Where Do You Go To My Lovely?                                           07 February 2025

In 2024, the Dubai luxury residential market saw one extra US$ 10 million + home sold, on the year, to a total of four hundred and thirty-five; 35.2% of this total, (equating to one hundred and fifty-three), was sold in Q4 – the highest quarterly figure on record. The number would have been greater but for the lack of inventory available in this sector – since mid 2023, supply has steadily deceased, but there is a lot now being built up but will not be hitting the market until 2027, at the earliest. Overall, villa prices last year rose by 19.1%, whilst those in the ultra-luxury sector were 20.2% higher – villas accounted for 68.5% of all luxury deals in 2024. Knight Frank estimates that ultra luxury prices will jump at least another 5% this year, in the emirate, after surging about 67% since 2021. Prices across the whole of Dubai’s booming property market are all moderating, after surging post-Covid, but will still be in double-digit territory. 52% of all luxury sales occurred in the off-plan market, with the top three developers — Omniyat, Nakheel and Emaar Properties — accounting for a combined 46% of these transactions. The leading location continued to be Palm Jumeirah, with one hundred and twenty sales – 29.0% the total – and valued at US$ 2.3 billion, equating to 32.5% of the total value. They were followed by Palm Jebel Ali, Emirates Hills, Jumeirah Bay Island, District One and Dubai Hills Estate.                              

Globally, prime residential prices continue to slow but no guesses which location is bucking the trend. Dubai’s market is the outlier. Even after surging price rises, Dubai is still one of the cheapest cities in the world, compared to the likes of New York and London where the price per sq ft is a third of the US city and a fifth of the latter. Even though supply is still well short of demand, and prime locations are becoming rarer, buyers are now pushing back on price hikes, after the years of increases.

Refine Development Management confirmed this week that it will launch an investment and development arm, with a project pipeline of US$ 12 billion. Recently, the Dubai-based company unveiled a 20k sq ft sales gallery in Business Bay. In H1, it plans to introduce high-end residential projects, valued at US$ 177 million, in Meydan, a US$ 2.18 billion mixed-use luxury development in Safa Park and branded residences, worth US$ 245 million, on SZR. In H2, SZR will be the location of its launch of a one hundred-storey twin-tower lifestyle development.

A study, undertaken by Arada, shows that the country’s residential wellness real estate market alone will grow, seven times, over the next three years from its current 2024 level of US$ 1.37 billion to a staggering US$ 8.40 billion by the end of 2027. It seems that all the major developers – including Emaar, Aldar, Damac, Danube Properties, Nakheel, Sobha, Meraas, Azizi and Samana Development – have been jumping on the wellness bandwagon and this segment of the market is not only in the domain of the ultra-wealthy but can also include middle-income families, looking for homes that offer a healthier lifestyle, without “breaking the bank”. Rosa Piro, Arada’s senior business development director, commented that the rise of wellness-focused residential projects, particularly in Dubai, is already evident, with supply expected to cross 16k units by 2030, adding that wellness real estate is set to be the next booming property asset class in the UAE.

This week witnessed a ground-breaking ceremony for a tower housing its own private island. Located in Jumeirah Village Circle, ‘I’sola Bella’ by MAK Developers, has been inspired by an Italian island of the same name. Sudais Moti, COO and Co-founder of MAK Developers, commented that “we’re creating a space where every day feels like a vacation, where residents wake up to an island retreat, without leaving home.” Among its forty-five world-class amenities – more than any tower in JVC has ever offered – are an infinity sky pool to a real sand beach, a private cigar lounge, a gaming room and a digital library, along with an exclusive island pool in the heart of the tower. It is reported that ‘I’sola Bella’ is already nearly sold out.

Plots in Satwa – a busy residential and commercial district in Dubai and adjoining Sheikh Zayed Road – are becoming available for freehold and no doubt it will prove a healthy investment for those interested. One of the older – and more well-known – suburbs in Dubai, Satwa is located adjacent to prime locations such as the Trade Centre Roundabout and would be ripe for a wider redevelopment. Rates would also be much lower than say Downtown or Dubai Marina.

With the UAE aiming for forty million hotel guests by 2030, it is obvious that more hotels are required, many of which will not be necessarily high-end. Little wonder then that Accor’s non-luxury brands will help fill the gap, with its range of non-luxury brands – Pullman, Ibis, and Novotel. The French hospitality giant, the world’s sixth-largest hospitality group, sees the UAE as its main regional revenue driver across the hospitality sector, with its other subsidiaries including Ibis, Mercure, Sofitel, and Fairmont Hotels and Resorts; it seems that it will be focussing its efforts in the ‘premium economy’, extended-stay residences, and other serviced apartment segments to fuel regional growth. Duncan O’Rourke, CEO of ME, Africa and Asia-Pacific, noted that “investor interest in the UAE remains strong – one of the noticeable trends is the rising demand for extended-stay residences, such as Pullman Living and other serviced apartments.” Accor has three hundred and sixty-five hotels (89.6k keys) in the MEA region, with fourteen new properties to open in 2025. In the UAE, its twenty-two brands have eighty-six hotels, with 24.5k rooms, with twelve more hotels (3.1k rooms) in the pipeline.

Emaar Properties has posted that Dubai Fountain will be closed, from this May, to undergo a comprehensive five-month renovation to offer improved choreography and an enhanced lighting and sound system. The fountain is one of Dubai’s most popular attractions, with visitor numbers in the millions, who come to see its synchronised water, music, and light performances. In true Emaar style, the developer posted that it will be “even more spectacular” upon its return, adding that the upgrades will create a “more immersive show”.

A new company has been formed, between  MIG Holding and a Dubai World entity, and located in National Industries Park, which will become the largest precast concrete factory in the ME, spanning 2.2 million sq ft. ‘Safetech’, with an annual production capacity of more than 700k cu mt, will revolutionise the UAE’s construction industry, by providing advanced precast concrete solutions designed to elevate both the quality and efficiency of project delivery, particularly in light of the sector’s rapid expansion. It is estimated that the construction sector contributes nearly 12% to the country’s GDP and is projected to grow at a CAGR of 4.26% until 2030.

According to the 2024 Travel & Tourism Development Index, by the World Economic Forum, the UAE ranked first in the region and advanced seven places, on the year, to eighteenth globally, whilst being the only ME country in the top ten for international tourism revenue. Over the past few years, it has become an all-year-round destination, with winter emerging as the peak season. The country’s Tourism Strategy 2031 has the twin aims of attracting US$ 27.25 billion in tourism investments, whilst welcoming forty million hotel guests; the WEF report forecasts that, by 2033, the country will be welcoming 45.5 million international visitors. Last year, visitor numbers were 15.5% higher at 29.2 million.

Last year, the UAE’s foreign trade soared to an unprecedented US$ 817.4 billion, (AED 3.0 trillion). HH Sheikh Mohammed bin Rashid noted that “the UAE’s foreign trade has reached a historic milestone, touching AED 3.0 trillion for the first time by the end of 2024. My brother, His Highness Sheikh Mohammed bin Zayed, has spent years strengthening economic ties with nations worldwide… Today, we see the results. While global trade grew by just 2% in 2024, the UAE’s foreign trade expanded at seven times that rate, achieving an impressive 14.6% growth.” He also commented on the impact of the Comprehensive Economic Partnership Agreements, with several countries, which have been added over the past two years, noting that “the Comprehensive Economic Partnership Agreements, led by Sheikh Mohammed bin Zayed, added US$ 36.79 billion to the country’s non-oil trade with partner nations – 42% higher on the year. He added that, in 2021, the government set a goal of reaching AED 4 trillion, (AED 1.09 trillion) in annual foreign trade by 2031, and by the end of last year it had already achieved 75% of that figure, with the target expected to be reached well before the target date.

Last November, Sirocco, a JV between Heineken and Dubai Maritime Mercantile International, announced a plan to build the Gulf’s first major commercial brewery in Dubai, scheduled to open by the end of 2027. This week, there is a possibility that Diageo, which late last year moved its head office from Beirut to Dubai, could open a local alcohol production facility; among its many brands are Guinness, Johnnie Walker, Baileys and Smirnoff. Antoinette Drumm, MD of Diageo Mena, commented that “we are in the process of doing our five-year strategic plan, and as part of that, we are looking at all angles—whether it will be distilleries, breweries, etc. We are not saying ‘no’ because we are in the process of building our plan.” The company also produces non-alcoholic beverages, and she commented “We are doing (production) under licence agreement in other parts of Mena. I would say it is not if but when (to start local production).”

Last year, Dubai Aerospace Enterprise registered an 8.4% revenue hike to US$ 1.42 billion, as profit grew 36.2% to US$ 477 million, with operating profit, before exceptional items, reaching US$ 711 million, 19.4% higher on the year. The aircraft leasing company, which serves one hundred and twenty airlines across sixty-five countries, having acquired eighty-three owned and managed aircraft and divested sixty-eight planes, saw its fleet grow to three hundred and twenty-nine owned, one hundred and ten managed and sixty-seven committed aircraft as at 31 December. Last month, the aircraft lessor announced it had signed an agreement to acquire 100% of Nordic Aviation Capital, with a fleet of two hundred and fifty-two owned and committed assets on lease to about sixty airline customers in approximately forty countries, as of September 2024. 

Dubai-based developer Damac is going ahead with ‘The Delmore’, an ultra-luxury residential project in Miami, on a plot that was bought in 2022 for US$ 120 million. The twelve-storey oceanfront condominium, located at the Town of Surfside, will have four and five-bedroom units, with prices starting at US$ 15 million; all apartments will have their own private elevator entry foyers. Its location, adjacent to Indian Creek and minutes from Bal Harbour, completes the coveted ‘Billionaire’s Triangle’, one of Miami’s most revered destinations. The Damac project, encompassing two acres, will be the firm’s second residential project in the Miami area and ‘one of the firm’s select few in the US’. Handover is slated for 2029.

Insurancebrokers were previously allowed to collect premiums for general insurance (excluding life, marine, and health) before remitting them to the insurer but, as from 15 February, insurance customers in the UAE will have to make direct payments to insurers instead of going through brokers. This move will be a double whammy benefit for policyholders, as their payments will go directly to the insurer, reducing any risk of delays or mismanagement, and will also lead to immediate policy issuance and faster claims processing; claim payouts and premium refunds must be made directly from insurers to clients. Brokers will also benefit from not having to handle premium collections, receiving commission within ten days and being able to focus on advisory and client service, rather than administrative payment management. However, the new regulations prohibit brokers from offering discounts by reducing their commission, which previously created an uneven playing field and encouraged price-driven competition over value-driven service. No longer can brokers enter into financial arrangements with non-insurance entities and paying them commissions for referring business.

In 2024, Dubai South welcomed 11.4% new companies, (four hundred and fifteen), bringing the total number of operating companies to 4.04k, whilst retaining 94% of existing companies. There was also an annual 300% increase in office space leased, to 500k sq ft. Furthermore, The Pulse Beachfront phase 1, comprising two hundred units, was completed, (with another five hundred due this year). During the year, South Living was launched and the fact that it sold out indicates the strength of Dubai realty, with BT Properties, Asia’s largest private property developer, agreeing to develop a gated master community within Dubai South’s Golf District. GEMS Founders School also welcomed its first five hundred students. Other significant events witnessed in the Logistics District at Dubai South were the inauguration of a state-of-the-art FedEx air and ground regional hub, the opening of Boston Scientific’s regional distribution centre at Hellmann Calipar Healthcare Logistics’ facility, and the groundbreaking of a new facility by dnata.

Between 19 February and 09 March, the ICC Champions Trophy, involving eight of the best cricketing nations, will take place. Despite Pakistan being the official host, the tournament will follow a hybrid model, after India refused to travel to Pakistan due to security concerns. After extensive discussions, the Pakistan Cricket Board has only just agreed to hold all of India’s matches and one semifinal in Dubai. Now the emirate is fast preparing for a last-minute surge in flight and hotel bookings. The matches to be played at the Dubai International Cricket Stadium are:

• 20 Feb – Bangladesh v India
• 23 Feb – Pakistan v India
• 02 Mar – New Zealand v India
• 04 Mar – Semi-final 1*
• 09 Mar – Final – Gaddafi Stadium, Lahore**
• All matches start at 13.00 Dubai time
• *Semi-final 1 will involve India if they qualify
• ** If India qualify for the final it will be played at the Dubai International Cricket Stadium

With bookings gradually increasing, the real surge is expected in the final two weeks before the match, and if left too late travellers will undoubtedly find limited availability and soaring prices. with them surging by as much as 50% – and even more for last minute bookings. This sudden change of plan has been a godsend for the local travel and hospitality sectors, with all ranges of hotels, from budget to seven star, seeing increased business and rising occupancy levels, as well as heightened demand for short-term lets and Airbnb.

With the aim of enhancing the efficiency and speed of trade operations across Dubai’s supply chain and logistics sectors, Dubai Trade has amended its Digital Delivery Order (DDO) platform to Trade+. The platform eases the digital exchange of cargo release documents between shipping lines, freight forwarders, consignees and other trade stakeholders, resulting in a faster and more efficient cargo release process. It is estimated that this Trade+ service, on the Dubai Trade Single Window for Trade and Logistics, will result in an average 90% reduction in transaction times, process higher trade volumes and expedite cross-border trade. Last year Trade+, which is 100% paperless, saved an estimated 2.36 million documents from being printed.

A UAE court has ruled in favour of the Dubai investment firm Shuaa in a dispute brought against the company by a former top executive. Last August, the investment firm was advised by the Dubai Labour Court of First Instance that it had received a lawsuit filed by the former executive. In a statement, Shuaa noted that “we are pleased to inform our shareholders that the Court has issued a judgement in favour of the company. The company… reaffirms its commitment to assessing all available legal options to safeguard its rights and those of its shareholders.”

With the twin aims of helping taxpayers to reduce their tax burden and encourage them to fulfil their tax obligations, the Federal Tax Authority has called on registrants who have yet to update their tax records to take advantage of the UAE Cabinet’s decision to grant a grace period, relieving them from administrative penalties. The Cabinet decision allows registrants to update information held in their tax records during the period from 01 January 2024 to 31 March 2025, without incurring the administrative penalties for failure to inform the FTA of any instance that may require amendments or updates to their tax records. If such a penalty had been imposed in the past, it will be reversed. The initial Cabinet Decision No. 74 of 2023 indicated that the registrant shall notify the FTA, within twenty business days, of any change to its data kept with the FTA.

Under the Medcare brand, the Aster DM Healthcare Group’s latest US$ 16 million investment plans point to a further ten ‘Medcare Medical Centres’ in Dubai and Sharjah over the next two years; there are already five multi-speciality hospitals and twenty-five medical centres. This will result in a 21.4% increase in payroll numbers, to eight hundred and fifty, in the medical centres. The Medcare Group overall has a 2.8k strong workforce, which includes five hundred and thirty-one doctors and 2.3k other ancillary service professionals.

At the height of its troubles in 2022, Union Properties had legacy debts of US$ 400 million which had been cut by 60.9% by the end of December 2024 to US$ 157 million which is due to move lower by US$ 41 million, to US$ 116 million, by the end of Q1. The Dubai developer commented that it “was able to reduce the margin on the three-month EIBOR from 3.25% to 2.75%, in light of growing trust among banks.” Having restructured its debt, Union Properties was able to cut its financing costs by 72.0% to US$ 9 million last year, providing a positive boost, both for its liquidity and profitability.

In 2024, TECOM Group PJSC registered an 11% hike in annual revenue to US$ 654 million, resulting in a 14% rise in net profit to US$ 327 million; this improvement was driven by several factors such as its targeted portfolio expansion, increased operational efficiencies, its robust occupancy level of 94% and a 92% retention rates. The fair value of the Group’s investment properties’ portfolio, conducted by CBRE, ascertained a fair value of US$ 7.63 billion, at year end, representing an annual 11% increase in like-for-like and an increase of 22%, including new acquisitions during the year. The Board has proposed an H2 dividend payment of US$ 109 million (equating to US$ 0.022 per share), subject to shareholders’ approval at the upcoming AGM on 10 March, and in line with the dividend policy valid through H1. Malek Al Malek, Chairman of TECOM Group said that “the US$ 736 million, (AED 2.70 billion), of investments announced through 2024 will further expand the Group’s portfolio, enabling its continued sustainable growth and reinforcing its role as a strategic driver in Dubai’s business sector.”

Emirates Islamic posted an annual 2024 46.0% rise to a record profit before tax of US$ 845 million, with net profit 32.0% higher at US$ 763 million. Total income rose 13.0% to US$ 1.47 billion, as expenses dipped 7%, on the year, and impairment allowances were 28% lower, driven by improvement in credit quality. Increases were noted for total assets, customer financing and customer deposits – by 27% to US$ 302 million, by 31% to US$ 19.35 billion and 25% to US$ 20.98 billion. Non-performing financing ratio improved to 4.4%, with strong coverage ratio at 142%.

The DFM opened the week, on Monday 03 February forty-six points, (0.3%), lower the previous week, gained fifty-nine points (1.1%), to close the trading week on 5,239 points by Friday 07 February 2025. Emaar Properties, US$ 0.19 higher the previous fortnight, gained US$ 0.04, closing on US$ 3.72 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.70, US$ 5.68, US$ 2.10 and US$ 0.40 and closed on US$ 0.72, US$ 5.78, US$ 2.10 and US$ 0.37. On 07 February, trading was at one hundred and thirty-nine million shares, with a value of US$ one hundred and one million dollars, compared to one hundred and ninety-seven million shares, with a value of US$ one hundred and seventy-three million dollars on 31 January.

By Friday, 07 February 2025, Brent, US$ 4.06 lower (5.0%) the previous fortnight, shed US$ 2.12 (2.8%) to close on US$ 74.71. Gold, US$ 247 (9.4%) higher the previous four weeks, gained US$ 69 (2.4%) to end the week’s trading at US$ 2,901 on 31 January 2025.  Not long to go before it hits the US$ 3k mark!

Since the transition to lower carbon energy was moving slower than expected, Norwegian energy giant Equinor is halving investment in renewable energy, over the next two years, while increasing oil and gas production. Chief executive, Anders Opedal, also added that costs had increased, and customers were reluctant to commit to long term contracts, as well as warning that gas prices could rise next winter, as European gas storage levels were lower now than this time last year. Equinor will halve its investments in renewables to US$ 5 billion, as “we don’t see the necessary profitability in the future,” and it will also drop a target to spend half of its fixed assets budget on renewables, and low carbon products, by 2030. Another blow for environmentalists was the chief executive saying he was confident that Rosebank – a giant new oil field in the North Sea – would go ahead, (despite a Scottish court ruling that consent had been granted unlawfully), and will be increasing oil and gas production by 10% over the next two years.

The US multinational, Estée Lauder, is planning to cut its payroll by some 7k of its 62k workforce, with the need to save around US$ 1 billion, as it manages “the risk of recession… including the imposition of tariffs and sanctions”.  The beauty firm – with brands such as Clinique, MAC, Jo Malone, Bobbi Brown, Aveda and Tom Ford – posted a Q4 loss of US$ 590 million, as customers spent less in China and Korea. It had already started a restructuring program to tackle its flagging performance, but circumstances may have worsened, with the threat of Trump sanctions hanging over many of their one hundred and fifty market countries. Having cited inflation being one of the main factors behind its rising costs, it announced that “we are significantly transforming our operating model to be leaner, faster, and more agile.”

Estée Lauder is one of many companies warning of the impact a tit-for-tat tariff war could have on their financials. For example, drinks giant, Diageo, which makes Guinness, Johnnie Walker, Baileys and Smirnoff, has warned that tariffs on Mexico and Canada – if they go ahead – “could very well” impact its business. Its chief executive, Debra Crew, commented that it was taking “a number of actions to mitigate the impact and disruption to our business that tariffs may cause”.

Founded in 2013, and in the past three years having seen three different owners, online fashion boutique Trouva, has called a halt to trading, while it explores its fourth sale. The company was acquired by Project J last year, (and is owned by that company alongside Fy!, a home and living marketplace), having previously been owned by Made.com, Next, and then a vehicle called Re:store. The company offers a platform for independent shops and boutiques that do not have an online presence to sell their products. Jonathan Thomson, co-founder of Project J, commented that “we have decided to focus our efforts on building the Fy! brand and explore the options for a sale of Trouva.”

For the first time in legal history, a Swiss court has charged an entire company and followed through with convicting the company Trafigura and its former COO of bribery, over payments made by the firm to gain access to Angola’s lucrative oil market. It sentenced its UK COO to thirty-two months in jail and fined the company US$ 148 million; both will appeal the decision. The court had heard that the company had set up a complex payment web, through which an official with Angola’s state oil company was paid almost US$ 5 million between 2009 and 2011. During that time, Angola signed contracts with Trafigura, worth almost US$ 144 million. However, the company was adamant that its own compliance and anti-corruption measures had been independently assessed and found to be excellent, but that was just a sham because there was an intricate structure set up to evade those measures in reality. There will be a few commodity brokers, based not only in Geneva, but worldwide, who will be a little concerned that it now seems Swiss prosecutors have raised the ante.

Volkswagen’s unit, Skoda Auto Volkswagen India, has sued authorities to quash an “impossibly enormous” tax demand of US$ 1.4 billion, arguing that it is contradictory to New Delhi’s import taxation rules for car parts, it will hamper the company’s business plans and that it puts at risk itsinvestments of US$ 1.5 billion in the country, and is detrimental to the foreign investment climate. Indian Customs and the Finance Ministry had become concerned that VW were breaking down imports of some VW, Skoda and Audi cars into many individual parts to pay a lower duty. Importing “almost the entire” car, in unassembled condition, will attract a tax of up to 35% on CKDs (completely knocked down units); classification of them as “individual parts”, coming in separate shipments, will be taxed between 5% – 15%. VW reckons that they have kept authorities aware of its “part-by-part import” model and received clarifications in its support in 2011. If the German carmaker were to lose the case, in a country, where it is a very small player, it could have to pay up to US$ 2.8 billion, which is higher than its total 2024 revenue of US$ 2.19 billion; its net profit came in at just US$ 11 million.

Another ‘victim’ of Indian procrastination is Skoda Auto Volkswagen India, facing a US$ 1.4 billion fine from the Indian tax authorities. This week, it seems that South Korean car maker Kia Motors is in the authority’s sights which has sent out a four hundred and thirty-two page confidential notice, accusing the company of evading millions of dollars in taxes. Kia has been importing the components for its Carnival car model in separate lots, rather than as a single shipment, a move that attracts significantly lower customs duties. If the claim is valid, it could be paying a fine of US$ 155 million. Its factory is in the Indian state of Andhra Pradesh and has sold more than a million cars in the country since its launch in 2019. The increase in similar tax cases, and the apparent lack of urgency in settling them, will surely have a negative impact on future foreign investment. Indeed, net foreign direct investment halved in 2024, and it seems that the government will have to address issues such as the tax dispute resolution process and remove a lot of red tape if it does wish not to lose further international investment funds.

Driven by stable progress in opening up to foreign investors, along with a more diversified investor base, China’s bond market rose 11.7%, to US$ 10.94 trillion, over the year; this was split between the interbank market, accounting for US$ 9.71 trillion, (88.88%) of the market, and the exchange market US$ 1.23 trillion – 11.12%. In 2024, the volume of treasury bonds amounted to US$ 1.71 trillion, with the volume of local government bonds reaching US$ 1.35 trillion. Indicators are that foreign institutional holdings are slowly making a mark, now accounting for up 2.4% of the country’s market holdings, at US$ 579 billion. The report showed that China’s bond market is becoming more stable and organised, with the balance of foreign institutional holdings in the market reaching US$ 579 billion.

Having previously indicated that it had been unable to find a new owner for Mosaic’s chains, Katies and Rivers, (and its other brands Rockmans, Crossroads, Autograph, W Lane and BeMe), would be wound down. KPMG posted that it will also close all of Millers and Noni B’s remaining two hundred and fifty-two stores, with the loss of 1.6k jobs, of which 0.65k had already been announced, with the closure of Rivers this month. Mosaic collapsed in 2024, with 0.25k people in head office and 2.5k workers across six hundred and fifty-one stores, in Australia and New Zealand, losing their jobs. Mosaic’s collapse, last October, left creditors being owed US$ 155 million, including US$ 17 million to factories in Bangladesh which has left thousands of jobs there in jeopardy.

Australia’s Fair Work Ombudsman has directed Hamilton Island Enterprises to pay back US$ 30 million in wages to 2.15k current and former salaried employees, who were not paid correctly between December 2014 and the end of 2022. HIE, the operator of Queensland’s luxury Hamilton Island resort, manages various businesses on the island, including accommodation, restaurants, the marina, airport, utilities and emergency services. The company has signed an enforceable undertaking agreement and, to date, has back-paid staff US$ 18 million. It is reported that certain entitlements, such as overtime rates, weekend and public holiday penalties, broken-shift allowances and annual leave loading had been underpaid by HIE.  Although one person was repaid US$ 74k, the average “payback” was US$ 5k, with a further US$ 136k owed to thirty-two employees, who investigators are yet to reach, remains outstanding. The company has been ordered to:

• implement a range of workplace changes, including an independent audit of salaried workers
  • appoint a workplace laws compliance officer
    • have a dedicated hotline and email employees, who investigators are yet to reach, remains outstanding
      • make a contrition payment of US$ 467k

There is no doubt that unskilled workers, young employees and those on temporary visas, not only in North Queensland or Australia, but in many global holiday destinations, are particularly vulnerable to underpayment, making it difficult for workers to challenge unfair conditions. The Fair Work Ombudsman noted that the “problem is endemic”, with University of Sydney Associate Professor, John Mikler, noting that wage theft is a problem throughout Australia.

Citing security concerns, Australia has become the first G20 nation to ban DeepSeek from all government devices and systems; the arrival of the Chinese chatbot last month was an eye opener in that it matched the performance level of US rivals, while claiming it had a much lower training cost. The result spooked global markets, with billions being written off share values of tech stocks tied to AI. The Albanese government has insisted the ban is due to the “unacceptable risk” it poses to national security, and not because it originated from China. Although all government entities are required to “prevent the use or installation of DeepSeek products, applications and web services”, as well as remove any previously installed, on any government system or device, it is unclear whether this edict covers the likes of educational facilities, public libraries etc. The Australian approach is in contrast to that of President Donald Trump who described it as a “wake up call” for the US but said overall it could be a positive development, if it lowered AI costs.

It would be a surprise if the Reserve Bank of Australia were not to lower interest rates later this month, as core inflation has declined again, dipping 0.4%, to 3.2% in Q4, below its forecasts. Inflation is lower because price rises in key items in the ‘Australian Bureau Statistics basket’ have reduced. Examples include Q4 rental price increases having nudged 0.3% lower to 6.4%, healthcare by 0.8% to 4.0%, and insurance/financial services by 0.8% to 5.4%. Two conundrua, facing the RBA decision, are the unemployment rate which, at 4.0%, could be seen as too low, (on the basis that the more people employed, the greater the risk of increased demand in the economy, which can drive up prices),  and the weak Aussie dollar, at 0.623 – both are factors that could possibly push a delay in further rate cuts this month.

At the start of the week, the Indian rupee continued its recent dismal run and slumped to a new low against the US dollar, at 87.18, after analysing the impact of Donaldonics and his tariffs. King Dollar will probably be dominant throughout the month – good news at least for Indian expats remitting money home.  Whether the Reserve Bank of India is able to change tack and start supporting the rupee is debateable. However, today, 07 February, the RBI cut its key interest rate by 0.25% to 6.25%, for the first time in nearly five years, in an attempt to boost the sluggish economy.

On Monday, President Trump signed yet another executive order, this time to take the first step towards setting up a sovereign wealth fund for the United States, which many consider could be used to purchase TikTok. Being Trump, he did add that the fund would soon be “one of the biggest”, even though the US currently runs a budget deficit. During the run up to the election, he had indicated that the fund would be financed by “tariffs and other intelligent things”, and that the SWF would finance “great national endeavours”, including infrastructure projects such as airports, roads as well as medical research. Treasury Secretary, Scott Bessent, said the fund would be set up within the next twelve months and that the plan was to monetise assets currently owned by the US government “for the American people”. After levying 25% tariffs on Mexico and Canada, starting last Saturday, on Tuesday the levies were paused for thirty days.

Last October, the UK finally ceded the Chagos Islands, but at the same time retained a ninety-nine-year lease over the UK-US military airbase on the largest island, Diego Garcia. However, following the elections a new prime minister, the colourful Navin Ramgoolam, was voted in and immediately indicated that new conditions had been negotiated meaning the UK’s lease payments would be linked to inflation and frontloaded. The end result would seem that the UK payments would double to US$ 22.57 billion – a claim that the Starmer government said was “inaccurate and misleading”.

The UK government has denied claims made by the prime minister of Mauritius that it faces paying billions more under a renegotiated deal over the future of the Chagos Islands. Whilst Ramgoolam railed against the former agreement, which he said was a “sell-out” for Mauritius, there are some in the UK who are opposed to the deal, describing it as “terrible”, “mad” and “impossible to understand”, and “at a time when there is no money, how can we spend billions of pounds to give something away?”

Two months ago, and blaming the government’s net zero targets, Vauxhall owner Stellantis signalled it would close its Luton van plant and shift manufacturing to Ellesmere Port. This week, yet another blow for the embattled Chancellor of the Exchequer, with AstraZeneca  cancelling plans for a US$ 558 million vaccine manufacturing plant in Liverpool, citing a cut in funding from the government; the pharmaceutical giant is claiming that the investment, announced last year, in the Tories’ spring budget, was dependent on a “mutual agreement” with the Treasury and third parties – it has now been cancelled because Labour ministers have offered less funding than their predecessors. The money would have expanded an existing site in Speke which “will still continue to produce and supply our flu vaccine, for patients in the UK and around the world”. There is no doubt that this is another major blow to Rachel Reeves’s renewed attempts to deliver economic growth.

The EY ITEM Club is the latest influential group to slash its earlier predictions on the UK economy and another potential knockout punch for the Chancellor; it had previously expected 2025 UK GDP growth of 1.5% which has been cut by a third to 1.0%. There will be more bad news over the next two months as, come April, the temperature will heat even further when tax and wage rises will bump up business costs.

Seventeen years ago, NatWest was bailed out by the government, with a US$ 56.11 billion package, and at one time it was 80% owned by the UK government which still maintains its position as the bank’s biggest shareholder – at 8%; however, it is perhaps only a few months before it divests its investment. The bank posted a 26% rise in Q3 profit, and its latest share value indicates that the bank’s market cap has doubled over the year to US$ 43.16 billion. Even after the recent recovery in its valuation, taxpayers will see a loss running to billions of pounds from NatWest’s emergency bailout.

This time of the year is bonus time, with NatWest reportedly raising the “pot” by 26.4% to US$ 555 million. One of the main beneficiaries is expected to be the chief executive, Paul Thwaite; with a salary of US$ 1.5 million, he is in line for a bonus of up to 150% of his pay, as well as stock worth a maximum of 150% of his salary, with a performance share plan (PSP) which could pay him up to three times his basic pay each year. Not a bad return but still some way behind Lloyds Banking Group’s Charlie Nunn and Barclays’ CS Venkatakrishnan – who himself is expected to see his annual pay capped at just over US$ 17 million under a new policy.

Because of the government’s recent scrapping of the EU bonus cap, HSBC Holdings is planning a US$ 19 million remuneration package for its fairly new French CEO Georges Elhedery, ahead of its annual results later in the month. Europe’s biggest lender, with a market cap of US$ 182 billion, is understood to have been consulting leading shareholders on the plans, which will involve halving his fixed pay, offset by more generous maximum variable pay awards. When he was named as Noel Quinn’s successor, last July, his remuneration comprised a base salary of US$ 1.7 million, a US$ 2.1 million fixed pay allowance, a maximum annual bonus opportunity of roughly US$ 3.7 million and a maximum long-term share award of close to US$ 5.6 million; this came to a maximum total of US$ 13.1 million. There is no doubt that he has done well in his first six months as CEO.

Monday saw the global markets in some sort of disarray, as the prospect of a global trade war loomed, following Donald Trump going through with his threat of tariffs on Canada, Mexico and China. Early Far East trading saw Japan’s Nikkei, Australia’s ASX and the Hkex down by 2.9%, 1.8% and 1.1%.  There is no doubt that this president means business and will not pull back from also hitting the EU with tariffs; he has also warned the UK that it “is out of line” on trade with the US and told reporters, “we’ll see what happens”.

For the third time in six months, the Monetary Policy Committee, as widely expected, cut UK interest rates by 0.25% to 4.5% – their lowest level in eighteen months. As usual, any rate move comes with a double whammy – in this case, lower mortgage payments for many homeowners, but also lower returns for savers. The market expects two more rate reductions this year, which it considers will be enough to see the inflation rate eventually reaching the BoE’s 2.0% target. However the BoE was the harbinger of some bad news – by slashing its forecast for economic growth, adding that the UK economy will narrowly miss a formal recession only by the narrowest of margins in the coming months, and downgraded its estimate of the economy’s ability to generate income, and that there will be a further few years of weak economic growth; it actually cut its forecast for this year and the following two. The BoE also said that the economy’s potential growth rate had halved to 0.75%, down from 1.5% this time last year.

And in a further blow to the Chancellor, it said her latest growth plans, unveiled in a speech last week, will add nothing to GDP growth in its forecast horizon. It also mentioned that everyone, (with the possible exception of Chancellor Reeves), already knew that it expects the National Insurance rise to weigh down on activity, in particular by pulling down employment. On top of everything was their concern that Donald Trump’s tariff threats could well pose further problems for the state of the UK economy.

Vertu Motors, which has almost two hundred sites operating in the UK, posted an unexpected profits warning and announced that it was cutting jobs and closing on Sundays, in a bid to reduce costs, amid tough trading and looming budget tax hikes. The UK’s third largest car retailer cited that it had been impacted by steep discounting industry-wide in a bid to meet a government target for sales of new electric vehicles – the so-called ZEV mandate which demands a rising proportion of total sales come from zero-emission vehicles each year; this year it has risen to 28% from 22% in 2024. Stiff penalties are in place for missing this target, which was not achieved in 2024. It also pointed out that budget tax rises, due to take effect in April, will cost a further US$ 12 million.

This week saw the death of the billionaire philanthropist and spiritual leader, Aga Khan, who had been the imam of the Ismali Muslims since 1957. The Aga Khan’s charities ran hundreds of hospitals, educational and cultural projects, largely in the developing world. The prince was also the founder of the Aga Khan Foundation charity and gave his name to bodies including a university in Karachi, and the Aga Khan Program for Islamic Architecture at Harvard University and the Massachusetts Institute of Technology. The Aga Khan Trust for Culture was key to the restoration of the Humayun’s Tomb site in Delhi. There is an annual Aga Khan Award for Architecture, and he also founded the Nation Media Group, which has become the largest independent media organisation in east and central Africa. To many, he will be remembered for his involvement in horse racing, being a leading owner and breeder, best known for Shergar, which in the early eighties was the most famous and most valuable racehorse in the world.  Two years after winning the Derby at Epsom in 1981, the horse was kidnapped in Ireland and never seen again. To others, it would be his being mentioned in a song, (‘Your name it is heard in high places, You know the Aga Khan, He sent you a racehorse for Christmas And you keep it just for fun’) – Where Do You Go To My Lovely?