Charity Begins At Home!                                                         04 October 2024

fäm Properties posted that Q3 overall sales transactions topped 50.4k, (37.9% higher on the year and 16.6% to the good on the quarter). Volume wise, the 39.1k apartment sales accounted for 77.0% of the Q3 total, (and 43.9% higher on the year), with a value of US$ 19.21 billion, whilst 8.2k villas were sold, with a value of US$ 10.68 billion – 16.6%  higher on the year and 18.4% on the quarter. The surge in the sector can be gleaned from the various median prices over recent times – US$ 277, US$ 321, US$ 383 and US$ 412 (all in per sq ft) in 2021, 2022, 2023 and 2024. For plot sales, there were 42.3% and 45.9% rises in volumes. on the year and the quarter, at 2.1k plots, valued at US$ 8.15 billion. Commercial real estate posted a 12.1% annual rise to 1.11k sales, valued at US$ 627 million.

It is interesting to note Q3 property sales over the past five Q3s, to 2024, read US$ 4.93 billion, US$ 11.55 billion, US$ 18.94 billion, US$ 29.75 billion and US$ 38.66 billion; transactions over that period were 8.6k, 15.9k, 25.5k, 36.7k and 50.4k. Over the period, the top five performing locations were Jumeirah Village Circle, Dubai South, Business Bay,, Wadi Al Safa and Dubai Hills, with 4.5k, 2.9k, 2.7k, 2.4k and 2.3k sales, valued at US$ 1.45 billion, US$ 2.25 billion,  US$ 1.97 billion,  US$ 1.44 billion and US$ 2.01 billion. In Q3, the most expensive sale, at US$ 749 million, was for an apartment at the One at Palm Jumeirah. A breakdown by value – below US$ 272k,  US$ 272k-US$ 545k,  US$ 545k-US$ 817k, US$ 817k-US$ 1.36 million and US$ 1.36 million plus – with 29%, 31%, 18%, 14% and 8% of sales. When it comes to primary versus secondary sales, the volume ratio was 68:32 and by value 67:33.

The latest Cavendish Maxwell report indicates that in the eight months YTD, new project launches neared 86k units, with an aggregate sales value of US$ 58.23 billion which augurs well for the year end figures beating last year’s record of US$ 74.11 million; a further 40k is expected by year-end, bringing the total to some 126k.  Sales transaction volumes in August reached 16.15k with Oqood, (off-plan), registrations accounting for 64.8% of all transactions, up by 6.5% month-on-month. The consultancy anticipated “that new launches will maintain their historically high levels throughout the remainder of 2024 and for a further 35k-40k units to enter the off-plan market.” The more popular areas for apartments are Dubai Islands, Jumeirah Garden City, Dubai Maritime City, Motor City, and Dubai Land Residence Complex, and for villas – The Valley, The Acres, The Oasis, and The Height Country Club. August witnessed the total volume of sales transactions increasing 0.28%, at 16.15k transactions – the second-highest month on record overall. Seven of the eight months of 2024, (with the exception of April), were record-setting months.

Property prices continued climbing to all-time highs, reaching US$ 390 per sq ft – 82.4% above April 2009’s nadir and 16.0% above the peak of September 2014. With the usual caveats, Cavendish Maxwell noted that, on an annual basis, prices have increased by 17.7% in August and now marks forty-two straight months of year-on-year increases.

With demand outstripping supply, it was no surprise to witness an 18.2% decline to four hundred deals registered in Dubai’s four prime areas. Over Q3, the number of home listings in the four prime areas declined by 52% – an obvious indicator that supply is failing to keep pace with the rapidity of sales. The number of US$ 10 million-plus home listings more than halved to 3.3k, whilst the number of sales rose 8.2% to ninety-two – a rise of 8.2%. Over the nine-month period to 30 September, home sales of over US$ 10 million nudged 1.8% higher to two hundred and eighty-two, valued at US$ 4.50 billion. The leading location continues to be Palm Jumeirah, with nineteen Q3 deals, totalling US$ 344 million, followed by Dubai Silicon Oasis and Dubai Hills Estate. Knight Frank’s data showed that nine sales worth more than US$ 10 million were recorded on the Palm Jebel Ali, totalling US$ 97 million in Q3 2024, and US$ 1.1 billion YTD, equating to 24.4% of Dubai’s total value of luxury home sales. As the demand for such homes heads north, there is a knock-on short-term impact that sees US$ 10 million plus listings slumping – YTD figure are 51% lower compared to 2023. However, despite this, the ratio of US$ 10-million-plus home sales to listings has climbed from 2023’s 10.7% to 17.1% this year.

In Q3, the average transacted price for a home in Dubai’s prime neighbourhoods stood at US$ 3.5 million, with Palm Jumeirah accounting for 90.4% of Q3 prime deals, followed by Jumeirah Islands (6.1%), Emirates Hills (2.2%) and Jumeirah Bay Island (1.4%).

Buoyed by the success of its initial entrée into Dubai’s residential market sector, Franck Muller Aeternitas Tower, London Gate, the leading Swiss luxury watch manufacturer, has now unveiled Franck Muller Vanguard Tower. Located in the heart of Dubai Marina, the US$ 436 million luxury thirty-four floor development will house seven hundred and twenty-two units – ranging from studio, (with sizes of between 414 sq ft– 674 sq ft) to three bedrooms, (spanning between 1.77k sq ft – 1.86k sq ft). Prices will start at US$ 341k, with handover expected within three years. According to Morgan’s 2024 report on Dubai’s Branded Residences, the number of units built in 2024 has risen by 50% from 2022 – equating to 7.2% of all property transactions in Dubai.

A new entrant to the burgeoning Dubai residential sector is Reef Luxury Developments, who will invest US$ 3.81 billion, to build thirty projects in the emirate – and 5k residential units – by the end of next year. It confirmed that is has already bagged a land bank across various places and will launch US$ 1.36 billion of projects by the end of 2024. All Reef apartments will have temperature-controlled sunken balconies, a developer-patented innovation that allows residents to enjoy year-round outdoor living. The developer has invested US$ 11 million in R&D to lead the real estate industry for innovation and provide more value to its customers focusing on technology and design.

This week saw the release of ‘Under Real Estate Strategy 2033’, with the aim of increasing the emirate’s real estate transactions by 57.7% to US$ 272.5 billion over the next decade. It also expects to raise the homeownership rate to 33% and implement programmes for affordable housing, whilst focusing on transparency and global marketing. New initiatives and policies will encourage people to buy more properties and turn to ownership, bring more transparency to the market, and enable developers to launch more affordable developments.

Although the sector has surged in recent years – and has now surpassed the record 2014 figures – it is hoped that the introduction of more affordable units as part of the Real Estate Strategy 2033 will open up opportunities for more people to own properties and help tenants transition to ownership. Ari Kesisoglu of Property Finder commented that the real estate market had seen a remarkable surge in property ownership over the past two years, and that this initiative “aligns perfectly with our long-held belief that strategic investments and cross-industry collaboration can enhance trust, technology, transparency, and talent in the real estate sector”. He also noted that the Dubai’s vast land availability presents a unique opportunity – a ‘blank canvas’ for real estate development.

Dubai’s September S&P Purchasing Managers’ Index Report saw the emirate’s overall activity rising at its fastest pace in four months, in contrast to the latest PMI Report for the country that showed the weakest expansion in business activity for three years; this was despite a slowdown in new business volume. The report noted that “the expansion led non-oil businesses to increase staffing and inventories to greater degrees than in August. Supplier performance also improved, though to a less extent amid reports of customs delays.” There was a marked jump in overall input costs, albeit with the rate of inflation easing to a five-month low, with the latest rise in charges being the quickest since the start of 2018.  Output prices also increased, as firms attempted to pass-through costs to customers.

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 Monday, retail prices saw declines, after average 8.6% September reductions for petrol. The breakdown of fuel prices for a litre for October is as follows:

• Super 98          US$ 0.725       from US$ 0.790           in Oct (down by 8.3%)
• Special 95        US$ 0.692       from US$ 0.757           in Oct (down by 8.6%)
• Diesel               US$ 0.673       from US$ 0.757           in Oct (down by 8.9%)
• E-plus 91         US$ 0.708       from US$ 0.738           in Oct (down by 6.5%)

Financial Times Ltd’s ‘fDi Markets’ has once again ranked Dubai as the world’s leading city, (for the sixth consecutive half-year period), for attracting Greenfield Foreign Direct Investment projects, ahead of London, Singapore and New York; in H1, Dubai’s five hundred and eight Greenfield FDI projects saw Dubai’s global share of the market 0.5% higher to 6.2%. Sheikh Hamdan bin Mohammed, Dubai’s Crown Prince, praised the city’s evolving economic policies and infrastructure as key factors in its appeal to investors and multinational corporations. India was the source country with the highest total estimated FDI capital into Dubai, accounting for 19.9%, followed by Switzerland (19.6%), US (12.0%), UK (8.3%) and France (7.4%).

A number of telemarketers in the UAE have been fined after authorities discovered over 2k violations. Under Cabinet Resolutions No. 56 and 57 of 2024, individuals are prohibited from using their personal numbers for marketing purposes, with penalties of US$ 1.36k, US$ 5.45k and US$ 13.62k for first, second and third violations respectively.

Because a takaful insurer failed to meet its legal minimum capital requirement, the Central Bank of the UAE has banned it operating in the UAE, from issuing or concluding new, or renewing, motor and health insurance contracts. The regulator, (which through its supervisory and regulatory mandates, works to ensure that all insurers, their owners and staff abide by the UAE laws), has given the unnamed institution six months to remediate the solvency position and comply with its directions.

The DFM opened the week, on Monday 30 September, three hundred and twenty-nine points (7.8%) higher the previous six weeks but, not surprisingly because of increased regional tensions, shed one hundred and fifteen points (2.5%), to close the trading week on 4,406 by Friday 04 October 2024. Emaar Properties, US$ 0.01 lower the previous week, lost US$ 0.14, closing on US$ 2.23 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.69, US$ 5.65 US$ 1.73 and US$ 0.37 and closed on US$ 0.68, US$ 5.44, US$ 1.66 and US$ 0.35. On 04 October, trading was at one hundred and fifty-seven million shares, with a value of US$ 100 million, compared to one hundred and fifty million shares, with a value of US$ 191 million, on 27 September.  

The bourse had opened the year on 4,063 and, having closed on 30 September at 4,503 was 440 points (10.8%) higher YTD. Emaar started the year with a 01 January 2024 opening figure of US$ 2.16, and has gained US$ 0.22, to close YTD at US$ 2.38. 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$ 0.70, US$ 5.53, US$ 1.71 and US$ 0. 36.

By Friday, 04 October 2024, Brent, US$ 2.71 lower (3.6%) the previous week, gained US$ 6.07 (8.4%) to close on US$ 78.05. Gold, US$ 179 (5.8%) higher the previous four weeks, shed US$ 13 (0.5%) to end the week’s trading at a record US$ 2,668 on 04 October 2024.

Brent started the year on US$ 77.23 and shed US$ 5.47 (271%), to close 30 September 2024 on US$ 71.76. Meanwhile, the yellow metal opened 2024 trading at US$ 2,074 and gained US$ 576 (27.8%) to close YTD on US$ 2,650.

As with most luxury carmakers, Aston Martin has been impacted by supply chain issues, falling sales in China and increased competition in the sector, after warning that its 2024 revenue and profits will be lower than expected; last year sales were at 6.6k vehicles, with about 20% of that total bound for SE Asia. This year, it expects production levels at round 1k less than originally planned. Monday’s announcement sent its shares tumbling by as much as 14%. Stellantis, the owner of brands such as Peugeot, Citroen, Fiat and Jeep, also saw its share price plummet on Monday, after a profits warning, noting that its profit margins would be significantly lower than previously thought this year. Other European carmakers are facing similar problems including Volkswagen, Mercedes-Benz and BMW having already downgraded their profit forecasts. The problems at Stellantis and Aston Martin reflect a wider malaise in the European car industry. According to data from the European Automobile Manufacturers Association, August sales of battery-powered cars were down nearly 44% on the year, while their share of the market dropped from 21.9% to 14.4%.

Despite its like for like sales growth slowing, Tesco posted a 4.0% hike in total Q2 sales, excluding fuel, at US$ 41.33 billion – with its adjusted operating profit at US$ 2.05 billion. The country’s biggest supermarket put this improvement down to its focus on value amid the continuing squeeze on shoppers’ budgets, and higher demand for its Finest premium ranges, which were almost 15% higher on the year

Liverpool-based Applied Nutrition has posted plans for a US$ 669 million, (GBP 500 million), flotation on the LSE, with a retail offering to private investors being coordinated by RetailBook, enabling them to acquire millions of pounds of stock at the IPO price. Issuing its Emerging Issues Task Force’s document will enable shares in Applied Nutrition to begin trading before the Budget in late October. There are reports that the company wanted the IPO before the budget because of the possibility that existing shareholders could incur a higher rate of capital gains tax post budget. Applied Nutrition’s largest brands include ABE – All Black Everything – which is a pre-workout range now stocked by Walmart, and BodyFuel, a hydration drink. The company formulates and makes premium nutrition supplements for professional athletes and gym enthusiasts and is the official nutrition partner of a range of English football clubs, including Premier League side Fulham, and the Scottish Premiership side Glasgow Rangers; it also has partnerships with professional boxers, MMA stars and in sports including basketball, cycling and rugby league. It sells its products in over sixty countries.

Although Harland & Wolff Group Holdings, with fifty-nine employees, has formally entered administration, for the second time in five years, its four operational companies, which run the yards, will continue to trade; their main yard is in Belfast with two more in Scotland, Methil and Arnish, and Appledore in England.  The shipbuilder said, “the Administrators will unfortunately be required to reduce the headcount upon appointment. The company has also reconfirmed that the administration process means that shareholders in Harland and Wolff will see the value of their investment wiped out. It does seem that, in 2020, the previous Norwegian owners had withdrawn support, and the business fell into insolvency, having not built a ship in a generation, with the business then taken over by Infrastrata. It was a small London-based energy firm which did not have significant experience in marine engineering, but then changed the name back to Harland and Wolff and in 2022 won a major Royal Navy contract as part of a consortium led by Navantia, Spain’s state-owned shipbuilder. However, finances did not improve – the 2021 accounts, covering a seventeen-month period, posted a US$ 33 million loss, in 2022 a US$ 37 million turnover, with a US$ 93 million deficit, (with the auditor’s opinion of “material uncertainty” about the firm’s ability to continue as a going concern), and last year a yet to be audited US$ 57 million loss. The nail in the company’s coffin came in July when the Sunak government confirmed there would be no support as there was “a very substantial risk that taxpayer money would be lost”.

A former owner of Misguided, Alteri Investors, the youth fashion brand, is in talks to buy Kurt Geiger, the upmarket shoe and accessories retailer. Several other parties are also considering bids for the sixty-one-year-old footwear and accessories brand, which has been owned by Cinven, the private equity firm, since 2015. Kurt Geiger, which could raise US$ 535 million in any sale, has around seventy stores, and multiple concessions within department stores, including Harrods and Selfridges.

A US$ 110 million proposed takeover bid, by Mike Ashley’s Frasers Group, has been rejected by the struggling UK luxury brand, Mulberry whose main shareholder is Singapore-based Challice; the potential buyer is already a 37% shareholder, but the bid was turned down because it did not recognise the company’s “substantial future potential value”. It claimed to be acting to prevent “another Debenhams situation” after apparently being kept in the dark over a move by Mulberry, last Friday, to raise cash. It has become a casualty of the global slump for luxury goods, such as handbags, which has also badly impacted the whole industry. Its latest accounts indicated that a “material uncertainty which may cast significant doubt on the group and parent company’s ability to continue as a going concern.” Mulberry shares were trading 3% lower on Tuesday morning.

Recent Chinese measures, to kickstart its economy, will not be helped by news that its largest EV market, the EU, has decided to implement measures, first introduced in summer, for the next five years. The charges were calculated based on estimates of how much Chinese state aid each manufacturer has received following an EU investigation. The EC set individual duties on three major Chinese EV brands – SAIC, BYD and Geely. Although German carmakers opposed the new tariffs, (with Volkswagen saying it was “the wrong approach”), and several member states abstained, the likes of France, Italy, the Netherlands and Poland backed the import taxes. The proposal was approved because it could only be rejected if a qualified majority of fifteen members voted against the motion.

Figures show that in August this year, EU registrations of battery-electric cars fell by 43.9% on the year, in the UK, demand for new EVs hit a new record in September, but orders were mostly driven by commercial deals and by big manufacturer discounts. The Society of Motor Manufacturers and Traders expressed concern that firms had “serious concerns as the market is not growing quickly enough to meet mandated targets”. It is obvious that improved incentives are required to help the domestic industry, as the Starmer administration has pledged to ban the sales of new petrol and diesel vehicles by 2030, after the former government had moved the timetable back to 2035.  Under the Zero Emission Vehicle mandate, at least 22% of vehicles sold this year must be zero-emission, with that target expected to hit 80% by 2030 and 100% by 2035; any manufacturer not meeting the target could be hit with a US$ 19.7k fine per car. BMW, Ford and Nissan have already advised Chancellor Rachel Reeves that they were likely to miss these targets, claiming that higher energy/material costs and interest rates had meant electric cars remained “stubbornly more expensive and consumers are wary of investing”; the average cost to buy an electric car is UK 63.0k.

43% of Zambia’s population of twenty million are connected to the national electricity grid and now the country is facing its worst-ever blackout, sometimes for three days at a time; a national disaster was called last February. This is the country home to the Zambezi, Africa’s fourth largest river, and the massive hydro-powered Kariba Dam. Because of the drought, that has led to parts of the river drying up, only one of the six turbines at Zambia’s power station is operating, resulting in the generation of a paltry 7% of the 1,080 MW installed at Kariba. But this year, it has been hit by one of the severest droughts in decades – caused by the El Niño weather phenomenon – which has decimated the country’s power-generation capacity. Only 13% of Zambia’s electricity emanates from coal, 3% from solar, diesel and heavy fuel oil are even lower, accounting for 3%, with 84% from water reservoirs such as lakes and rivers. Lack of finances has seen the country unable to pay for imported energy since suppliers insisted on advance payment. A financial crunch also severely restricted the government’s ability to import power, as suppliers wanted payment upfront. On Wednesday, its only coal-fired power plant, Maamba Energy, returned to maximum capacity after several weeks of maintenance and now Zambians will have at least three hours of electricity a day.

Today, the Labor Department posted that the US jobless rate dipped 0.1% to 4.1%, with employers adding a further 254k jobs – almost more than 70% of the 150k estimate some analysts had forecast; these figures give comfort that the economy will not be heading into decline. This was also good news for the Biden administration, which has created sixteen million in its almost four-year tenure to date, with the presidential election edging nearer. However, surveys indicate that the public is still wary about the state of the US economy as a 20% price hike in prices since 2021 still impact consumer sentiment. Furthermore, since October 2023, job growth has slowed and unemployment rate has been edging higher, though it remains at historically low levels. A triple whammy of the impact of Hurricane Helene, the Boeing labour strike and the start of a new school year could easily move the October figures downwards, which could be to Biden’s detriment.

Under new legislation, and starting at the end of this month, UK banks will have the power to pause payments for up to four days, replacing the old law that transfers must be processed or declined by the end of the next business day. This will give financial institutions more time to investigate fraud. It is no secret that bank fraud is on the rise and it is estimated that it accounts for a third of all crime in England and Wales, from various means such as by impersonating a genuine trader to trick victims into transferring money, or through the increasingly popular romance scams.

The former chairman of the Post Office, who was sacked after fourteen months in the job, told the public inquiry on Tuesday that the institution was in a “mess”, run by executives and government appointees who “dragged their feet” in efforts to compensate and exonerate sub-postmasters. Henry Staunton also claimed that the organisation had a “huge cultural problem” with a lack of ethnic and gender diversity – and had overseen “vindictive” investigations into two sub-postmasters who served on the company board. After taking the position in December 2022, he said he found a culture of chaos in senior management that immediately required more than the two days a week he had been told was required. He also indicated that he thought that executives did not fully accept the findings of the High Court judgment that established the role of the Horizon computer system in hundreds of flawed prosecutions. He also commented that initially a “ridiculous” amount of his time was taken up with requests for a pay rise from chief executive Nick Read, who he previously told a Parliamentary inquiry was unhappy and threatening to resign.

I am sure that Lord Mervyn King does not read this blog, but if he had maybe he would have come up earlier with the idea that the BoE (and several other central banks) had been too slow to press the button to push rates higher. Lost in France – 22 July 2022, was but one of many blogs that criticised the BoE of being too dilatory and their vacillating attitude has probably cost the UK taxpayers billions.

At the beginning of H1, UK interest rates stood at 1.25%, having risen by only 0.1% in H1, but many analysts consider that rate rises have still some distance to go before they will have any control over inflation which currently stands at 9.1% – a forty-year high. This observer has espoused that the Bank of England has left it too late so if, and when, it takes more positive action, and pushes rates higher, it, like the ECB, will be a case of too little too late. Economics 101 teaches that when rates move higher, it becomes more expensive for consumers and businesses to borrow, so that businesses and consumers start spending less, which in turn slows demand for goods and services and then the pace of price rises slows. The problem this time is the cost of soaring energy prices – and any rise in rates will have little impact on prices and must be gauged against the backdrop that the economy earlier this year was in excess demand. In fact, the real economy is slowing when inflation erodes real income and real spending,

The good Lord noted that record high inflation was caused by the Bank of England keeping interest rates too low for too long, and whilst noting that inflation had been tamed, he criticised all central banks for failing to act fast enough initially. Additionally, when he was asked if the Bank of England kept rates “too low for too long”, replied “Yes, and that’s why we had inflation.” He concluded that “they raised interest rates like all other central banks – it wasn’t just the Bank of England – and inflation is now back under control.”

He suggested that the BoE could be a “bit more aggressive” on cutting interest rates, but that the speed at which borrowing costs are reduced will depend on the rate of inflation, and it was “vital” it remained low. He also cautioned that if the latest ME crisis could be a catalyst, in particular any movement in oil prices which could fuel inflation. His remarks on Tuesday saw the pound dip over 1.0% to US$ 1.317.

On Tuesday, a new law, benefitting three million service workers in England, Scotland and Wales, but not N Ireland, will see all tips, whether by cash or card, from customers should be paid to the workers and not to the establishment owners. It applies across industries, but is expected to benefit those working in restaurants, cafes, bars, pubs, hairdressers, or as taxi drivers the most; if not applied, staff will be able to bring claims to an employment tribunal. Staff can now request a breakdown of how tips are being distributed every three months. Unfortunately, the tax law remains – workers will still have to include tips on their tax returns.

In 2005, the then thirty-five-year-old supermodel Naomi Campbell founded Fashion for Relief; this week, she was disqualified from being a trustee for five years by the Charity Commission. The inquiry found that between April 2016 and July 2022, it was found that between April 2016 and July 2022, the charity, merging fashion and philanthropy, raised just 8.5% of the its overall expenditure. Fashion For Relief had been dissolved and removed from the register of charities earlier this year. The charity’s mission was to make grants to other organisations and give resources towards global disasters in a bid to relieve poverty and advance health and education, by generating income from hosting fundraising events to generate income, including in Cannes and London. The Charity Commission recovered US$ 456k, as well as protecting a further US$ 130k  of charitable funds, whilst finding serious mismanagement of funds; this included using charity funds to pay for Campbell’s stay at a five-star hotel in Cannes, France, as well as spa treatments, room service and cigarettes. The model said she was “extremely concerned” by the findings and an investigation on her part was under way.

There is no doubt that most charities are well managed and most of the funds raised will go to benevolent causes; however, there are some where too much money is paid to the senior “management”. One recent example was The Captain Tom Foundation, set up in 2022, which raised over US$ 51 million but, in 2022 was the subject of a Statutory Inquiry, launched by the Charity Commission. There were concerns about several seemingly dubious arrangements between the family and the Foundation, along with the issue of a ‘spa building’ constructed at the family home. For some it seems that Charity Begins At Home!