Masters of War                                                           27 September 2024

Nakheel, part of Dubai Holding Real Estate, has awarded a US$ 470 million contract, to Alec by Nakheel, to construct its seventy-five-storey Como Residences on Palm Jumeirah.  This luxury development will only have a maximum two units per floor and will comprise a total of eighty-one residences, ranging from two- to seven-bedroom apartments, including a spacious duplex penthouse. Each apartment will have 180-degree views of the sea and skyline, while those on levels twenty-three and above having 360-degree panoramas. Two-bedroom prices start at US$ 5.72 million. The development includes elevated private sandy beaches, alongside communal and private pools on many levels, along with a rooftop infinity pool and observation deck on the seventy-fifth floor. Additional amenities will include private parking, an onsite spa, a fully equipped gym, green spaces, and children’s play areas. The project is set for handover in the Q2 2028.

LMD announced the launch of The Pier Residence, valued at US$ 204 million, in Dubai Maritime City. Slated for completion by Q2 2027, the project will comprise two hundred and seventy-four 1 B/R to 3 B/R apartments, all with views spanning the Arabian Gulf, and the Downtown Dubai skyline. The usual amenities will be available, including a premium gym, a padel court, jogging/walking tracks, a luxurious residents’ lounge, and a children’s play area. Devmark has been appointed the exclusive agent for the project, with the real estate developer partnering with the National Bank of Fujairah. The developer also carries on business in Spain, Greece and Egypt.

MS Developments has commenced construction on its latest luxury project, Iluka Residences, located within the exclusive Dubai Islands; it will feature a range of one to four-bedroom apartments. Each apartment will have a fully equipped Miele kitchen, Italian boutique brand Gessi sanitary fittings, and refined flooring featuring Italian tiles.  

Citi Developers launched Allura Residences, its second project, at a cost of US$ 82 million, in Jumeirah Village Circle. It consists of a ground floor, five parking levels, and twenty-nine floors with a private business centre, along with a private pool for every 2 B/R and 3 B/R apartment, located at a corner of the building. Allura Residences will feature the largest lobby ever, at approximately 8k sq mt, in Jumeirah Village Circle which will also house a dedicated business centre. Residential units will be handed over to customers in Q2 2027, with a 1% monthly payment plan until delivery.

This week, HH Sheikh Mohammed bin Rashid has approved the US$ 2.72 billion master plan for the expansion of the Dubai Exhibition Centre in Expo City; this will almost treble the exhibition space from 58k sq mt to 180k sq mt. It is estimated that the number of annual events will double to six hundred, with an annual impact of up to US$ 14.71 billon by 2033. This project is an important cog in the government’s strategy to ensure that Expo City becomes a dynamic economic hub, driven by global exhibitions and events. By 2030, the third and final phase of the project will be completed and will feature twenty-six halls on a single contiguous level that spans 1.2 km, and will accommodate one mega event or up to twenty simultaneous smaller events. It will also include a 300+ key hotel, retail outlets, commercial offices, and an industrial kitchen for fully integrated operations. The Dubai Ruler also commented that “this iconic venue will not only become the largest indoor exhibition and events destination in the region but also set new global standards for excellence in the industry. We are committed to consolidating Dubai’s status as a global leader in the events and exhibitions sector and the top destination for mega events.”

Rizwan Sajan, the founder of Danube Properties, estimates that over the next five years, there will not be an oversupply of residential units because the high demand will continue to absorb all the new supply, as there is an increasing influx of investors. He also thinks there will be a positive  knock-on effect when the Ras Al Khaimah gaming resort opens in 2026, commenting that, “I believe that once the gaming resort in Ras Al Khaimah opens in the next few years, the influx of tourists to Dubai will be massive,” and “I don’t see an oversupply in the next four-five years, because the opening of the gaming resorts will likely double the number of tourists”.

There is no doubt that the residential property building sector is booming, with preliminary numbers, released by Cavendish Maxwell’s Property Monitor, indicating that launch projects in the emirate numbered one a day. In March, the thirty projects launched that month will add a further 10k units to the market. Some in the market espouse that property is becoming more expensive – which it is when compared to local recent prices – but not when compared to properties in other major global cities. Latest data from Savills research shows Dubai prices of US$ 800 per sq ft lags well behind the likes of Hong Kong’s US$ 4k, US$ 2.6k – New York, US$ 2.6k – Geneva, US$ 2.1k – Shanghai, US$ 1.9k – London, US$ 1.8k – Singapore, US$ 1.6k – LA and US$ 1.1k – Mumbai.

A European UHNWI has acquired an off-plan, five-bedroom 15k sq ft villa for US$ 34 million at Jumeirah Bay Island’s Sea Mirror community; this becomes the most expensive off-plan villa sale of the year. The community will be home for eighteen residences, designed by international architects Jacobsen Arquitetura and Studio MK27, while the interiors are designed by Patricia Urquiola, a Milan-based designer. The properties are equipped with expansive indoor and outdoor spaces, complemented by world-class amenities from the neighbouring Bulgari Resort, Marina, and Yacht Club.

UBS has put a slight damper on the Dubai property market by elevating its status from ‘fair-valued’ last year to ‘moderate bubble risk’, with the UBS Global Real Estate Bubble Index 2024, seeing Dubai’s score increasing from 0.14 in 2023 to 0.64 this year. Since the market started its current turbo-charge in early 2021, the bank’s report noted that “transaction numbers have reached new all-time highs each year and excess supply has been absorbed. In the last four quarters, real housing prices increased by almost 17% and are 40% higher than in 2020. A high proportion of likely speculative, off-plan transactions, and an elevated new supply, could trigger a moderate price correction in the short term.” In August, Property Monitor said Dubai property price growth experienced its second-highest monthly gain of the current market cycle, with a monthly 2.48% gain recorded. This is more than double the rate of growth compared to last month as well as the average monthly growth experienced YTD.

In H1, Dubai delivered twelve new hotels, and over 2.7k new hotel rooms, as indicators showed a buoyant hospitality section, with a further 10.1k rooms and forty properties, set to come on to the market over the next fifteen months; currently a further 4.75k rooms are expected to be added between 2026 – 2027. Occupancy, at 78%, was higher than pre-Covid levels, with ADR at US$ 196 –  its highest level in six years. By the end of June 2024, Cavendish Maxell estimated that there were seven hundred and sixteen establishments and 149.75k rooms. Of the total, Cavendish Maxwell indicated that 67% of inventory was in the luxury, upper upscale or upscale classification and 27% in the upper midscale and midscale category; the balance was in the economy range. 75% of new supply in H1 was for the top end of the market, with hotels being opened including The Lana Dubai Dorchester Collection, SIRO One Za’abeel, One & Only Za’abeel, FIVE Lux JBR and the Address Palace Dubai Creek Harbour. Leading source markets were Western Europe (20%), South Asia (17%), Eastern Europe (15%), GCC (14%) and Mena 12 (12%).

In its Dubai Office Market Review, Knight Frank posts that the average Dubai lease office rates  had risen by an average 22.4%, in H1, with the DIFC continuing as the most expensive area for office rentals in the city. The main factors pushing costs higher is a combination of rising demand and limited supply. The consultancy notes that the demand can be seen across the city’s top office submarkets, and that Grade A office occupancy levels currently exceed 90%. Over the next four years, it is estimated that a further 4.2 million sq ft of new office space will be added. Meanwhile, D&B Properties reckons that Dubai’s office rental market has seen a 19.0% in Q2. 

Knight Frank notes that the three most expensive locations, for office rentals are DIFC, Trade Centre District and Downtown at US$ 97 per sq ft, US$ 95 and US$ 64. Over the past twelve months. The Greens (77%), Sheikh Zayed Road (West) (77%), and Jumeirah Lakes Towers (67%) have also experienced double-digit growth rates, with rents now exceeding US$ 55 per sq ft.

The first ever global gathering of the global diamond industry will take place in Dubai from 11 -15 November and will encompass three key events – DMCC’s Dubai Diamond Conference, the Kimberley Process Plenary Session, and the Jewellery, Gem & Technology in Dubai trade show. The biennial DDC, opening the week on 11 November, will focus on critical discussions about the industry’s most pressing challenges, and will be followed by the three-day JGT Dubai; this year’s event will bring together gemstone dealers, jewellery manufacturers, tech solutions, and service providers for three days of networking and trading. The 2024 Plenary Session of the UN-led Kimberley Process (KP), running from 12 -15 November, will benchmark progress against the programme’s priorities and adopt key administrative decisions, as part of the KP’s efforts to regulate the international diamond trade and prevent conflict diamonds from entering the market.

Another week and news of yet another Comprehensive Economic Partnership Agreement for the UAE; this time, it is New Zealand with negotiations having been concluded. According to New Zealand’s Trade Minister, Todd McClay, “the trade deal will remove duties on 98.5% of NZ’s exports with that proportion expected to rise to 99.0% within three years”, and “this will create new opportunities for New Zealand businesses in the dynamic UAE market, contributing to our ambitious target of doubling exports by value in ten years.”  The UAE Minister of State for Foreign Trade, Dr Thani Al Zeyoudi, added that “the UAE is committed to expanding opportunity for our private sector by enhancing market access to key economies, and with its well-developed agriculture and food-production sectors, New Zealand is a nation that holds outstanding potential across a number of industry verticals.” In H1, bilateral trade was valued at US$ 790 million.

YTD, Dubai Maritime City has docked almost three hundred vessels – a 16% annual hike in dry berth occupancy.  DMC, with a two hundred and forty-nine-hectare waterfront platform, is the region’s premier maritime cluster, providing world-class service and facilities for luxury yacht and commercial shipbuilding/repair companies. Following comprehensive upgrades, including the retrofit of DMC’s ship lifts, (doubling its annual ship handling capacity by 150% to 1k vessels), the introduction of new ship cradles, and the activation of state-of-the-art substations and shore power supplies, will support more complex shipbuilding and repair projects.

In a meeting with Andrey Slepnev, Minister in charge of Trade for the Eurasian Economic Commission, in Moscow, Dr Thani bin Ahmed Al Zeyoudi, UAE Minister of State for Foreign Trade noted that the UAE has been exploring ways to expand trade and investment ties with the Eurasian bloc, which includes Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan. The ministers discussed the progress of ongoing negotiations for a Comprehensive Economic Partnership Agreement, which are currently at an advanced stage and aim to establish a solid framework for cooperation. Key sectors identified for potential growth include logistics, manufacturing, agriculture, and transport, along with opportunities for a north-south trade corridor, linking the UAE and Russia. In H1, non-oil trade between the UAE and the EEC reached US$ 13.7 billion – 29.6% higher, compared to the same period last year.

Latest H1 data, issued by the Central Bank of the UAE, sees national airports posting a 14.2% increase in passenger traffic to 71.7 million travellers. DXB posted an annual 8.0% increase to 44.9 million.

Latest reports from the UAE Central Bank show that the country’s 2024 economy is expected to grow by a further 0.1% to 4.0%, compared to its June estimate, whilst 2025 figures have been upgraded to 6.0%. In H1, the country posted a record US$ 381.5 billion in non-oil foreign trade. Future growth will also benefit from several global economic agreements, with various nations, over the past eighteen months; CEPAs have been signed with the likes of India, Turkey, Israel, Indonesia, Cambodia, South Korea, Chile, Mauritius and Australia, (with that agreement being signed by year-end). It is expected that the economy will benefit from these agreements to the tune of US$ 41.65 billion by 2031. Earlier in the month, the Ministry of Economy posted that the Q1 economy grew by 3.4% to US$ 117.07 billion, with the non-oil sector up by 4.0%. The report noted that the boost to GDP reflects the “improved performance of the oil sector”, but growth forecasts continue to be “driven by tourism, transportation, financial and insurance services, construction and real estate, and communications sectors”. However, it did warn that “we see risks from escalation of some of the current geopolitical tensions or eruption of new ones (including the Russia-Ukraine conflict, the war in Gaza, and the disturbances in the Red Sea) … from a global economic deceleration resulting from the extensive period of high interest rates and from potential further oil production cuts by Opec+.” It also lowered its 2025 inflation forecast by 0.1% to 2.2% but noted that may be revised downward if disinflationary trends in food, beverages, and key non-tradable components continue to persist.

Meanwhile, Dubai Statistics Centre posted that the emirate’s August inflation that inflation rose by 0.06%, month-on-month. On an annual basis, CPI inflation rose 0.06% to 3.38%, after annual Inflation has been running at an average 3.6% in the year to August, compared to 3.3% in 2023. Housing, (which accounts for over 40% of the “inflation basket”), has risen by more than 6.0% year-on-year each month in 2024, with the August housing/utilities component of the basket rising by 6.9%, year-on-year.  Other increases were noted in  transport costs, (which account for about 9% of the “inflation basket”), up by 0.3% month-on-month, food/beverage, up by 0.6% on the month and 2.8% on the year, recreation prices, up 4.6%, month-on-month, financial services, up 5.9% on the year and education fees which have been stable at 3.1% year-on-year for the last five months. Emirates NBD expects 2024 Dubai CPI inflation to be 0.2% higher at 3.5% year-on-year.

According to the Securities and Commodities Authority, UAE public joint stock companies distributed a total of US$ 16.82 billion in cash, split between dividends, (US$ 15.81 billion), and bonus shares, (US$ 1.01 billion), during the past year. The leading sectors for dividend payments included banking, energy, telecommunications and utilities with cash dividends of US$ 5.00 billion, US$ 3.09 billion, US$ 2.38 billion and US$ 3.09 billion, followed by real estate, transportation, services, insurance and investments/financial services. The banking sector also dominated bonus share distributions, totalling US$ 937 million, followed by the services sector with US$ 77 million.

The DFM opened the week, on Monday 23 September, two hundred and forty-four points (3.2%) higher the previous six weeks and gained eighty-five points (1.9%), to close the trading week on 4,521 by Friday 27 September 2024. Emaar Properties, US$ 0.03 higher the previous week, shed US$ 0.01, closing on US$ 2.37 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.68, US$ 5.54 US$ 1.671and US$ 0.35 and closed on US$ 0.69, US$ 5.65, US$ 1.73 and US$ 0.37. On 27 September, trading was at one hundred and fifty million shares, with a value of US$ 77 million, compared to three hundred and nine million shares, with a value of US$ 191 million, on 20 September.  

By Friday, 27 September 2024, Brent, US$ 3.53 higher (5.0%) the previous fortnight, shed US$ 2.71 (3.6%) to close on US$ 71.98. Gold, US$ 145 (5.8%) higher the previous three weeks, gained US$ 34 (1.3%) to end the week’s trading at a record US$ 2,681 on 27 September 2024

The benchmark price of oil had risen earlier in the week mainly attributable to expected global economic growth and possible supply problems, with China’s latest stimulus package also helping to boost confidence. By the end of the week, negative factors,  following the latest Israeli bombing in Lebanon, dampened  the market. 0.000173 per LITH.

Several new mines were opened in recent years to take advantage of the surging prices being paid for lithium, spurred on by rising demand and prices for rechargeable batteries, of which lithium is the key component. Often referred to as ‘white gold’, it was trading at CNY/T 631k in early November 2022 but had fallen to just under CNY/T 400k in June 2023, and yesterday it was hovering around the CNY/T 72.5k – an 85% slump in just fifteen months – with the two main drivers being a global oversupply of the commodity and declining demand, as sales of EVs are heading south. The main casualty is Australia, mainly because it supplies 52% of the world’s total production. It also has the second largest reserves of the mineral, (after Chile). Not surprisingly 2024 has been littered with more closures including Core Lithium suspending mining at its Finniss site in Darwin, in January, (due to “weak market conditions”), WA’s Kemerton lithium processing plant scaling back production in August, and Arcadium Lithium’s Mt Cattlin mine being mothballed, blaming low prices. Some analysts have warned that oversupply will keep the market under pressure until at least 2028.

A study by Good Food Nation rates air fryers as the third most-used appliance in 58% of UK kitchens, after toasters and microwave ovens, which are used by 77% and 75% of those polled.

Indian-owned Jaguar Land Rover, UK’s largest car manufacturer, will invest an extra US$ 669 million in its Halewood plant, to bolster future production of EVs; production is expected to start in H1 2025. Currently, the plant, (which currently makes hybrid, diesel and petrol-powered Range Rover Evoque and Discovery Sport models) is being expanded for EVs and already has a production floor space. It is yet unknown what electric models will be made at the plant but it is widely expected that it will be a mid-sized vehicle under the Range Rover brand. The production lines will also utilise seven hundred and fifty autonomous robots and laser alignment technology, overseen by cloud-based digital plant management systems.

Julian Dunkerton is not happy with the way that its competitor, Shein, is being treated by the UK tax authorities, with him complaining that the fast fashion giant was enjoying an unfair advantage because import duties are not charged on the low-value parcels, up to US$ 180, (GBP 135k) it sends direct to customers from overseas. The Superdry supremo said it would be in the UK’s interests to get rid of this tax “loophole”, adding that “the rules weren’t made for a company sending individual parcels [and] having a billion-pound turnover in the UK without paying any tax.” Shein has previously said it complies fully with all its UK tax liabilities. US and EU authorities are considering looking at whether to tighten tax policies to bring Shein and other direct-to-consumer businesses, like Chinese retailer Temu, into the tax net.

Earlier in the week, China’s central bank announced a new stimulus programme to grow its struggling economy; three of the main measures were a cut in interest rates on loans to commercial banks, rate cuts on new and existing mortgages, to 15%, and a reduction in the amount of money banks are required to reserve. Housing remains its number one concern and after twenty years of seemingly non-stop building, the administration has finally realised that it built too much too fast  and has now resulted in many of these residential units being left empty or unfinished; the end result is that millions of Chinese have lost their life savings and some of the country’s largest real estate companies have either gone bust or are close to it. These measures are intended not only to address the property market slump but also to boost weakened consumer demand. Not since the pandemic has such an intervention taken place, but the jury is out whether this will be enough.

In an ongoing strategy to speed up the flagging economy, Xi Jinping’s administration has been promoting investment in green energy, EVs, solar panels, lithium batteries and advanced technology, such as AI and semiconductors. For example, it has been manufacturing more EVs than the world can absorb and dumping them for cut-throat prices, on the European and US markets, much to the chagrin of other global manufacturers. A tit for tat trade war is ongoing. Earlier in the year, China had already introduced a range of measures to help its economy, including allowing local governments to buy distressed real estate as well as reducing housing deposits.

Under new rules, introduced by the Payment Systems Regulator and effective from 07 October, UK banks must refund fraud victims up to US$ 114k (GBP 85k) within five days. Most High Street banks and payment companies voluntarily compensate customers who are tricked into sending money to scammers. This moves the previous higher maximum compensation of US$ 555k but it was noted that the new balance would cover more than 99% of claims. It also added that once a bank or payment company had refunded a customer, it could claim half back from the financial institution the fraudster used to receive the stolen money. The new legislation also covers victims of authorised push payment fraud; this occurs when scammers pretend to be legitimate businesses, such as their bank or a tradesperson, or by selling goods that do not exist.According to UK Finance, the number of cases of this type of fraud rose by 12% to 232.4k, with losses totalling US$ 615 million. Of that total, there were only eighteen instances of people being scammed for more than US$ 555k, and four hundred and eleven, where they lost more than US$ 114k.

Even though the new Starmer administration made its position on non-domicile tax status clear by seemingly advocating is abolition, it seems that the Treasury might be thinking otherwise. It is reconsidering parts of Labour’s manifesto plan on account of concerns over how much money will be raised, should wealthy foreigners simply leave the UK. (“Non-dom” describes a UK resident whose permanent home – or domicile – for tax purposes is outside the UK). In March, the revenue raised was assessed by the Office for Budget Responsibility to be highly uncertain. Treasury officials acknowledge that scrapping two concessions made by the previous government might not raise the US$ 1.34 billion they thought it would, or indeed any money at all. In its pre-election manifesto, Labour planned to put this money for extra hospital and dental appointments and school breakfast clubs. It seems that some watering down or phasing in of the decision to apply inheritance tax to trusts, and a discount on bringing in foreign income next year, is being considered. However, it did comment that “we are committed to addressing unfairness in the tax system so we can raise the revenue to rebuild our public services”, and “that is why we are removing the outdated non-dom tax regime and replacing it with a new internationally competitive residence-based regime focused on attracting the best talent and investment to the UK.”

The OECD has adjusted its earlier dismal 2024 May forecast for the UK economy from 0.4% to 1.1%, putting it in the same bracket as Canada and France – but behind the US; 2025 sees growth at 1.2%, in fifth place, but ahead of Germany and Italy. The four main reasons for this sudden improvement are down to a more stable political backdrop, following the demise of the chaotic Sunak administration, an uptick in the global economic climate, the August cut in interest rates, the end of the train/doctor strikes and – following public sector wage increases – and a more stable political outlook, following July’s general election. The final caveat from the OECD was that “significant risks remain. Persisting geopolitical and trade tensions could increasingly damage investment and raise import prices.” Consumer prices this year, and in 2025, are expected to come in at 2.7% and 2.4% – a faster rate than the other six OECD members. The quandary facing the Chancellor, Rachel Reeves, is whether to increase borrowing rise for a time, which would boost growth and reduce debt over the longer term, or slash public expenses to try and maintain the public debt  hovering around 100% of GDP.

After as good as eradicating Gaza, Israeli forces turned their attention to fighting the Hezbollah in neighbouring Lebanon. There, the week started with the deadliest day of Israeli attacks in more than a decade, killing almost five hundred people, as the Israeli military conducted air strikes on Hezbollah sites; tens of thousands of Lebanese were forced to flee for safety. Meanwhile, Iran warned Israel it had ‘crossed its red lines’ and branded the attack a ‘game-changing escalation’, further stoking fears of an all-out war in the region. The Israelis responded by resuming attacks today, with explosions reported in parts of the city and three buildings reduced to rubble. Today the Lebanese capital has become a blazing hellscape, as Israel continues to pound it with missiles overnight. 

Lebanon’s economy was in dire straits even before this week’s events, not helped by twelve months of border fighting and years of “economic mismanagement”. Two of its major sectors – hospitality and agriculture – are in tatters; even before the latest incursion, occupancy in the country’s fifty thousand hotel rooms was at just 10%, whilst much of its agricultural land lays in ruins, following rocket attacks and enforced absence of much needed farming. Remittances, which accounted for up to 30% of GDP, have almost dried up, whilst foreign direct investment will share the same fate. If there is no money available, imports will be severely restricted whilst the currency will take a pounding.  Its GDP, already in negative territory, could contract up to 25%, if the fighting keeps going, and infrastructure continues to be destroyed. On top of that, power, medical, utility, education, transport and retail sector, already hit by low purchasing power, will only worsen.

It is time for the superpowers to wake up, stop talking and take action to stop this senseless and mindless killing.Nobody seems able to second guess the Israeli prime minister, who to all intents and purposes, appears to only stay in power as he rides roughshod over the Israeli people – and most of the world. He thinks he has carte blanche to attack any ME state and seems oblivious to the consequences of his actions. How this warmonger can get away with killing over 50k people in Gaza, (many of whom were innocent women and children), and claim this was acceptable because he was defending his country, beggars’ belief.  The same is now happening in Lebanon. History will not treat him well but will note that he was one of the century’s Masters of War.