempt to double the group’s turnover to US$ 10 billion over the next five years, Sobha Group’s founder, PNC Menon, has announced that it will be is venturing into jewellery and furniture sectors, setting up Sobha Jewels and Sobha Furniture. The seventy-six-year-old entrepreneur has turned Sobha Realty into a US$ 5.0 billion realty business and has recently announced that he would be stepping down as chairman of the US$ 5 billion Sobha Realty. Meanwhile, his son Ravi has taken over the reins of Sobha Realty, with projects in Dubai, Muscat and India, and plans to expand further across the US and Australia. Over the next few years it expects to expand its workforce by 40% to 35k; it also has a lighting fixture business and a ‘design studio’ in Dubai where it employs over five hundred architects and engineers, as well as a contracting company and a pod manufacturing business.

The RTA has confirmed that electric air taxis will be operational in the emirate as from Q1 2026, operating from four vertiports – at Dubai International Airport, Palm Jumeirah, Dubai Marina and Dubai Downtown. The vehicles, designed to carry a pilot and four passengers at 320 kph, will be considerably less noisy than normal helicopters with a sound level of no more than forty-five decibels, which is said to be less than the sound of rain. A further benefit is said to be the reduction in the level of traffic across Dubai., (but that would need a raft of such vehicles that could snarl air traffic). The new heliports will be designed and developed in collaboration with air mobility infrastructure firm Skyports and will include dedicated take-off and landing areas, electric charging facilities, a dedicated passenger area. It is reported that the RTA has given Joby Aviation six years exclusive rights to operate air taxis.

The first-ever Aviation Future Week will take place next month, sponsored by Emirates and the Museum of the Future which will be the three-day event’s venue. The meeting will include keynotes, panels and workshops and be attended by UAE ministers, senior government officials and industry leaders from across the aviation and aerospace, airfreight, Maintenance, Overhaul & Repair (MRO) and logistics ecosystem. Day one will address air travel demand and airport infrastructure, day two will be dedicated to developments within airfreight and logistics, and the third day will navigate the boundary-breaking potential of Web3, AI and XR infused solutions to drive workflow efficiencies and service delivery.

The latest report from the Baltic Exchange and Xinhua News Agency has confirmed Dubai’s fifth position, as a global maritime leader, in its 2024 International Shipping Centre Development Index. This is the fifth year in a row that it has achieved this placing behind Singapore, London, Shanghai, and Hong Kong, whilst it still remains the only Arab city in the top twenty. It also notes the emirate’s efforts to enhance transparency in local container fees, through the Dubai Maritime Authority’s new directive, which requires service providers to list fees on the unified Dubai Trade portal.

Under the soon to be signed comprehensive economic partnership agreement, Australia will export more than 99% of its products to the UAE without tariffs. The bilateral deal is expected to boost trade and investment ties and will “streamline trade processes, eliminate tariffs on a wide range of goods and services, create new opportunities for investment, and encourage private-sector collaboration in priority sectors”. The treaty is expected to be signed later this year. Australia exports many products to the UAE, including alumina, coal, steel, meat, dairy, oil seeds, seafood, canola seeds, nuts and honey, whilst, on the flip side, the antipodeans will cut import tariffs on UAE-produced furniture, copper wire, glass containers and plastic.

The UAE’s energy and infrastructure minister, Suhail Al Mazrouei, posted that clean energy production now accounts for 27.83% of the country’s total energy mix last year; these figures show that the UAE is well on its way to meet its 30% target of its energy requirements through clean sources by the end of the decade. In the four years to 2022, the country succeeded in doubling its renewable energy capacity as part of the UAE Energy Strategy 2050 to triple the installed capacity by 2030. The minister noted that in 2023, the UAE achieved a remarkable growth of 70% in installed renewable energy capacity, which reached 6.1 gigawatts. The Arab world’s second largest economy has invested heavily in clean energy projects, ranging from nuclear to solar, to achieve net-zero emissions by 2050; in 2021, its Net Zero 2050 Strategic Initiative launched a US$ 163.49 billion plan to invest in clean and renewable energy sources over the next three decades.

Following the Fed’s decision to cut rates, the Central Bank of the UAE has followed suit and decided to cut the Base Rate applicable to the Overnight Deposit Facility (ODF) by fifty basis points, from 5.40% to 4.90% effective from yesterday. The central bank has also decided to maintain the interest rate applicable to borrowing short-term liquidity from the CBUAE at fifty basis points above the Base Rate for all standing credit facilities.

The Central Bank (CBUAE) on Monday imposed a fine of US$ 1.36 million on an unnamed bank operating in the UAE for violating anti-money laundering laws and for funding illegal organisations. The sanction was in line with articles 89 and 137 of the Federal Decree Law No. (14) of 2018 regarding the Central Bank & Organisation of Financial Institutions and Activities and its amendments, and article 14 of the Federal Decree Law No. (20) of 2018 on Anti-money Laundering and Combating the Financing of Terrorism and Illegal Organisations. It directed the bank to present the Central Bank’s action to the board of directors of its overseas headquarters.

The DFM opened the week, on Monday 16 September, one hundred and eighty-eight points (1.9%) higher the previous five weeks and gained fifty-six points (1.3%), to close the trading week on 4,436 by Friday 20 September 2024. Emaar Properties, US$ 0.02 lower the previous week, gained US$ 0.03, closing on US$ 2.38 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 5.45 US$ 1.68 and US$ 0.35 and closed on US$ 0.68, US$ 5.54, US$ 1.71 and US$ 0.35. On 20 September, trading was at three hundred and nine million shares, with a value of US$ 191 million, compared to, eighty-five million shares, with a value of US$ 54 million, on 13 September.  

By Friday, 20 September 2024, Brent, US$ 0.55 higher (11.0%) the previous week, gained US$ 3.08 (3.4%) to close on US$ 74.69. Gold, US$ 109 (5.8%) higher the previous fortnight, gained US$ 36 (1.4%) to end the week’s trading at a record US$ 2,647 on 20 September 2024.

Qantas has revealed it will pay former CEO Alan Joyce an extra US$ 2.3 million for his last two months in the role, which will partly offset the US$ 6.03 million, he ‘lost’ because, on his shift, there were several scandals including Qantas illegally sacking 1.7k workers during the pandemic period, and the ACCC suing the airline for cancelled “ghost flights”. He resigned earlier than expected last September and two weeks later, the airline made its first ever apology to the 1.7k ground staff it illegally sacked, asking the case to be heard in the Federal Court and High Court. The disgraced former supremo could also receive a further US$ 1.6 million from the airline, as he is still part of a long-term incentive plan scheme, which is valid until 2026. This is on top of the US$ 10.0 million received in 2022-23, his last full year as chief executive.

Amazon is the latest major international group to ordering its 1.5 million global staff back to the office five days a week as it ends its hybrid work policy; the move starts on 01 January 2025. Other global companies, such as JP Morgan, UPS and Dell, seem to agree and are liklely to demand full-time office attendance. Amazon’s chief executive, Andy Jassy, posted that “we’ve decided that we’re going to return to being in the office the way we were before the onset of Covid,” to be “better set up to invent, collaborate, and be connected enough to each other”. He is also concerned that its corporate culture is being diluted by flexible work and too many bureaucratic layers. HO staff staged a protest last year as the company tightened the full remote work allowance that was put in place during the pandemic. Amazon said it would end hot-desking in the US, although that will continue in most of Europe. Amazon’s stance contrasts with the UK government’s approach, which has promised, (for what it is worth), to make flexible working a default right from day one as part of a new employment rights bill due to be published next month, with Business Secretary, Jonathan Reynolds, wanting to end the “culture of presenteeism”, noting there were “real economic benefits” to people working from home. A US summer report indicated that about 12% of full-time employees were fully remote and a further 27% reported having hybrid work policies in place.

In H1, data from PwC showed the fragility of the UK economy, with their estimate that every week, eighteen chemists, sixteen pubs and nine banks closed over the period. The latest high profile casualty could be TGI Fridays, with Hostmore saying the sales process was in an “advanced stage”, but added it was unlikely to “recover any meaningful value” of its assets, as bids to date have failed to meet the chain’s liabilities. The hospitality group added that “the sale process remains ongoing, with no decisions having been made to close any existing stores, and TGI Fridays continues to operate normally across the country”. It had tried to buy the US operator of TGI Fridays for US$ 236 million but that deal collapsed.

Regular coffee drinkers will know that Robusta and Arabica beans are now trading at near-record highs but may not know why this is so. The fact that the cost of unroasted beans traded in global markets is now at a “historically high level” attributable to a 2021 freak frost that wiped out coffee crops in Brazil, (the world’s largest producer of Arabica beans – those commonly used in barista-made coffee). The resulting deficit resulted in buyers searching for Robusta beans, that are used to make instant coffee blends, in countries such as Vietnam which subsequently was impacted by the region’s worst drought in nearly a decade. Now it appears that because of falling yields (and loss of revenue for coffee producers), many are turning to a smelly yellow fruit – durian – that is banned on public transport in in Thailand, Japan, Singapore and Hong Kong because of its odour. Stocks of Vietnamese coffee is “near depleted”; in contrast, Vietnam’s durian market share in China almost doubled between 2023 and 2024, and some estimate the crop is five times more lucrative than coffee. Furthermore, June Robusta coffee exports were down 50% on the year. Although exporters in Colombia, Ethiopia, Peru and Uganda have raised production, it is still not enough to ease a tight market. The end result is that end users can expect further price increases when they visit their local coffee outlet, even though it is estimated that beans contribute less than 10% of the price of a cup of coffee.

With China facing an ageing and shrinking population, along with a dwindling pension fund, China has introduced new regulations including that retiring before the statutory age will not be allowed and that the country will “gradually raise” its retirement age for the first time since the 1950s – from fifty to fifty-five for women in blue-collar jobs, from fifty-five to fifty-eight for females in white-collar jobs, and for men an increase from sixty to sixty-three; the change will take place from 01 January 2025. Starting 2030, employees will also have to make more contributions to the social security system in order to receive pensions, and by 2039, they would have to clock twenty years of contributions to access their pensions. A population slowdown, (as its birth rate continues to decline for a second consecutive year), and a weakening economy, are disturbing news and have been brought about by a decades-long one-child policy; to add to their woes its average life expectancy  has risen to 78.2 years, and that by 2040,  33% of the population, (some 402 million), will be above the age of sixty by 2040 – 58.3% higher since 2019’s 254 million. It is estimated that over the next decade, about three hundred million people, who are currently aged fifty to sixty, are set to leave the Chinese workforce.

August data from the US Commerce Department indicated that consumers spent 0.1% more than a month earlier, after surging the most in eighteen months in June; sporting goods stores, online retailers, (1.4% higher), health/personal care, (up 0.7%), and home/garden stores all reported higher sales. This is in contrast to gas sales, dipping 1.2%, and auto sales declining, whilst being flat for restaurants and bars. Despite all the financial problems, (including soaring inflation and higher interest rates), for the average US household, it seems that it had not any direct bearing on consumer demand.

A report from the National Association of Realtors showed existing home sales fell 2.5% in August to a seasonally adjusted annual rate of 3.86 million units, the lowest in ten months. The median existing home price increased 3.1% from a year earlier to US$ 416.7k, the highest on record for any August. Maybe the latest rate cut may see more homeowners putting their homes on the market, as most homeowners have mortgage rates below 4% and when rates start to head south, this could stimulate demand that has been largely dormant.  However, as Jerome Powell pointed out. “the real issue with housing is that we have had and are on track to continue to have not enough housing,” adding “this is not something that the Fed can really fix, but I think as we normalise rates, you will see the housing market normalise.”

The US central bank has lowered interest rates, by 0.50% to the range of 4.75%-5.00%, for the first time in more than four years. Fed’s Jerome Powell commented that the move was needed as price rises ease and job market concerns grow. He also added that the cut was intended to make sure that high borrowing costs, put in place to fight inflation, would not end up hurting the US economy. The Dow Jones Industrial Average, the S&P 500 and the Nasdaq jumped after the initial announcement but ended the day modestly lower.

In contrast, the BoE Interest rates did nothing – exactly what happened some three years ago when they probably too slow at not pushing rates higher. Andrew Bailey, the BoE governor, noted that they are “now gradually on the path down”, adding that inflation had “come down a long way” but warned the Bank would need to see more evidence that it will remain low before cutting rates further. With inflation, at 2.2%, nearing the BoE 2.0% target, it is highly likely that there could be two 0.25% cuts in Q4. Has the BoE got it right this time or will History Repeats Itself?