Out Of Control!                                                                 14 March 2025.                            

The ValuStrat Price Index posted its slowest capital growth in twenty months, with monthly villa valuations up 2.0%, 0.7% lower from its 2.7% peak, with apartments up 1.2%, down from a 2.0% high. Villa capital values grew 2.0% monthly, and 30.8% on the year, with the strongest performers being Jumeirah Islands, Palm Jumeirah, Emirates Hills and The Meadows – up 42.3%, 41.8%, 31.2% and 29.8%. The lowest gain was seen in Mudon, returning a 10.5% hike, having been stable for the past six months. Dubai’s freehold villas are, on average, valued 57% above the previous market peak and 160% higher than post-pandemic levels. Last month, the VPI touched 207.5 points – 1.6% and 26.5% higher on the month and on the year; villa values came in at 269.6 points from a January 2021 base of 100 points.

Apartment prices rose by 1.2% monthly, down from 1.4% in January, recording an annual growth of 22.2%. The leading five locations for capital gains were The Greens, Palm Jumeirah, Dubailand Residence Complex, The Views and Town Square, with hikes of 28.9%,26,3%, 25.7%, 25.4% and 25.1%. On the flip side, with the lowest capital value increases, were recorded in International City (15.4%) and Dubai Sports City (17.9%). Apartment valuations are, on average, still 9.0% lower than the previous market peak but 65.0% above post-pandemic levels. Apartment values came in at 167 points from a January 2021 base of 100 points.

Oqood (contract) registrations for off-plan homes grew an incredible 22.2% on the month and 59.5% on an annual basis, representing 70.8% of all home sales in February. The volume of ready secondary-home transactions also increased by 12.8% monthly and 9.8% annually. Last month, there were thirty-one transactions for residences above the US$ 8.17 million, (AED 30.0 million), level, found in Dubai Hills Estate, Palm Jumeirah, Emirates Hills, Jumeirah Bay Island, Business Bay, Bluewaters Island, District One, and Jumeirah Golf Estates.  The six main developers in the month, accounting for 46.2% of sales, were Emaar (17.5%), Damac (12.7%), Sobha (4.8%), Nakheel (4.3%), Dubai Properties (4.3%) and Samana (2.6%). Top off-plan locations transacted included projects in Jumeirah Village Circle (7.1%), The Valley (6.5%), Damac Island City (5.5%), Emaar South (5.0%), and Dubailand Residence Complex (4.9%). Most ready homes sold were in Jumeirah Village Circle (9.9%), Business Bay (7.4%), International City (5.6%), Dubai Marina (5.4%), Downtown Dubai (5.2%), and Jumeirah Lake Towers (3.3%).

February figures continued to defy gravity, with the Dubai property market posting a 35% surge in transactions to 16.1k and a mega 55% increase in value to US$ 13.92 billion. According to Property Finder, this is down to shifting preferences and tenants, with a prime example being apartments. The property portal notes that although the demand for studios remains flat at 13%, a whopping 71% of buyers are moving to smaller units – with 34% seeking one-bedroom and 37% two-bedroom apartments. The fact that areas, such as Dubai Marina, Downtown Dubai, and Palm Jumeirah, are still the most popular location choices indicate that investors continue to prioritise luxury and connectivity. There has been a marked move towards furnished apartments – up 19% to 64%. Among renters, the trend seems to reflect budget-consciousness, with a focus on studios, (20%), and one-bedroom (36%).

 In contrast on the villa front, it appears that the main drivers are community amenities and affordability, along with a preference for family-oriented living, with an increasing demand for larger spaces. An 86% of those seeking villa accommodation were interested in a three-bedroom unit (39%), or a four-bedroom home (47%). Leading locations include Dubai Hills Estate, Damac Hills 2, and Al Furjan. When it comes to villa rentals, Jumeirah Village Circle, Deira and Business Bay are the leading locations. Although there has been a 6% upward movement for furnished villas to 42%, the demand for unfurnished villas continues to dominate at 58%. 80% of renters are seeking three-bedroom (41%) or larger villas (39%), with popular locations being Jumeirah, Dubai Hills Estate, and Al Furjan. The off-plan market continues to surge, with transaction values 57% higher to US$ 5.59 billion, on the year, with significant returns seen in Wadi Al Safa 5 and Al Yufrah 1, posting sales of US$ 599 million and US$ 381 million. The ready market remains robust, as existing property transactions jump 27% to 7k, led by high-profile properties such as the Burj Khalifa and Al Yelayiss 1.

It does seem that for those wishing to buy:

• to invest, focus on studio and one-bedroom apartments for better percentage returns and luxury villa projects in emerging suburbs for capital appreciation
• to live in, focus on the affordability aspect going for the larger size option where available – and often found in new developments in the outer suburbs

Betterhomes claim that there is ‘increased rental inventory’, which means a rising number of homes available for rent could translate to a possible cooling in the rental sector and a slowdown in rental increases. Since the start of the year, locations, such as Deira, Discovery Gardens and Sports City,  have shown signs of some rental growth stability which in turn gives tenants more options, as they become more price sensitive. This is particularly welcome to the many tenants that have had to put up with double-digit annual rentals post Covid. The agency also noted that there were 36.22k leasing transaction – 10% lower on the month – and that “renewals dominated the market, making up 59% of transactions.”

Meraas has awarded a contract, worth over US$ 545 million, to Arabian Construction Company LLC for the construction of Design Quarter at d3. The project, the first within d3 and comprising five hundred and fifty-eight apartments, will include a global creative and design ecosystem. It will have two skyscrapers and one low-rise tower, all within a landscaped podium which includes the first residential community within Dubai Design District (d3), a global creative and design ecosystem. It will provide a social hub for residents which will include co-working spaces, an indoor-outdoor gym, pool facilities, barbecue areas and fun-filled zones for children’s activities. Completion is expected by mid-2027.

For the fourth consecutive year, Dubai has been ranked the leading global destination for Greenfield Foreign Direct Investment. The Financial Times Ltd’s ‘fDi Markets’ data posted that last year, the emirate attracted a 33.2% annual increase to US$ 14.24 billion in estimated FDI capital – marking the highest annual FDI value ever recorded in a single year since 2020. Project-wise, the 1.12k return was the highest ever, whilst there was a 10.7% increase in FDIs to 1.83k. It is claimed that 58.7k jobs, (an annual 31.1% increase), were created through FDI. This marks the highest number of total announced FDI projects ever recorded by the emirate. Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed bin Rashid, commented that “Dubai’s ability to steadily consolidate its status as a leading global destination for foreign direct investment reflects its commitment to delivering exceptional value to investors worldwide”, and “this success is the result of a strategic vision that keeps pace with economic and technological transformations, aligned with the ambitious objectives of the Dubai Economic Agenda D33 to double the size of the emirate’s economy by 2033 and establish it as one of the world’s top three urban economies.”

Four factors have had a bearing on these impressive figures – an attractive business environment, favourable regulations, modern infrastructure, and a strategic location. The leading five source countries, accounting for 63% of the total estimated 2024 flows into Dubai, were India, US, France, UK and Switzerland responsible for 21.5%, 13.7%, 11.0%, 10.0% and 6.9% of the total. The leading five source sectors, accounting for 53% of the total estimated 2024 flows into Dubai, were hotels/tourism, real estate, software/IT services, building materials and financial services responsible for 14.0%, 14.0%, 9.2%, 9.0% and 6.8% of the total. For FDI projects, the top sectors were business services (19.2%), food/beverages (16.5%), software/IT services (14.3%), textiles (9.6%), and consumer products (8.3%).

The UN Trade and Development expects moderate FDI growth this year, attributable to economic stability, technology advancements, and geopolitical shifts. Locally, Dubai’s outlook remains positive, specifically in high tech and innovation-driven sectors – and this despite global uncertainties and shifting economic dynamics.

This week Ripple became the first blockchain-powered payments provider to receive a licence from the Dubai International Financial Centre, to offer regulated crypto payments and services in the emirate. It is also Ripple’s first foray in the ME, indicating its further regional expansion plans and cementing its position as a leader in enterprise blockchain and crypto solutions.

There is a chance that there could be a five-day holiday to celebrate the Islamic festival of Eid Al Fitr. Depending on the sighting of the mood, the break could be four or for five days, (including the weekend), with the latter likely as per astronomical calculations of the Eid date, which is celebrated on the first of Shawwal, marking the end of the holy month of Ramadan. Islamic Hijri months last either 29 or 30 days, depending on when the crescent Moon is sighted.  

Dubai is home to almost fifty freezones, with the latest being ISEZA – a first-of-a-kind industry-dedicated free zone cluster in the UAE and globally. It will cover established sectors, such as sports management and marketing, event management, talent representation and media and broadcasting, while also supporting growth in emerging areas like e-sports, AI-driven sports tech, and fan tokens. It will be home to a diverse range of industry players including global brands, sports leagues and franchises, rights owners and investors, sports and talent agencies, artists, sports and media personalities, social media influencers and creative industries professionals. ISEZA will operate within the DWTC Free Zone, and hopes to attract international and regional sports organisations, such as sports federations, associations and leagues, both in established and emerging sports. Dubai’s sports industry contributes approximately US$ 2.5 billion annually to its economy.

There was a 43.8% 2024 surge for Dubai’s luxury transport sector, reaching 43.444 million trips, carrying the same 43.8% increase of passengers to 75.592 million.  This sector has marked a record growth, the highest in recent years for the luxury transport sector via e-hail. Other notable increases include e-hail services, (up 43.8% to 32.556 million), operating companies from nine to thirteen and fleet size 30.1% to 16.4k.

Last year, Tecom Group posted an annual 11% year-on-year increase in revenues to US$ 654 million, with occupancy and retention rates of 94% and 92%; its full year net profit rose 14% to US$ 327 million. Having already paid out shareholders a US$ 0.0218 dividend, equating to US$ 109 million. In line with the firm’s approved dividend policy, it will pay the same dividend of US$ 109 million applicable to H2 2024. Its chairman, Malek al Malek, noted that “Tecom Group’s strong performance through 2024 has allowed us to implement our strategic investments. This includes US$ 736 million, (AED 2.7 billion), of investments to deliver sustainable growth.”

The DFM opened the week, on Monday 10 March, one hundred and twenty-five points lower, (2.4%), the previous three weeks, shed eighty-two points (1.6%), to close the trading week on 5,141 points, by Friday 14 March 2025. Emaar Properties, US$ 0.10 higher the previous week, shed US$ 0.15, closing on US$ 3.57 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.69, US$ 5.65 US$ 2.06 and US$ 0.32 and closed on US$ 0.68, US$ 5.46 US$ 2.06 and US$ 0.36. On 14 March, trading was at two hundred and ten million shares, with a value of US$ one hundred and two million dollars, compared to dollars two hundred and thirty-seven million shares, with a value of US$ one hundred and fifty-three million dollars on 07 March.

By Friday, 14 March 2025, Brent, US$ 4.39 lower (5.8%) the previous three weeks, gained US$ 0.19 (0.2%) to close on US$ 70.58. Gold, US$ 62 (2.2%) higher the previous week, gained US$ 87 (3.0%) to end the week’s trading at US$ 2,994 on 14 March, having traded above US$ 3k earlier in the day

There is no doubt that some US officials are becoming increasingly concerned about the modus operandi of DeepSeek and how the tech company deals with user data stored on its servers in China. The Trump administration is considering multiple measures to curtail its activities in the US which could include banning DeepSeek’s chatbot application on federal government devices. Its national security concerns are how it uses the information it has and who has access to it. Further moves could see more draconian measures, including a complete ban on the app from US app suppliers and stringent limitations on how domestic service providers can offer DeepSeek’s AI models to customers.

The Statistical Centre for the Cooperation Council for the Arab Countries of the Gulf posted that up until the end of October 2024, the overall GCC inflation was 1.7% higher on the year. The main sectors moving higher were housing, goods/services, hospitality, culture/entertainment, education and food/beverages, with increases of 6.4%, 3.0%, 1.7%, 1.4%, 1.2% and 0.8%. They were offset by declines noted in transportation, furniture/household, tobacco, communications and clothing/footwear of 3.6%, 1.9%, 1.1%, 0.9% and 0.4%; prices of the health group remained at their previous levels. It is interesting to note that the overall inflation rate in the GCC countries was lower than the EU’s 2.3% rate. The global countries, with the highest inflation rates, were Brazil at 4.8%, India – 4.4%, UK – 3.2%, US – 2.6%, Japan – 2.3% and Germany – 2.0%.

Having announced a strategic review last year, the embattled online fashion retailer, Boohoo hasrenamed itself Debenhams Group, now the department store’s updated business model accounts for the majority of group profitability. In recent months, the company had been fighting its main shareholder, Mike Ashley’s Frasers Group, over direction and performance. In 2020, when Debenhams collapsed, closing one hundred and twenty-three stores and making 12k staff redundant, Boohoo had acquired only the name and website operations from administrators. Boohoo is now valued at US$ 440 million – well down from its former value of US$ 4.40 billion. The main drivers behind this slump include increased and cheaper competition, supply chain disruption and rising returns. It has added that the marketplace-led, stock-lite, capital-lite Debenhams had “transformed” its fortunes, and that “our ongoing business review has confirmed that Debenhams, its business model and its technology is at the epicentre of our group going forward.”

Jim Ratcliffe, co-owner of Manchester United, has announced plans for a US$ 2.60 billion, 100k-seater ground, set to be the largest stadium in the UK; it seems highly likely that the existing iconic Old Trafford ground will be demolished. Although such a project would normally take ten years to build, Ratcliffe is confident that it could be ready within five years. There was some hope that the original ground could be used by United’s women and youth teams, but it has been found that this option is not viable. Foster and Partners, who have designed the project, confirmed that the new stadium would feature an umbrella design and a new public plaza that is “twice the size of Trafalgar Square”. Another feature will be the three masts – the trident – that will be 200 mt high and have visibility of some twenty-five miles.

In Q4 2024, the euro area’s seasonally adjusted GDP increased by 0.2%, whilst in the EU it came in on 0.4%; in Q3, GDP had grown by 0.4% in both areas. After both blocs had posted 0.4% growth in 2023, GDP growth in the EU was 0.1% marginally better than the euro area’s 0.9%. During 2024, GDP in the US increased by 0.6%, compared to the previous quarter (after 0.8% in Q3 2024).

In Australia, the beleaguered casino group Star Entertainment has secured a US$ 33 million lifeline from the sale of 50% of its share in a new Brisbane casino to the other 50% owner. Hong Kong investors, Far East Consortium International and Chow Tai Fook Enterprises, confirmed that a deal had been reached to take over full control of the US$ 2.4 billion Brisbane’s Queen’s Wharf development. In return for this 50% stake, Star Entertainment will acquire the Hong Kong parties’ two-thirds stake in the Gold Coast project. Star has been running casinos in Sydney, Brisbane and on the Gold Coast for decades, but in recent years, along with other casino companies Crown and SkyCity, it has been the subject of ongoing investigations and royal commissions in four states, manly related to money laundering. Star is now battling legal action, with the corporate watchdog ASIC alleging Star’s board and directors had “failed to give sufficient focus to the risk of money laundering and criminal associations”.

With Canada having started this trade battle, by initiating levies, (100% on EV imports and 25% on steel/aluminium products), on China last October, it has announced retaliatory action by levying tariffs of over US$ 2.6 billion on Canadian agricultural and food products.  These comprise a 100% tariff on Canadian rapeseed oil, oil cakes and pea imports, and 25% on aquatic products and pork. At the time, the Chinese Commerce Ministry argued that “Canada’s measures seriously violate World Trade Organisation rules, constitute a typical act of protectionism and are discriminatory measures that severely harm China’s legitimate rights and interests. Meanwhile, the then Canada’s PM, Justin Trudeau, claimed the measure was to counter what he called China’s intentional state-directed policy of over-capacity.

This week, the odds on a US recession strengthened and even President Trump refused to rule one out, commenting “I hate to predict things like that,” and that “there is a period of transition, because what we’re doing is very big – we’re bringing wealth back to America. “It takes a little time.” Trump’s orchestration of amending tariffs to the likes of Canada, Mexico, China and others have left the US, (and global), financial markets in turmoil and consumers unsure what the year might bring; indeed, the previous week was the worst performing for global bourses since the November election, whilst consumer confidence has dipped alarmingly, with the undoubted increase in prices after years of high inflation, just returning to some form of normality.

On Tuesday, he lifted the ante in his trade war with Canada, by doubling tariffs on Canadian steel and aluminium to 50%. This comes after Ontario placed 25% tariffs on electricity exported to the US, which led the new Canadian leader, Mark Carney, to back down after the state’s premier, Doug Ford said, “we will not back down” and called on Trump to “stop the chaos”. This came after the worst day of the year for US bourses. Trump took the fight to Canada even further by also by adding that if the tariffs on agricultural products were not dropped, he would hike taxes on the car industry which would all but shut the industry in Canada down.

The on-going sparring between the two N American neighbours further unsettled financial markets, already reeling by Trump’s focus on tariffs. After taking a spill after Trump’s initial post on Truth Social, that he was going to put an additional 25% tariff on the metals products from Canada, stocks rebounded when Ford said he would suspend the electricity surcharge and Ukraine agreed to a 30-day ceasefire. The S&P 500 index dropped as low as 5,528 points, briefly marking a 10.0% slump from its record closing high of 6,144 on 19 February, which is commonly known as a market correction. Overall stocks have fallen hard since reaching a record high about a month after Trump took office on 20 January, shedding almost US$ 5 trillion of their market caps. Despite Mark Carney, the new man at the helm in Canada, saying that “Canada will never be part of America in any way, shape or form,” the US protagonist reiterated that Canada relied on the US for “military protection”, and  that he wanted the country to become the fifty-first US state, adding that it “would make all tariffs, and everything else, totally disappear”, if this were to happen.

On Tuesday, the Trump administration imposed a 25% tariff on global steel and aluminium imports and on the following day, the EU launched countermeasures, as from 01 April 2025, against new US tariffs on steel and aluminium, with plans to impose duties on US$ 28.3 billion worth of American goods.  The European Commission, the EU’s executive arm, said it would move forward with “swift and proportionate” measures. For Europe, the new tariffs are almost quadrupled what they were in Trump’s first presidency, when the US targeted nearly US$ 7 billion of the bloc’s metals exports, citing national security concerns.  Furthermore, the US has stated that reciprocal tariffs, coming in early April, are based on policies of partners that are seen as obstacles to US trade, including Europe’s value-added tax, and has targeted certain goods including European cars.

US President Donald Trump reversed course on Tuesday afternoon on a pledge to double tariffs on steel and aluminium from Canada to 50; this followed a move by Ontario Premier Doug Ford, to place a 25% surcharge on the electricity Canada’s most populous province supplied to more than a million US homes unless Trump dropped all of his tariff threats against Canada’s exports into the US. Hours later when he realised that Trump would actually go through with his threat, Ford unceremoniously pulled back on his 25% surcharge on electricity.

Last month, the EU’s trade chief, Maros Sefcovic, had gone to Washington to discuss amicable solutions to members of Trump’s team, including Commerce Secretary Howard Lutnick. He did offer some compromises, including increasing US imports of liquefied natural gas and defence goods and reducing tariffs on industrial goods, including cars. However, he concluded that “the US administration doesn’t seem to be engaging to make a deal,” and “as the US is watching over their interests, so is the EU,” and the bloc “will always protect European businesses, workers and consumers from unjustified tariffs because we know they expect no less from us.”

Ironically, Elon Musk’s Tesla has sent a letter to the US Trade Representative’s Office warning officials it risks being exposed to “disproportionate” retaliatory tariffs under the president’s escalating trade war. The market has shown its displeasure with Tesla, as its share value has slumped by more than 50%, equating to some US$ 800 billion, since its December peak, including its worst daily loss this week in five years. This was in line with the market seemingly indicating that US consumers and businesses were now facing the prospect of a recession in the coming months; on top of that, some of the EV maker’s problems can be linked to domestic anger over Elon Musk’s work in government to shrink its size through leadership of the so-called Department of Government Efficiency.

There is no doubt that the European economies will be badly impacted by the double whammy of their steel exports to the US will diminish and that the bloc could be flooded with cheap steel, as the US market becomes too expensive and other markets have to be found To add to their woes, the EU  is already suffering from cheap steel imports from Asia, N Africa and the ME. It has been estimated that during his last stint as President, Trump’s tariffs saw that for 67% of steel deflected from the US market, ended up in the EU. Furthermore, Canadian aluminium, that normally comprises 50% of US imports, will be looking at dumping excess in the European markets.

Mainly down to a dip in the manufacturing sector, the UK economy contracted by 0.1% in January – a figure that disappointed the market which was expecting a 0.1% expansion, following on December’s 0.4% growth – and which was another body blow for the Starmer administration. This contraction – another indicator of the fragility of the economy – will also impact Chancellor Rachel Reeves’s decisions as she seeks to meet her self-imposed rules on tax and spending in her Spring Statement later this month; she will have to pull more than an Easter bunny out of her hat to try and keep the sluggish economy growing. More so because 01 April sees the arrival of business entities having to pay more in National Insurance, along with minimum wages rising and business rates relief being reduced, that will see employers with less cash available to give pay rises, create new jobs or invest. On top of all that, is the scenario of Trump tariffs and more of the government money being poured into defence spending. There is no doubt that the Chancellor finds herself between a rock and a hard place, as growth prospects falter, at the same time that government spending will have to be reined in so that Reeves can meet her tax and spending rules.

What could come as a surprise to many would be the fact that at the beginning of 2025, 9.3 million people, aged 16 to 64, in the UK were economically inactive – an 8.3% hike of 713k since the pandemic. The Department of Work and Pensions indicates that some 2.8 million people are economically inactive because of long-term sickness, and that the government spends of over US$ 84.0 billion on sickness benefits – with tens of billions of pounds being added by the time of the next election in 2029, (assuming the government can last that long).

It seems that the dynamic duo, Starmer/Reeves, is out to irk some of the electorate, as the PM commented that the current welfare system was “the worst of all worlds”, discouraging people from working while producing a “spiralling bill”; he added that the current benefits system was unsustainable, indefensible and unfair. In the coming weeks, Work and Pensions Secretary, Liz Kendall, will set out changes to the welfare system and cuts to the benefits bill – indeed the Chancellor has already earmarked several billion pounds in draft spending cuts to welfare and other government departments ahead of her Spring Statement, later this month. Some of the sectors that could be impacted include cuts to incapacity benefits for people unable to work and receiving Universal Credit, and restrictions on eligibility for the Personal Independent Payment, which provides help with extra living costs to those with a long-term physical or mental health condition. It is no surprise that some Labour MPs will be uncomfortable with the measures to be taken and could vote with their feet.

The PM also commented that “we’ve found ourselves in a worst of all worlds’ situation – with the wrong incentives – discouraging people from working, the taxpayer funding a spiralling bill. A wasted generation, one-in-eight young people not in education, employment or training, and the people who really need that safety net still not always getting the dignity they deserve. That’s unsustainable, it’s indefensible and it is unfair, people feel that in their bones. So, this needs to be our offer to people up and down the country. If you can work, we will make work pay – if you need help, that safety net will be there for you. But this is the Labour Party – we believe in the dignity of work and we believe in the dignity of every worker.” However, a dozen charities have argued there is “little evidence to suggest cutting benefits increases employment outcomes” and have urged Rachel Reeves to “think again about cuts to disability benefits”. She continues to insist that “we do need to get a grip” on the welfare budget, saying the “current system is not working for anyone”.  Maybe it is the Chancellor who is Out Of Control!