Picking Up The Pieces!                                                               15 August 2025                                

Despite some negative opinion indicating that there soon will be a correction in the market, Dubai continues to lead the world and has probably more attributes that support the property sector than any other nation. It is being driven by a progressive and dynamic government that has seen the economy grow at a faster pace than many others, with an expectation that growth this year will be above 4.0%, driven by strong performances in trade, tourism, financial services, and real estate.

The market’s resilience is further supported by Dubai’s broader economic fundamentals. Into H2, Dubai will continue to see the resilient property market maintain its momentum, supported by sustained population inflows, strong rental yields, expanding infrastructure, and proactive policymaking. In the seven months to 31 July, the emirate’s population had risen by 120k from 3.864 million to 3.984 million – and, by year end, could easily top 4.050 million, an annual increase of 186k or 4.81%. Meanwhile, ongoing infrastructure investment, including major transport and leisure developments, is enhancing the city’s long‑term liveability and investment proposition.

Chestertons’ Mena latest property survey indicates that the Dubai market is still robust, with six locations – Jumeirah Village Circle, Damac Island, Downtown Dubai, Dubai Marina, Meydan City and Dubai South – returning yields of 7.39%, (US$ 337 per sq ft), 7.38%, (US$ 682 per sq ft), 6.00%, (US$ 682 per sq ft), 6.24%, (US$ 479 per sq ft), 7.14%, (US$ 522 per sq ft), and 6.77%, (US$ 282 per sq ft), respectively. As land banks, nearer the city, are becoming restricted, such areas are gaining popularity where suburban master-planned zones gain prominence. Mohamed Mussa, executive director at Chestertons Mena, noted that “government support continues to be instrumental in shaping a vibrant and accessible real estate market. From streamlined regulations to enhanced investor protections, the UAE is attracting a new wave of international and family-oriented buyers”. The study notes that growth is being driven by a raft of buyer-friendly policies, including lower down payment thresholds, improved mortgage access, and long-term visa options dependent on property ownership.

As already noted in previous blogs, recent data from the Dubai Land Department shows a 25.8% annual hike in real estate transactions, to over US$ 49.05 billion, with the residential sector maintaining its dominance with  60% plus of total sales, assisted by a myriad of developers, (including Emaar, Sobha Realty, Damac, Azizi and Binghatti), launching high-appeal projects, in line with growing demand. CBRE posted that off-plan sales accounted for 58% of total residential transactions in H1, with an annual 32% rise. Rents are not to be left behind with Asteco posting that there were average rental rises of 19.6% and 18.5% for villas and apartments. Interestingly, the consultancy noted that whilst prime areas, such as Downtown and Palm Jumeirah, are seeing stabilisation, mid-market and emerging zones are driving rental growth, with tenants seeking more space and better affordability.

Meanwhile, Property Finder reported that both July transactions and volumes surged by an annual 27% and 24%, with sales transactions totalling US$ 17.33 billion, as buoyant off‑plan activity, robust demand for ready properties, and a landmark corporate tax concession fuelled investor appetite. Apart from the ‘normal’ drivers, the market was buoyed by a UAE Ministry of Finance decision to allow corporate tax deductions on investment properties held at true market value; investors are now allowed to depreciate assets based on current market valuations rather than historical cost. This basically will increase the after‑tax returns for corporate property owners. It is almost certain that this will stimulate more investment development projects in income‑generating assets such as commercial buildings and rental portfolios It is hoped that this initiative will enhance investor returns, improve reporting transparency, and stimulate further portfolio growth among developers, funds, and corporate owners.

Off‑plan sales posted a 123% surge in value, to US$ 2.07 billion, and by 88% in volume to 2.68k transactions, with the primary market not being left behind, posting 66.0% and US$ 3.32 billion and 56.0% and 1.96k transactions. Overall, the primary market generated US$ 8.69 billion in deals, 32% higher on the year, driven by high‑value transactions in Wadi Al Safa 3 and Dubai Investment Park, which accounted for 16% and 9% of the total. Value-wise the total value of secondary market sales was almost the same as for the primary sector – at US$ 8.64 billion – up 22%, as transactions increased by 18% to 8.22k. A major deal of US$ 300 million was recorded for an industrial land transaction in Al Wasl, with increased activity noted in Ras Al Khor, Jumeirah Second, and Marsa Dubai.

62% of purchase interest and 80% of rental searches are for apartments, with studios and one bedroom units accounting for 16% and 36% of buy searches and 22% and 40% on rental searches. There is no doubt that soaring apartment rentals, which have climbed by up to 25%, since the start of 2024, have led to tenants considering the buying option, more so in the smaller unit segment. The share of demand for apartments over villas increased by 3% suggesting that affordability is becoming a factor in the move towards higher‑density, and cheaper, living options.

A study from Morgan’s International Realty, paints a startling picture on the status of branded residences in Dubai. There is increasing demand for them so much so that it is estimated that they can demand a premium of up to 40%, compared to “normal” residences, with an average per sq ft being US$ 1,030. 79% of all branded transactions were off plan, and accounted for 13% of all residential transactions despite making up only 5.8% of the volume. The study notes that the emirate currently has ninety branded residences under construction, comprising 30.4k units, of which Downtown, Business Bay and Palm Jumeirah are the sector’s leaders with totals of twenty-one, seventeen and sixteen respectively. Some fifty-four branded projects – with 18.1k units – have been completed, with 38% being managed by hotel operators. In H1, twelve new branded projects, (with 5.5k units), were launched that brings the total inventory in Dubai to 48.5k. Jumeirah Asora Bay was home to the unit with the highest price per sq ft of US$ 4,985, whilst Dubai Marina and Downtown attracted the most sales – worth US$ 889 million and  US$ 1.55 billion. According to Henley and Partners, the UAE will attract around 9.8k millionaires this year, many of whom will be looking for up-market branded residences.

ValuStrat always provide interesting and forthright information when it comes to the state of the Dubai property market. The latest report sees Q2 prices continuing to head north but at a slower pace – with home values rising at 4.7%, compared to 5.0% a year ago, but still up nearly 24% on the year. Even though the supply chain will release more units this year, it does appear that demand will more than keep up with this increase; the actual numbers are not known but could be around 58k, although the agency expects the number to be 66.6k, split 65:35 apartments:villas. It also estimates that 200k units are in the pipeline until 2029, that equates to 40k a year although new and bigger projects to be launched over the next two years will see the pipeline grow.

Villas continue to perform well, with average prices 28.7% higher on the year, with some locations including Jumeirah Island, Palm Jumeirah and Arabian Ranches seeing prices surging by 284%, 248.6% and 201.1% since 2021. In Q2, villa prices in Jumeirah Islands, Palm Jumeirah, Emirates Hills and The Meadows rose by 8.5%, 8.5%, 5.5% and 5.5%, with Mudon being the slowest at 2.1%. Prices will continue to climb especially in prime villa areas.

Apartments saw prices rise by 3.4% in Q2, and 19.1% on the year., with the biggest gainers in Q2 being Remraam, Dubai Silicon Oasis, The Greens, Town Square and Palm Jumeirah at 5.4%, 5.0%, 4.5%, 4.5% and 4.2%. Dubai Marina and International City posted the lowest growth levels of 2.9% and 2.3%.

Rental prices are slowing but still growing, with overall rents 1.0% and 6.2% higher on a quarterly and an annual basis. This is split between villas – which have seen prices flat on the quarter and up 6.2% on the year, to US$ 117k – and apartments which were 1.2% higher in Q2 and 7.2% on the year, to US$ 26k. Average annual asking rents for studios, one-bedroom, two-bedroom and three-bedroom were US$ 17k, US$ 25k, US$ 36k and US$ 52k. For villas, three-bedroom, four-bedroom and five-bedroom average rentals were US$ 91k, US$ 116k and US$ 142k.

The off-plan market in Q2 witnessed 35.7k deals – a massive 24% higher on the quarter and 43% on the year – worth US$ 30.79 billion. Three locations accounted for 22.0% of the total – JVC, Damac Islands and Business Bay with 9.5%, 7.5% and 5.0% of the total. 36.4% of sales in the secondary market were for properties in the under US$ 272k (AED 1.0 million) segment, with it also surging with 13.69k resale deals. There are indicators that mortgages are becoming increasingly popular, as it seems more residents are choosing long-term to semi-permanent stays and home ownership, with the percentage of mortgages climbing, but still behind cash sales. The figures show that 16.0k, worth US$ 10.08 billion, were cash sales and there were 11.6k mortgage deals, valued at US$ 6.54 billion. The advice is to disregard any comments by the doomsayers and believe that the Dubai market is still buoyant even after five years of a bull run.

There has been a move in the commercial property sector that sees the demand for “expensive” office space increasing. Data shows that the number of offices selling for more than US$ 2.72 million, (AED 10 million), has more than trebled in H1 to eighty-three, compared to twenty-seven such deals a year earlier. Knight Frank points to Downtown Dubai being the epicentre of this boom, with average office prices going up to more than US$ 1.36k per sq ft – and ‘significantly outpacing all other submarkets’. Meanwhile, with a 21.2% growth over the past five years, Business Bay remains the second most expensive submarket, with average prices topping a record US$ 545k psf. Another feature of the boom is the rise of off plan sales, with Knight Frank commenting that “largely concentrated in Business Bay, which is set to deliver more than 1.3 million square feet of office spaces through this model, the surge reflects the strength of investor confidence in purchasing office assets in the city’s prime financial hub”. For office rental rates, DIFC remains the sector’s leader with an average of US$ 109 psf for fitted offices, compared to the likes of Dubai Design District, The Greens and Business Bay with rentals of US$ 76, US$ 71 and US$ 68.

As from 01 October, Emirates will allow passengers to carry one power bank onboard but with the following specific conditions:

• passengers may carry one power bank that is under 100 Watt Hours
• power banks may not be used to charge any personal devices onboard
• charging a power bank using the aircraft’s power supply is not permitted
• all power banks accepted for transport must have capacity rating information available 
• power banks may not be placed in the overhead stowage bin onboard the aircraft and must now be placed in the seat pocket or in a bag under the seat
• power banks are not permitted in checked luggage

but the power banks may not be used while in the aircraft cabin — neither to charge devices from the power bank, nor to be charged themselves using the aircrafts’ power source. Over recent times, the global aviation sector has seen a marked growth in the on-board use of power banks resulting in an increasing number of lithium battery-related incidents onboard flights.

Over the past four months, flydubai has taken delivery of seven Boeing 737 MAX 8s, bringing its fleet size to ninety-three, with five more due before the end of the year. However, the carrier is still awaiting a further twenty jets from a backlog that has been delayed for several years; this delay has impacted its expansion plans. The carrier flies to one hundred and thirty-five destinations, in fifty-seven countries, and has also recently increased its workforce by 10% to over 6.5k employees.

Driven by a ‘strong performance’ recorded in its ports and terminals operations, as well as through recent acquisitions, DP World saw both its H1 revenue and profits surge by 20.4% to US$ 11.2 billion and by 69.0% to US$ 960 million. EBITDA came in 21.4% higher at US$ 3.03 billion, with 2025 capex, planned at US$ 2.5 billion, supporting expansion in Jebel Ali Port, Drydocks World, Tuna Tekra (India), London Gateway (UK), and Dakar (Senegal), along with DP World Logistics and P&O Maritime Logistics. The figures may have been even better if it were not for the regional tensions, the continued closure of the Red Sea and the threat of Trump tariffs. With its flagship Jebel Ali Port handling 7.7 million TEUs, (20’ equivalent units), container volumes handled were 5.6% higher on a like-for-like basis, to 45.4 million TEUs across the global portfolio.

Dubai Chamber of Commerce, one of the three chambers operating under the umbrella of Dubai Chambers, had a busy H1, welcoming 35.5k new member companies, up 4.0% on the year. There was an 18.0% hike in the value of members’ exports and re-exports to US$ 46.84 billion, with a 10% hike in the number of Certificates of Origin, to 409.1k, and issued and received almost 3.0k ATA Carnets for goods valued at around US$ 529 million. It also successfully supported the expansion of sixty local companies into new global markets during H1 2025, with a 76% growth.

In 2024, the emirate’s economy grew 5.8%, at current prices, to US$ 147.41 billion, and by 3.2%, at constant prices, to US$ 120.71 billion. Official figures show that Dubai’s Q1 GDP grew by 4.0% to US$ 32.62 billion, driven by strong performances across a wide range of strategic sectors including the following activities:

• Human Health and Social Work  26.0%                   US$ 518 million      1.5% of Dubai’s GDP
• Real Estate                                             7.8%            US$ 2.45 billion       7.5% of Dubai’s GDP
• Financial/Insurance                            5.9%                US$ 4.36 billion   13.4% of Dubai’s GDP
• Accommodation/Food Services     3.4%                   US$ 1.34 billion    4.1% of Dubai’s GDP
• Transport/Storage                             2.0%                  US$ 4.20 billion   13.0% of Dubai’s GDP
• Information/Communications        3.2%                  US$ 1.44 billion     4.4% of Dubai’s GDP
• Wholesale/Retail                                 4.5%                 US$ 7.49 billion   23.0% of Dubai’s GDP

By the end of 2025, Omega Seike Mobility will be assembling electric vehicles at its new 42k sq ft plant in Jebel Ali Free Zone. The Indian company, which will employ over one hundred in its primary phase, is investing US$ 25 million over a five-year period in its ‘first international EV assembly plant’ and designed to ‘meet rising demand for low-emission transport in the region’.

UAE authorities have once again issued a stern warning to the ever-growing number of social media users to desist from posting offensive or insulting comments targeting content creators personally; a reminder that such behaviour is a criminal offence under UAE law. Colonel Omar Ahmed Abu Al Zawd, Director of the Criminal Investigation Department at Sharjah Police, noted that “commenting on a public post does not give anyone the right to verbally attack, mock, or humiliate others,” and that the law is clear – online insults, even within comment threads or replies, are punishable”. Furthermore, Major Abdullah Al Sheihi, acting director of the Cyber Crime Department at Dubai Police, added, “whether it’s a written post, video, audio clip, or live stream, the law prohibits posting any comment that is insulting or defamatory,” he said. “Many users assume comments, especially during live sessions, are casual and harmless. But every word is recorded, traceable, and can result in legal action”.  Penalties for online insults or defamation include imprisonment and fines ranging from US$ 68k to US$ 136k.

Last Friday, the UAE signed a new Services and Investment Trade Agreement with the Russian Federation that follows the recently signed Comprehensive Economic Partnership Agreement with the Eurasian Economic Union – a bloc that includes Russia, Armenia, Kazakhstan, Kyrgyzstan, and Belarus. Dr Thani bin Ahmed Al Zeyoudi, Minister of Foreign Trade, noted that the country continues to consolidate its international partnerships and to further enhance its role as a global hub for trade and investment. He added that “this marks the second services and investment agreement following the earlier one with Belarus. The third agreement, with Armenia, has also been finalised. We expect to conclude negotiations with both Kazakhstan and Kyrgyzstan in the near future”. He hopes that all five agreements will be signed by the end of the year. These agreements aim to enhance investment flows and support the economic diversification strategies of both the UAE and its partner nations. It is estimated that H1 saw an exceptional 75% surge in bilateral trade, following a 5.0% increase in 2024 – last year trade with Eurasian bloc jumped 27% to almost US$ 30 billion.

Amanat Holding has advised the DFM that it has sold its sold real estate assets of North London Collegiate School for US$ 123 million to an undisclosed buyer, with the deal being finalised in Q3. The leading healthcare and education listed investment company noted that “Amanat remains focused on delivering value to shareholders, continuing with our monetisation plan for education,” H1 financials are not yet available but the result of this sale will only be shown in its Q3 results.

Salik registered a 39.5% growth in H1 revenue,, to US$ 416 million, with some of the improvement down to growth driven by the introduction of variable pricing, at the end of January and two new toll gates last November; profit surged by 41.5% to US$ 210 million. The number of chargeable trips in Q1 and Q2 came in on 158.0 million and 160.4 million, giving a half-year total of 318.4 million. Over the six months, toll fees collected were US$ 370 million, up 42.3% on the year, whilst fine revenues were 15.7% higher at US$ 36 million, with tag activation fees increasing by 16.2% to over US$ 6.0 million. Total ancillary revenue, being revenues from partnerships with Emaar Malls and Parkonic, was at more than US$ 2 million.

In H1, the formerly embattled Drake & Scull posted a 56.7% hike in revenue to US$ 21 million but saw its net profit sink to just US$ 2 million from US$ 104 million a year earlier. The comparative figures were skewed because the 2024 profit’s ‘restructuring adjustments’. During the period, the company won new projects with a total value of US$ 379 million, including a US$ 272 million UAE project, the North Balqa Wastewater Treatment Plant in Jordan  for US$ 59 million and a water treatment plant in Maharashtra, for US$ 46 million it also launched its first real estate project, having bought land in Majan to build its first self-owned commercial building in Dubai. It is also trying robustly collecting money that has been owed to the company over the years, noting that, ‘we are pursuing several legal cases to recover as many receivables as possible’.

This week, Amlak Finance PJSC posted its H1 2025 financials. There were increases in revenue, net profit after tax, and the share of profit from JVs and net income from development properties by 61.3% to over US$ 54 million, by 265% to US$ 5 million and to US$ 15 million. Its operating costs dipped 2.4% to US$ 11 million. Over the period, Amlak completed the sale of Ras Al Khor land plots for a total consideration of US$ 790 million which will be realised in the next accounting period, as the transfer of ownership and receipt of full proceeds only occurred in July 2025. However, it did successfully execute a partial sale of a 29% stake in its investment in an associate in KSA, with the 79% balance being completed in July. In Q2 it managed to repay almost US$ 10 million owed to financiers and fully settled the debt in July by repaying US$ 247 million.

Emaar Properties on Wednesday announced H1 results:

• revenue                                up 38%                    to        US$ 5.40 billion
  • net profit before tax             up 34%                    to        US$ 2.84 billion

robust performance across development/retail/hospitality/international operations

• property sales                         up 46%                  to US$ 12.63 billion, record sales
  • revenue backlog                     up 62%                    to US$ 39.86 billion
• • S&P and Moody’s raised their credit ratings on Emaar to BBB+ and Baa1, both with stable outlooks

Emaar Development – a subsidiary of Emaar Properties

• revenue                                      up 35%                    to           US$ 2.72 billion
• net profit before tax             up 50%                    to           US$ 1.49 billion
• property sales                         up 37%                  to           US$ 11.06 billion

launched twenty-five new projects

• revenue backlog                     up 50%                    to              US$ 35.04 billion

Shopping malls and leasing portfolio

• revenue                                      up 14%                    to           US$ 872 million
• EBITDA                                     up 18%                   to          US$ 763 million

driven by continued growth in tenant sales and ongoing 98% occupancy levels

Hospitality, leisure, and entertainment businesses

• revenue                                                                          to           US$ 572 million

driven by supported by strong tourist activity and growing domestic demand

• occupancy levels                    up 2%                      to              80%
• commercial leasing                up 15%                    to              US$ 1.44 billion
• EBITDA                                 up 16%                    to              US$ 1.12 billion
• hotel keys                               up six hundred      two new hotels

International Operations

• revenue                                      up 26%                    to           US$ 272 million

driven by continued demand across key markets

• property sales                        up 200%                 to              US$ 1.44 billion

The DFM opened the week, on Monday 11 August, on 6,149 points, and having shed fifty-seven points (0.9%), the previous week, shed twenty-three points, (0.4%), to close the trading week on 6,126 points, by Friday 15 August 2025. Emaar Properties, US$ 0.12 lower the previous week, shed US$ 0.17, closing on US$ 3.99 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.74, US$ 7.36, US$ 2.63 and US$ 0.48 and closed on US$ 0.75, US$ 7.14, US$ 2.65 and US$ 0.47. On 15 August, trading was at one hundred and seventy-nine million shares, with a value of US$ one hundred and forty-three million dollars, compared to one hundred and twenty million shares, with a value of US$ one hundred and sixty-three million dollars, on 08 August 2025.

By 15 August 2025, Brent, US$ 2.91 lower (4.2%) the previous week, had shed US$ 0.59 (0.9%) to close on US$ 66.11. Gold, US$ 55 (1.7%) higher the previous fortnight, shed US$ 9 (0.3%), to end the week’s trading at US$ 3,339 on 15 August.

On Monday, once again bastardising the English language, the US President Donald Trump said on Monday that “gold will not be Tariffed!”  Gold futures were little changed after Trump’s post, but gold prices slid lower. Only last week, the market was spooked when the White House said that the administration would issue a new policy clarifying whether gold bars would be subject to duties after a US government agency said they would.

Last year, Boeing had agreed to buy back Spirit for US$ 37.25 a share, in an all-stock deal, that valued the supplier at US$ 4.7 billion, with the total transaction value of US$ 8.3 billion, that included Spirit’s net debt. In the UK, the Competition and Markets Authority has finally decided to take no further action on Boeing’s multi-billion deal to acquire Spirit AeroSystems Holdings Inc; the watchdog did not immediately publish the reasons for its decision to wave the deal through. Twenty years ago, the then Boeing company was spun off to save the US plane maker costs and now it will return as a key supplier for the Boeing aircraft portfolio. As part of the transaction, Boeing’s chief competitor, Airbus SE will also take over parts of Spirit that make components for the European plane maker.

Q2 saw the UK car sales reached almost two million – and rose by 2.2% to just over four million in H2, bringing the figure marginal lower, (by 37.3k), than post pre-pandemic levels. Of the total cars sold, it was reported that about 10% were for EVs. Smaller cars accounted for 31.8% of cars sold, whilst black, grey and white made up more than 50% of transactions. SMMT’s chief executive noted that “surpassing the four million half-year milestone for the first time since 2019 shows the UK’s used car market is building back momentum” and that “to maintain this trajectory, a thriving new car market must be delivered across the segments, along with accelerated investment into the charging network to give every driver the ability to switch.”

Crocs’ share price plunged after the rubber clog-maker revealed a fall in US sales, as shoppers are choosing to spend on trainers ahead of the 2026 World Cup and the 2028 Los Angeles Olympics. Even its supremo, Andrew Rees, acknowledges the fact that North American consumers are buying into a “clear athletic trend”, and that US customers were being “super cautious” due to the high cost of living and the potential impact of Trump tariffs; he added that “they’re not purchasing, they’re not even going to the stores, and we see traffic down”. As US sales fell by 6.5% in Q2, it reported a US$ 449 million pre-tax loss, (compared to a US$ 296 million profit last year), and cautioned on a “concerning” second half of the year, sending its share price spiralling by 30%, to a three-year low of US$ 73. It is expected that the company would take a US$ 40 million hit for the remainder of 2025 due to tariffs. Crocs also own casual footwear brand HEYDUDE, following a US$ 2.5 billion takeover in late 2021.

It is reported that the owners of Visma are considering an IPO – and at an estimated US$ 21.67 billion, it would be a major coup for the embattled London Stock Exchange, which has seen several big name exits in recent times. The Norwegian firm, one of Europe’s biggest software companies, supplies accounting, payroll, HR and other business software to well over one million small business customers. It has grown quickly in recent years, both organically and through scores of acquisitions, and has seen its profitability and valuation rise substantially during that period. The business is partly owned by a number of sovereign wealth funds and other private equity firms, with Hg, the London-based private equity firm, the majority shareholder.

With trading have been “very good” right across the group, Aviva’s H1 operating profits rose by 22.0% to reach US$ 1.49 billion. Its chief executive, Amanda Blanc, commented that “we are the number one UK wealth player, with more than £ 200 billion (US$ 271.33 billion) of assets, and net flows are up 16% Over the six months, sales and operating profit, for general insurance, headed north by 7% and 29%, as health business expanded by 14%, with an increasing number of people opting for private insurance. A US$ 0.178 per share dividend was approved. Its acquisition of Direct Line was finally completed last month – too late to reflect in H1 results – but it will boost growth and see its customer base of some twenty-one million, (equivalent to around 40% of the UK’s adult population), move higher.

Yesterday, 14 August, in early Asian trading, Bitcoin hit an all-time high of US$ 124.2k before retreating by the end of the day to US$ 118.2k; the sudden rise was down to favourable US legislation and a rise in US equities, with both the S&P 500 index and Nasdaq closing the day before at record highs. There have also been several regulatory changes enacted by President Trump that have proved beneficial for the cryptocurrency who has moved to end restrictions that previously prevented banks from largely doing business with crypto firms. It closed today on US$ 117,095.

Reports indicate that fashion accessories chain Claire’s, (with three hundred and six stores, of which two hundred and seventy-eight are in the UK and the balance in Ireland), has appointed administrators to seek a potential rescue deal. The US-based group, with 2.15k employees, has been struggling for some time but its UK branches will remain open, as usual, once administrators have officially been appointed. However, it appears that several potential bidders have been scared away by the scale of the chain’s challenges.Late last week, River Island has had a restructuring plan granted by the High Court in London that will result in thirty-three outlets closing, with a further seventy-one with landlords ordered to reduce rents – and in some cases, to zero. If landlords do not accede to this request, there could be more shop closures on the cards. 11.6% of its nine hundred and fifty workforce will be made redundant that will save US$ 11 million. A US$ 54 million, rescue package supplied by an investment company, owned by the billionaire Lewis family, is supporting the planThe High Street fashion had warned that if the rescue plan had not been approved, it would have resulted in a liquidation. River Island has two hundred and twenty-three stores across the UK and Ireland. None of the Irish shops face closure. Like other major UK retailers, it has suffered from issues felt by many UK retailers, such as the shift to online shopping.

In the UK, The Entertainer chain operates more than one hundred and sixty shops, as well as concessions in Tesco, Matalan and M&S. Now its founder, Gary Grant, has decided to hand the business to its 1.9k employees which will result them in being rewarded through tax-free bonuses based on the profits generated in the future. The move will ensure the business, which also owns the Early Learning Centre and Addo Play, remains independent. The current owners, the Grant family, will be compensated for the sale of their stake from future profits of the business. The direction of the company will be overseen by a three-person trust, that will own 100% of the company, one of whom will be a representative of the staff board. A colleague advisory board will be created to help employees shape policies and share ideas.

As widely expected, the RBA cut its main cash rate by 0.25%, to a two-year low of 3.60%, but it seems that this could be the last reduction for a while; a slowdown in inflation and a looser labour market were the two main drivers behind the decision though Australia’s central bank was cautious on the prospect of further easing.  Assuming a gradual easing in policy, it expects core inflation to moderate to around the middle of its 2% to 3% target band.

North of Perth, deep into Western Australia mining territory, is a town called Eneabba, surrounded by barren and desolate land which miners believe contains a huge stockpile of critical minerals, better known as rare earths – they refer to seventeen elements on the periodic table which are lightweight, super strong and resistant to heat. These are required by such industries as EV makers, wind turbines and defence equipment, along with a host of other industrial sectors. Currently, the sector is monopolised by the Chinese, who are the global leaders, by a long stretch, and dominate the international supply chain.

Australia is betting big on this discovery, with a billion-dollar loan to a mining company to extract these metals – and disrupt a supply chain that China has monopolised. Indeed, Beijing has the power to disrupt the global market by just cutting off supplies but has currently agreed to let rare earth minerals and magnets flow to the US, which eased the bottleneck.  Just weeks ago, Ford halted production of its Explorer SUV because of a shortage of rare earths.  (An EV will probably have rare earths-based motors in dozens of components from side mirrors and speakers to windscreen wipers and braking sensors).

Although Europe and France were dominant in this industry over thirty years ago, China took the plunge to an extensive mining operation which has now reaped benefits; it now accounts for more than 50% of global rare earth mining, and almost 90% of processing. The US sources 80% of its rare earth imports from China, while the EU relies on that country for about 98% of its supply. Now the Australian government has stepped in to try and loosen China’s grip on the market by a US$ 652 million (AUD 1.0 billion) loan to Iluka Resources who have been mining for zircon. It has a one million tonne stockpile of mineral sands, (valued at US$ 650 million), that includes dysprosium and terbium – some of the most sought-after rare earths. The material is there but will still need to be processed or refined and it will take two years to build a refinery. There is no doubt that it is critical that China can no longer pull the strings when it comes to rare earths – and although a gamble, it is hoped that Iluka could be a game-changer for the sector and global manufacturing.

Following widespread discussions, US and China have extended a tariff truce for a further ninety days, until 10 November, with all other elements of the truce to remain in place. This sees potential three-digit tariffs off the card until then but the 30%:10% tariffs on Chinese imports:US imports. Donald Trump noted that “the United States continues to have discussions with the PRC to address the lack of trade reciprocity in our economic relationship and our resulting national and economic security concerns”. This extension will buy crucial time for the seasonal autumn surge of imports for the Christmas season, including electronics, apparel and toys at lower tariff rates. Earlier, Trump commented that China was getting very close to a trade agreement, and he would meet Xi before the end of the year if a deal was struck. It seems that he is hanging out for further Chinese concessions such as quadrupling its soybean purchases and curtailing its imports of Russian energy. In July, exports to the US fell an annual 21.7%, while shipments to SE Asia rose 16.6%, as manufacturers sought to pivot to new markets and capitalise on a separate reprieve that allowed trans-shipment to the US. Interestingly, the US trade deficit sank to its lowest level since 2004

The UK’s biggest bioethanol plant has given the Starmer administration until this Monday, 18 August. a hard deadline to provide a bailout or it will be forced to close. A Trump add-on clause to the US-UK trade agreement gave the US almost unlimited access – and a zero-tariff quota to export US ethanol imports, significantly larger than previous export volumes. Vivergo is one of two bioethanol plants, with a combined capacity of 1.4 billion litres, which will be badly impacted by cheaper US competitive imports. The UK bioethanol plants utilise significant amounts of feed wheat, and a decline in production could negatively impact UK farmers and also have a knock-on effect on the UK chemicals sector. The final decision lies with Business Secretary, Jonathan Reynolds, on whether to hold or fold his cards.

Finally, some positive news for the Chancellor with UK June quarter growth coming in on 0.4% – well above initial estimates of 0.1%. Construction was up 1.2%, whilst the services sector, which makes up some 75% of the country’s economy, showed a 0.3% improvement; these gains were partially offset by a 0.3% fall in production which includes manufacturing. Liz McKeown, director of economic statistics at the ONS, noted that the economy had been boosted by “computer programming, health and vehicle leasing growing”.

Figures from the Office for National Statistics confirms that the UK jobs market has continued to slow with vacancies falling, with the number of people on payrolls dipping, as job openings fell by 5.8% to 718k in the July quarter; almost all sectors were impacted. The report noted that there was evidence that some firms may not be recruiting new workers or replacing people who have left. Both the average wage growth and the unemployment rate remained flat at 5.0% and 4.75%, with a marginal 8k dip in people on payrolls. There are over thirty million on employer payrolls in the UK. In April, the National Living Wage rose 6.7% to US$ 16.56, the same month that employers’ national insurance contributions rose 1.2% to 15.0%. Notwithstanding the pandemic period, job vacancies are at their lowest level since January 2015. Normally, a decline in jobs vacancies will contribute to slowing wage growth and the payroll state of the nation is one factor that can push inflation either higher or lower – and so it is important information for the MNC members when they consider interest rates.

The average two-year mortgage rate, which sees its fifth reduction in eleven months, has dipped below 5% for the first time since the not so halcyon days of September 2022 and Liz Truss’s hysteric mini budget. It seems that there could be just one more reduction in 2025 but thereafter, they are unlikely to fall substantially.  Over the past four years, the rate has risen from its November 2021 3.59% to July’s 2024’s 8.07%, before dropping bank to its present 4.99%. Over that time span, the BoE’s rate was 0.1%, 5.25% and 4.0%.  It seems, from last week’s rate cut, that even the central bank does not appear to know how the UK economy is progressing and what to do. With one of the nine-member committee voting for a 0.5% cut in rates, the rest were split. Four members saw that the economy was continuing to stagnate and that job losses were starting to move worryingly higher – and voted for a 0.25% rate reduction; the other four saw that inflation was not only above the BoE’s long-standing 2.0% target but on the move higher by 0.2% on the month to 3.6%. Indeed, the Bank itself is expecting it to reach 4.0% in September, from an earlier 3.75% forecast, not helped by higher utility bills and food prices. With food inflation possibly topping 5.5% in coming months, BoE Governor, Andrew Bailey was asked whether this was down to poor harvests or government policy and he replied, “it’s about 50-50”, noting that food retailers, including supermarkets, were passing on higher national insurance and living wage costs – the ones announced in the Autumn Budget – to customers. Apart from the bank’s fifth rate cut in twelve months, there is little for the Chancellor to celebrate.

The latest EY study will prove difficult reading for the Treasury, with its estimate that the ongoing productivity gap between the public and private sectors, could be erasing US$ 108.5 billion from the UK economy; it reports that whilst output from the private sector has increased by 3%, the public sector has headed in the other direction, with a 3% decline. It is estimated that public sector spending now accounts for 44% of GDP and the drag impact of its poor performance will continue to have negative repercussions on the economy, if not rectified, and that the gap could rise to 5%, equivalent to US$ 230.70 billion, by 2030.

A desperate Chancellor is looking at all openings available for her to raise much needed funds to plug not only the much-hyped US$ 29.85 billion black hole, inherited from the previous Conservative government, but also a further unknown balance, (that could be as high as US$ 54.28 billion), she has managed to achieve in her fifteen months in the job. After she has ruled hikes in income tax, national insurance and VAT, one possibility is CGT changes, as well as tweaking amendments to inheritance tax.   Since this tax reaped US$ 9.09 billion for the Exchequer in 2022-23, Rachel Reeves has imposed not only a 20.0% levy on family businesses and farms, worth more than US$ 1.36 million, but has also made pensions liable to death duties, as well as extending a freeze on thresholds. It is estimated that the average tax rate paid, by just 4.6% of estates, is 13.0%, as any estate less than US$ 407k pays no tax, followed by a range of those between US$ 407k to US$ 543k paying 4.0% and up to 26.0%, with values of between US$ 2.71 million to US$ 4.07 million. To show the inequality with the system, the two hundred and two estates that pay more than US$ 13.57 million pay only 17.0%. However, possible revenue-making changes include amendments to the seven-year inter vivos rule, between giving and dying, and a lifetime cap on money that can be given away.

Last October, Rachel Reeves promised that she would take action on the so-called non-dom regime, that had existed for more than two centuries, allowing residents to declare they are permanently domiciled in another country for tax purposes. The law basically allowed some of richest people in the country, not to be taxed on their foreign incomes. In her budget speech, she announced that “I have always said that if you make Britain your home, you should pay your tax here. So today, I can confirm we will abolish the non-dom tax regime and remove the outdated concept of domicile from the tax system from April 2025”; she expected that this change would add US$ 5.14 billion to the Exchequer. Ten months later, her plan lays in tatters, with clear indicators that with so many non-doms leaving the UK, the policy has backfired and will cost the UK investment and jobs that they had generated, along with the tax that the non-doms already pay on their UK earnings. Another casualty will be the luxury home market, as recent data shows that in May there were 35.8% fewer transactions for properties in London’s most exclusive postcodes than a year earlier. However, it will be some time before the full impact can be measured. The other side of the coin concerns the people who were to move to the UK and/or set up a business and because of this change have decided to move elsewhere. At the end of the day, who will be left  Picking Up The Pieces?