It’s Now Or Never

HH Sheikh Mohammed bin Rashid Al Maktoum has ordered Dubai Municipality to allocate 10k land plots – in Al Ruwayyah 3rd, Mushrif and Wadi Shabak – for Emirati families. The Dubai Ruler that it was part of his strategy to “promote the wellbeing and prosperity of Emirati citizens in Dubai”.

A Cavendish Maxwell report estimates that over the past twelve months, property prices and rents have fallen on average by up to 2% and 5% respectively. The rental market has been hit by a shrinkage in the number of tenants at the high end of the sector, with company redundancies and cut backs in housing allowances. It estimated that the Dubai property portfolio increased by 3.8k in Q1, as developers ensured that a tight grip in supply is maintained.

According to Luxhabitat, 7,050 apartments and 622 villas were transacted in Q1, covering both secondary residential and off plan markets, with the former posting a 14.9% quarter on quarter decline to US$ 2.3 billion; over the same period, off-plan sales dipped 28.0% to US$ 1.6 billion. In the prime residential sector, quarterly sales came in at US$ 1.4 billion, with off-plan sales a lot lower than secondary villa sales.

Omniyat has secured a US$ 40 million construction finance for its twin tower project, The Sterling, set to house 385 units.

Dubai hotels reported their first increase in average daily rates in March for almost a year – up 0.5% to US$ 205.Occupancy rates rose 0.6% to a credible 85.7%, as RevPAR (revenue per available room) dropped marginally by 0.1% to US$ 176. Supply continued to outstrip demand by a net 0.7%, as room numbers increased by 5.4% but paying guests rose by the lesser amount of 4.7%.

Al Futtaim has already started work on its new Jebel Ali Festival Plaza that will host 100 retail outlets, a hypermarket and a food court as well as being home to the emirate’s second Ikea. The lifestyle shopping destination, located inside wasl Gate, will be ready by the end of 2019, well in time to benefit from Expo 2020.

Known as Dubai’s first smart city project, the 150k sq mt mixed use development in Silicon Oasis should be completed within the next twelve months. Al Shirawi Interiors has started fit-out work in Silicon Park’s 19 buildings including its business centre, hotel and fitness centre. It will include street charging docks for smart devices, electric vehicle charging stations as well as smart pop-up furniture and digital play tables.

A year after a US$ 1 billion launch, noon is to introduce an online auction platform, in cooperation with both UAE and Saudi government entities. The online site, using the latest technology, will hope that it performs better than Souq.com which closed shortly after opening a similar functionality. Although not really established in the region, with only several small players, it will surely take off when considering over 30% of global e-commerce is accounted for by online auctions.

As demand for public transport increases, the RTA is to buy 316 multi-size buses for US$ 127 million that will see the fleet increase by 18.1% to 2.1k. The ultra-modern vehicles, including 143 Volvo buses for inter-city use, will have low-floor access, roomy seats, high-end interiors, as well as Wi-Fi.

It is reported that Qantas is to sell its catering division to dnata to raise money to spend on upgrading its premium lounges and long-haul routes. The acquisition will result in 1.2k employees transferring to the Dubai aviation-services company, a division of the Emirates Group. No financial information was made available but the deal, initially for ten years, includes Qantas’ subsidiaries, Q Catering Limited, which operates in four Australian cities, and Snap Fresh Pty Limited.

Spanish operator Parques Reunidos, which already runs over fifty animal parks and other leisure facilities worldwide, has been appointed to manage Dubai Safari, opened last December. The facility, which cost US$ 270 million, was built by Dubai Municipality to replace the ageing Dubai Zoo in Jumeirah.

Gems Education reported a 5.2 % hike in H1 profits to March at US$ 203 million on the back of a 9.5% jump in revenue to US$ 602 million. The region’s largest school provider expects to see a 5.5% increase in enrolments by August year end to 121k, allied with a 4.5% rise in average revenue per student to US$ 8.45k.

Two Dubai-based traders, Ryan Fernandez and Sydney Lemos, involved in the US$ 200 million Extential Group forex scam got more than their come-uppance this week. The court sentenced both to over 500 years in prison, with each year counting for one of their criminal cases. It is a pity that US and European courts do not follow the Dubai example where there too many senior bankers escaped incarceration, despite being involved in bigger frauds that ruined the lives of so many and brought the global economy to its knees.

The Central Bank reports that exports from the country’s 37 free zones rose by 6.6% last year to US$ 61.2 billion, equating to 19.5% of the UAE’s total exports.

According to Dubai-based BNC Network, the value of Expo-related projects is US$ 42.5 billion, with most of the money spent in three sectors – infrastructure (US$ 17.4 billion), housing (US$ 13.2 billion) and hotels/theme parks (US$ 11.0 billion). Big ticket items include the US$ 8.0 billion expansion to the Al Maktoum International Airport and US$ 2.9 billion on the metro Red Line extension.

The Jebel Ali Free Zone reported a 9.1% hike in the number of new companies last year, bringing its total active customer base to 7.5k; of that total, the three main source markets are the ME – 49%, Asia Pacific – 28% and Europe – 15%.

A landmark decision saw the UAE cabinet approving legislation to ensure equal pay between the sexes in the country – the Law on Equal Wages and Salaries for Men and Women. The approval will confirm the government’s commitment that females have equal opportunities as partners in the UAE’s development, as well as their rights being protected.

The March Emirates NBD Dubai Economy Tracker Index pointed to a slight easing, slipping 0.5 to 55.3. With margins becoming tighter, employment moved into contraction for the first time in thirteen months. Travel/tourism – at 56.7 – was a major player keeping the overall economy still in expansionary phase.

A Dubai-based company, launched last year by Jason Philip, has been taken to court by one of the world’s largest companies, China’s Alibaba, claiming that their use of the name of Alibabacoin off its cryptocurrency is illegally trading on the e-commerce giant’s name and reputation. The counterclaim is that the name Alibaba derives from the ME (and not China) and that the regional folklore character’s name is generic and should not be for the sole proprietorship of Jack Ma.

US-based investment bank, Houlihan Lokey Inc, has been hired by the Abraaj Group to assist in negotiations with investors relating to its US$ 1 billion Growth Markets Health Fund. Some stakeholders have raised concerns that the money raised was not being used for its stated purpose.

Amanat Holdings, a local investment company focused on the medical and educational sectors, is to look at projects outside of the GCC. Since its start-up on the Dubai bourse, the company has spent almost half of its US$ 681 million capital base on three local deals in the medical sector.

Dubai-based Depa Limited has been awarded a US$ 35 million contract to fit out a privately-owned super yacht in Europe. Work will be carried out by the company’s subsidiary, Vedder, which has already carved a reputation as one of the world’s leading interior fit-out service provider.

The DFM opened on Sunday (08 April), at 3083, and edged 11 points higher to 3094 by Thursday, 12 April. Emaar Properties, having lost 37.2% in market value since September 2016, reversed its downward trend to close US$ 0.06 higher at US$ 1.58, whilst Arabtec shed US$ 0.03 to close on US$ 0.59. Volumes traded higher at 176 million shares on Thursday, valued at US$ 77 million, (compared to 155 million shares worth US$ 69 million the previous Thursday – 05 April).

By Thursday, Brent Crude rose 5.4% over the week, gaining US$ 3.69 (5.4%) to US$ 68.33, with gold also on the up by US$ 14 to US$ 1,342by 12 April 2018.

Aramco is to join forces with three Indian companies to build a US$ 44 billion refinery complex at Ratnagiri on the sub-continent’s west coast. The Saudi oil giant will provide half of the oil to be processed at the new refinery.

Tesco posted impressive annual results ending 24 February, with profits 770% higher at US$ 1.8 billion with revenues 1.3% to the good at US$ 80.5 billion; 2017 figures were skewed buy one off costs and if these were taken out, underlying profits were still 28% higher at US$ 2.3 billion. It was no surprise to see its share value 7% higher on the day.

On the flip side, Shop Direct, which owns Littlewoods and Very.co.uk, is to close three sites in Greater Manchester which could result in the retrenchment of some 2k. The company is planning to consolidate and enhance operations at its new US$ 280 million warehouse in the East Midlands where 500 new placements will be needed.

The steep decline in the UK high street was brought out by figures from the Local Data Company that indicated that 5.9k high street stores closed in 2017 – an average of 16 per day! Meanwhile only 11 new stores opened every day equating to 4.1k, its lowest figure since 2010. This year appears to see no improvement, with more of the same on the horizon.

German industrial production posted its biggest decline since August 2015, falling 1.6%, month on month. The main driver behind the decline was down to weak construction activity. On an annual basis, the expansion fell to 2.6%, with a weaker growth forecast in the short-term. In February, Germany posted an unexpected fall in month on month exports by 3.2% to US$ 129 billion but was 2.4% higher than a year earlier. Meanwhile as imports were lower by 1.3% (compared to January), its trade surplus rose 6.4% to US$ 22.6 billion. The disappointing results in the first two months of the year were down to the weather, record high employment and low interest rates.

A report by the Congressional Budget Office estimates that the US will have an annual budget deficit in excess of US$ 1 trillion by 2020, warning that this has the potential to have “serious negative consequences”. The two drivers behind this caveat are the recently introduced tax cuts of US$ 1.5 trillion and higher public spending of US$ 1.3 trillion. It expects that the economy will grow by 3.3% this year but the deficit will be 20.9% higher at US$ 804 billion.

The US trade deficit widened in February – up 0.9% on the month to US$ 57.6 billion, as both exports and imports rose by US$ 3.5 billion to US$ 204.4 billion and US$ 4.4 billion to US$ 262 billion. There was a decrease in the services surplus and an increase in the goods deficit to US$ 34.7 billion. Interestingly, the Chinese trade gap shrank 2.3%, on the month. The President has been on record that he wants to see the US/Chinese trade deficit decline by US$ 100 billion.

Following the earlier tough stance taken by the Trump administration on China and its threat of wide-ranging sanctions, it seems that President Xi Jinping has taken a conciliatory stance. He has promised to cut automotive tariffs, with the German car industry the major beneficiary, and to improve intellectual property protection for overseas tech companies. Later in the week, the markets were buoyed by a softening of the rhetoric from the White House which noted that any penalties were not imminent and there would be plenty of time to work out a deal and avoid any trade war.

Last year, the US trade deficit with China was US$ 375 billion, as imports of US$ 506 billion far outweighed the US$ 130 billion figure for exports; this anomaly has been going on for years. There is no doubt that Donald Trump has many critics but there has to be agreement with Steve Bannon’s take on the President’s dealings with China. He reckons that “the elites in America have bailed out the Chinese regime for 25 years. Trump is the first leader to confront this – the first leader of either party to have the backs of the American workers”; it would be hard to disagree. He is also the first US president to try and sort out the 60 year-old Korean problems head on and not keep brushing it under the carpet; it is hard to disagree. Now because of the inactivity (and apparent ineptitude) of the previous incumbent five years ago, he has been landed with the Syrian problem head on; it is hard to disagree. For the world, these problems have to be sorted out immediately – It’s Now Or Never!

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We Won’t Get Fooled Again!

Q1 saw a 37.0 % decline to 4.6k in the number of new launches for Dubai off-plan sales, with an even steeper 46.0% fall in value at US$ 1.6 billion. Over the same period, ready property numbers and values were lower by 17.0% to 3k and 24.0% at US$ 1.3 billion. With the holy month of Ramadan approaching within six months, it is highly like that the decline for H1could top 50%.

Saudi Arabia’s Tanmiyat has awarded Al Adnan Contracting a US$ 163 million contract to build six towers in its Living Legends project in Dubailand; handover is expected by the end of 2019. Last year, Beijing Emirates Contracting was appointed to build two towers for the same location, along with another adjacent to the Dubai Water Canal. On completion, Living Legends will house over 20k residents.

Emaar is expected to soon launch Sunrise Bay, a twin-tower project that will form part of the developer’s massive 10 million sq ft Emaar Beachfront, with twenty residential towers and hotels. The 26-storey buildings will house various sized apartments, ranging from 75 sq mt to 253 sq mt.

Progress Construction is the latest to be awarded a contract by Azizi Developments. It will be building the Dhs 166m Azizi Grand in Dubai Sports City – a 47.1k sq mt development housing 431 studio,1-2 B/R apartments which will resemble four towers merging into one.

DMCC is to join forces with AccorHotels to develop its first SO hotel in Dubai. To be located in Uptown Dubai, in the first super tower to be built there, the luxury brand, with 188 keys and 215 branded residences, will open in 2020.

Jumeirah has launched its first 3-star brand hotel – the new Zabeel House by Jumeirah, with 150 rooms, will open in Al Seef, with room rates starting at a reasonable US$ 95.

Radisson Blu has opened its latest, and fifth, Dubai offering – the 432-room Radisson Blu Hotel, Dubai Waterfront. One of its main features will be the Gotha nightclub, encompassing 16k sq ft, with a 1k person capacity; it plans to replicate the Gotha in Cannes, famous for themed nights and major performers.

With four hotels now operating in Dubai, Emaar’s Rove brand has signed an agreement with Mada’in Properties to operate Rove Mina Seyahi, due to open in 2021. The proposed 50-storey tower will house a 270-key hotel and 443 serviced residences.

United Properties has announced the first phase of its new US$ 2.2 billion scheme to redevelop Dubai Motor City. Zawaya, encompassing 148k sq ft, will house 400 residential units along with retail, F&B and sporting facilities.

Nakheel has tied up with Shurooq to develop a US$ 20 million shopping complex in Sharjah’s Al Rahmaniya district. This will be the Dubai developer’s first project outside its home emirate and will be similar to the seven neighbourhood retail hubs, known as Nakheel Pavilions, already established in Dubai.

DEWA has awarded a US$ 90 million contract to ABB to build a substation that will integrate the upcoming solar power into the emirate’s grid. Last year, the Swiss company completed its first one that integrated 200 MW of electricity into the main supply.

In this day of increased technology and talk of flying taxis, hyperloops and driverless cars, it is refreshing to see that DHL is to re-introduce pedal power to Dubai. The global courier company is set to bring the cubicycle, a 4-wheel bike that can carry loads of up to 125 kg, to the emirate’s streets.

Following a period of some doom and gloom, a mini boom has descended on the local construction sector as, according to a Ventures Onsite report, the UAE can expect contractor awards totalling US$ 50.4 billion, equating to a third of the total awards for the GCC, this year; this is some way ahead of Saudi Arabia’s total of US$ 40.0 billion, accounting for some 27% of the total. The biggest contributor will be the buildings segment, with a year on year increase of 10%, as the UAE’s share comes in at US$ 37.3 billion.

The importance of the expanding MICE (meetings, incentives, conferences and exhibitions) sector to the Dubai economy – including hospitality and retail – cannot be emphasised enough. Last year, the DWTC hosted 353 such events, with a 9% increase in numbers to 3.3 million, a third of which were overseas visitors. During the year, 56.3k companies from 154 countries took part. The knock-on impact is crucial to the progress of Dubai’s economy.

There was a marginal 0.3% February fall to 6.9 million passengers at Dubai International, with YTD traffic falling 0.6% to 14.9 million; at the same time, flight movements were 3.4% lower at 66.8k. India, Saudi Arabia and the UK remained the top three markets, whilst Eastern Europe recorded the largest increase with numbers rising by 17.6%. The top three destinations – London, Mumbai and Bangkok – remained unchanged.

A sign that business is returning to normal for Emirates is the fact that the airline is to undertake a cabin staff recruitment drive not only in Dubai but also in the region, Africa and Europe. With operating 269 planes (and being the largest global operator for Airbus 380s and Boeing 777s), it flies to 159 destinations.

There was a slowdown in the Emirates NBD March PMI March figures with a 0.3 month on month decline to 54.8, driven by sluggish new order numbers, slower output (at  a 23-month low) and dismal foreign demand for the locally produced goods. As has been the norm for past months, there has been a continued easing of output charges with the aim to encourage more demand; this should bear fruit by mid-year. The rate of employment growth is at a 17-month low.

The fragility of the local markets last year was reflected by the number and value of MENA’s mergers and acquisitions declining by 2.3% to 126 deals and by 57.7% to just US$ 16.0 billion; a significant driver for this downturn was construction, with its value dropping from US$ 1.3 billion to US$ 59 million. 72.5% of M&As originated from three sectors – Financial Services (US$ 4.5 billion), Industrials/Chemicals – US$ 3.9 billion and Telecommunications – US$ 3.2 billion.

The Ministry of Economy expects the country’s economy to grow 3.4% this year to US$ 436 billion, with the non-oil sector now accounting for around 70% of the total, as the reliance of oil continues to fall to just 20% by 2020. With the industrial sector expected to invest US$ 75 billion over the next eight years, with Dubai spending significant amounts on the upcoming Expo 2020 and the capital catching up with its infrastructure projects, the overall UAE growth is all but guaranteed.

Research by Euromonitor International indicates a possible 7.7% growth this year to US$ 2.8 billion for the country’s consumer electronics market, driven mainly from inflation in inventories. However, the brick and mortar retailers are still the dominant force in this sector, although it is slowly losing ground to e-commerce which now accounts for 19% of total revenue, with growth of 6% to US$ 259 million this year.

Nasdaq Dubai’s latest sukuk is a Dar Al Arkan Real Estate US$ 500 million issue; this is the Saudi company’s fourth listing on the Dubai bourse, bringing its total listing to US$ 1.85 billion. The money raised will help finance the company’s latest project, I Love Florence, in Downtown.

Having raised US$ 850 million from 94 investors in February, Dubai-based Telegram Group was again in the market last week, raising a further US$ 850 million and planning to use the funds to further develop the Telegram Open Network blockchain, including its cryptocurrency Gram. The encrypted messaging app was founded by the Russian exile, Pavel Durov, and has a reported 200 million active monthly users.

The DFM opened on Sunday (01 April), at 3109, and again moved south over the week, closing 26 points (0.9%) lower at 3083 by Thursday, 05 April. As some analysts continue to show concern about the state of the local property sector, Emaar Properties continued its downward trend, and has lost 37.2% in value since September 2016, shedding another US$ 0.06 to close at US$ 1.52, with Arabtec US$ 0.01 higher at US$ 0.62. Volumes traded lower at 155 million shares on Thursday, valued at US$ 69 million, (compared to 231 million shares worth US$ 80 million the previous Thursday – 29 March).

By Thursday, Brent Crude dipped over the week, shedding US$ 0.58 (2.3%) to US$ 68.33, with gold down US$ 2 at US$ 1,328 by 05 April 2018. For the month of March, both commodities traded higher with Brent up US$ 4.61 (7.1%) to US$ 69.34 and the yellow metal by 1.0% to US$ 1,330.

In the US, VW has spent US$ 7.4 billion in buying back some 350k of its vehicles tainted by the diesel emissions control system scandal. Only a tiny portion of the vehicles has been sold (13k) and a further 28k have been destroyed. The rest are currently stored in 37 storage areas until it is decided either to repair the damage caused or destroy them. It has become a long ongoing problem, for which the German carmaker has already paid US$ 4.3 billion in federal penalties.

With some surprise, GKN has been finally acquired by Melrose Industries, in a deal worth US$ 11.3 billion, with a further US$ 1.4 billion to support the pension fund – 14.1% higher than its original bid in January. Many stakeholders, including unions, customers (particularly Airbus) and government, opposed the takeover but 52% of shareholders voted for the change on the promise that it would increase the company’s profitability after five years of declines. Labour called the buyer, which specialise in turning round troubled manufacturing businesses before selling them off, a “short-term asset stripper”.

The world’s fifth and Australia’s largest wine producer, Accolade Wines, has been acquired by the US private equity firm, the Carlyle Group, for US$ 769 million. The company, established in 2011 with the purchase of two separate divisions from Constellation Brands for US$ 223 million, delivers 38 million cases to over 140 countries, including China, every year. In 2017, Australia saw wine exports to China increase by 64% to US$ 652 million.

As Chinese companies try to expand their local food delivery services, Alibaba has acquired from Baixu Inc the remaining 57% share it did not hold in Ele.mem, which values the company at US$ 9.5 billion. The company will be competing in a sector that is dominated by Meituan Dianping which it backed by Tencent Holdings and could be valued at US$ 60 billion if it goes public later in the year. Both Chinese giants see the delivery of food and other services will benefit their online payment services.

Spotify went public on Monday and within an hour had seen its market value jump by 28.7% before closing the day 14.0% higher, with a closing price of US$ 149.01, after opening the session at US$ 132.00. The Swedish music streaming service, that has never posted a profit, has a market value of US$ 30 billion.

The ailing UK car industry received a welcome boost this week with the announcement that Vauxhall will make its new Opel/Vauxhall Vivaro model in Luton, this saving 1.4k jobs (and possibly creating a further 450). The brand’s owner PSA Group is expected to invest US$ 238 million in the upgraded plant that could produce 100k units from next year.

Latest February figures from IATA indicate that air freight markets increased by 6.8 % over the year, as capacity expanded at the lower 5.6% level; accordingly, demand outstripped capacity growth for the 19th straight month. Figures were dampened and distorted by the Chinese Lunar New Year in February. However, the ME data pointed to less impressive returns with just a 3.4% hike in demand, as capacity was at a higher 3.9%.  Over the same period, international passenger traffic jumped 7.2%, with total capacity 5.9% higher and load factor nudging 1.0% higher to 79.3%.

March Eurozone inflation figures increased by 0.3% to 1.4%, month on month, and this despite core prices – excluding alcohol, energy, food and tobacco – remaining steadfastly flat.

The latest manufacturing PMI data in March nudged slightly higher to 55.1, with output growth on the rise, offset by slower rises in both employment and new orders.

In a bid to appease regulators as it attempts to take over Sky plc, the US media group, 21st Century Fox (already a 39% Sky shareholder), has offered to sell Sky News to Disney. The regulators have reservations about the takeover could result in the Murdoch Family Trust – which has major interests in Fox, News Corporation, The Sun, The Times and The Sunday Times – wielding too much influence on the UK media sector. Last December, Disney tabled a US$ 66 billion offer for Fox’s entertainment assets, including Sky. 21st Century Fox has suggested two options to ensure regulatory approval for it to sell Sky News to Disney.

This blog has in the past recorded that many of the US mega companies seem to be abrogating their responsibilities by parking their cash and profits outside of their home base, where tax rates were less onerous. Luxembourg was one of the favoured locations where the then Prime Minister, Jean Claude Juncker, actively encouraged companies to set up in the duchy to avoid paying higher tax rates in their home countries. One of the main recipients of the now EU President’s magnanimity was Amazon so it was no surprise (and not before time) to see Donald Trump take a pot shot at them earlier this week.

There was a slowdown in the US manufacturing sector in March as the ISM PMI fell 1.5, month on month, to 59.3 – still a very healthy figure. The main drivers behind the fall were a 2.4 drop to 57.3 in the employment index, new orders by 2.3 to 61.9 and production by 1.0 to 61.0. There was an upturn in February construction spending to US$ 1.27 trillion, with spending on private construction came in 0.7% higher at US$ 982 billion, split 54.3:45.7 between residential and non-residential.

Barely a week after the Trump announcement of scything tariffs on China, retaliation has come in the form of duties of up to 25% on US producers and in proportion to the US$ 3 billion introduced by the US on 23 March. At the same time, China’s Ministry of Commerce confirmed it was suspending its WTO (World Trade Organisation) obligations to reduce tariffs on 120 US goods. Whether this turns into a fully-fledged trade war – and its negative impact on global trade – is unlikely.

Last Sunday saw April Fools’ Day which coincided with Emirates announcing that its new 777s would incorporate a SkyLounge with transparent walls and ceilings. Who said We Won’t Get Fooled Again!

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Gone Fishin’

Launched by Minor Hotels seven years ago, AVANI Hotels & Resorts has announced the signing of its third Dubai property – AVANI Hotel Suites & Branded Residences, a 48-storey tower, due to open in 2020. It will comprise 527 units, with 264 serviced apartments and 263 residences. The hotel management company currently has a portfolio of 23 properties in fifteen international locations.

Emaar Hospitality has launched a 220-key Vida Za’abeel hotel which will form part of a twin tower (68 and 70 storeys) mixed-use development for Emaar and Meraas; it will also include 1-3 B/R serviced apartments, as well as various amenities, including 3k of retail space. No further details, including cost and timeframe, were made available.

The latest EY report confirms that the Dubai hospitality sector is still holding its own, even though some indicators are dipping. Although 2017 occupancy rates averaged 77.7% (falling 1.4%), average room rates of US$ 243 (down 4.4%) and revenue per available room of US$ 189 (down 6.2%) all declined, they are still the highest in the MENA.

As indicated in an earlier blog, and after a decade in Dubai, the QE2 has finally been moved to Dubai Drydocks for refurbishment that will see the famous ocean liner become a floating hotel as early as next month. The operator of the upcoming 5-star property will be PCFC Hotels.

Green Modelling Contracting has won a US$ 48 million contract to build Azizi Developments’ new HQ in Meydan Avenue, as the developer continues to expand its real estate portfolio at a rate of knots. The 520k sq ft building will have an apparent wave-shaped crystallised fabric exterior.

Enoc Group has opened the first of sixteen new service stations for 2018, located at Al Marmoum; over the next three years, it expects to add a further 54 stations. As with similar installations, the 72.7k sq ft station has a Zoom convenience store, Pronto, a drive-thru McDonalds, a drive-thru ATM, a cafeteria and a prayer room.

With the introduction of the Contingency Approach Control Room and other restructuring enhancements, costing US$ 16 million, capacity at Dubai International has increased by 25%. This has also resulted in a marked reduction in the number of delays, caused by planes having to wait for air traffic control clearance to land; it was estimated that in 2015 airline delays in the ME caused losses of US$ 2.5 billion. Last year, the airport dealt with 500k air traffic movements, set to rise by 20% to 600k over the next five years.

In the first two months of the year, Al Futtaim Motors – with government assistance – has confiscated a reported 179k fake car parts, valued at over US$ 1 million, in eight raids across the country.

GFH Capital is planning to sell its 70% stake in Dubai’s Philadelphia Private School, founded in 2006 and valued at US$ 35 million. No other details were readily available.

The UAE and Kazakhstan have signed six separate investment and business agreements, two of which involved DP World. The deals covered the acquisition, governance and management of Special Economic Zones in Aktau (the country’s main cargo and terminal hub) and Khorgos, with plans to acquire 49% and 51% stakes respectively. Both locations will play major trade roles along the New Silk Route.

With the country recently appointing a dedicated Minister of Artificial Intelligence, and with Dubai introducing a fully functional robot police, it is no surprise that the emirate will host the first edition of the World AI Show next month. This is just part of Dubai’s mission to become the world’s smartest location.

Government-controlled Dubai Aerospace Enterprise, which bought Dublin-based AWAS last year, is set to arrange a US$ 400 million syndicated loan. Last year, it also issued senior bonds of US$ 2.3 billion to partly pay for the acquisition. The leasing and maintenance company is now one of the biggest in the world, with about 400 aircraft, valued at US$ 14 billion.

April will see no change in Special 95 gas prices which remain at US$ 0.605 per litre but diesel will retail 1.2% lower than March prices, at US$ 0.654.

There are reports that Abraaj Group, founded in 2002, is to divest part of its fund management business, which oversees funds globally for institutional investors, to raise cash. At the same time, Dubai market regulators are discussing with Abraaj some investors’ concerns about improper allocation of capital in a healthcare fund. There has also been a raft of senior managers recently leaving their positions, including the global head of private equity, the global head of impact investing and the CFO.

It was announced that Drake & Scull International will issue a five-year convertible sukuk in Q2, with a probable value of US$ 122 million. Conversion, after expiry in 2023, will be at a set price of US$ 0.82 per share or at a 25% discount of the market price.

As expected, Emirates NBD shareholders have given the green light to the bank to increase its capital base, via a rights issue, to US$ 2.0 billion; some of the money raised could be used for a proposed purchase of Turkey’s Denizbank. At this week’s AGM, various other resolutions were passed including increasing the foreign ownership of shares to 20%, as well as agreeing to a US$ 12.5 billion euro medium term notes programme, a US$ 1 billion structured note programme and a US$ 1.5 billion Australian dollar debt issuance.

Last year, UK Export Finance financed an approximate US$ 2.8 billion of GCC projects, the government’s largest single regional allocation. The British government’s export agency is to open only its fourth dedicated global office in the country, following Brazil, Indonesia and Turkey. UKEF has indicated that it has up to US$ 7.0 billion available to project sponsors in the UAE, as well as an additional US$ 5.6 billion for Dubai projects. It has already supported a number of the emirate’s developments, including the US$ 308 million Dubai Arena, (a 17k-person multipurpose stadium contracted by British construction firm Kier), DWTC One Central and Bluewaters. Back in 2015, the UKEF helped Emirates purchase four Airbus 380s, becoming the first export credit agency to develop a guarantee for sharia-compliant sukuk in the debt capital markets.

With a US$ 327 million finance facility from its major 52.3% shareholder, Meraas, and a three-year moratorium on principal repayments on debt of US$ 1.1 billion, DXB Entertainments is confident that it will not have to make any further cost cuts. The theme park operator, with a set-up cost estimated at US$ 3.6 billion, has posted two successive losses – of US$ 132 million and US$ 300 million – since its 2016 opening and welcomed 2.3 million visitors last year. Next year, it will open both the Legoland Hotel and the US$ 708 million Six Flags theme park.

Since its 2014 launch, Marka has failed to post an annual profit, with the latest 2017 figures showing a US$ 66 million loss, on the back of lacklustre revenue of US$ 27 million. The company has been on an active cost cutting exercise and a restructuring programme that has seen a more efficient and leaner retailer, as well as the exiting of certain unprofitable units. On Thursday, its share value was at US$ 0.128, less than half of its September 2014 opening of US$ 0.272.

The DFM opened on Sunday (25 March), at 3150, and fell a further 41 points this week to close 1.3% lower at 3109 by Thursday, 29 March. Emaar Properties again disappointed, trading US$ 0.02 down at US$ 1.58, with Arabtec also US$ 0.02 lower at US$ 0.61. Volumes traded higher at 231 million shares on Thursday, valued at US$ 80 million, (compared to 144 million shares worth US$ 71 million the previous Thursday – 22 March). For the month of March, the market lost 135 points (4.2%) with both Emaar and Arabtec lower – by US$ 0.10 and US$ 0.05 respectively.

By Thursday, Brent Crude dipped over the week, shedding US$ 0.55 (0.8%) to US$ 68.91, with gold up US$ 3 at US$ 1,330 by 29 March 2018.

According to Saudi Crown Prince Mohammed bin Salman, his country and Russia, the two largest global oil producers, are discussing a longer-term pact to extend the January 2017 agreement to curb world crude supplies.

In a move to wean itself off oil dependency, Saudi has signed a US$ 200 billion MoU with Japan’s SoftBank Group to build the world’s biggest solar power development. It is estimated that the plant will reach full capacity by 2030 and could cost around US$ 1 billion a gigawatt, whilst cutting energy costs by US$ 40 billion. The massive project has the potential to create 100k jobs and will be a major factor in diversifying the oil-dependent Saudi economy. It is also expected to spend US$ 80 billion on building 16 nuclear reactors to meet the surging demand for electricity which has risen on average 9% per annum since the turn of the century.

The head of an organised crime ring, suspected of stealing US$ 1.2 billion over the past five years, by the use of Carbanak and Cobalt malware, has been arrested in Spain. Having infiltrated over 100 banks, its modus operandi was to siphon off cash via bank transfers or dispensed automatically through cash machines.

Asia’s largest company, Tencent Holdings, slumped 4.4% on Friday following its warning that it would sacrifice short-term margins to solidify future growth, by investing in content and technology.

Once planned to be the world’s biggest global player, Uber continues to retreat from the Asian market. After selling its Chinese and Russian businesses to Didi Chuxing in 2016 and to Yandex, it is now divesting its SE Asian ride share and food delivery company, covering eight countries, to Grab; it will however retain a 27.5% stake. No financial details were available but the deal – that could top US$ 6 billion – covered all of its operations, including Uber Eats. Last year, it has to be remembered that Uber did lose US$ 4.5 billion and it has to take steps to move into positive territory – one of which is to exit loss-making markets.

Having just pulled out a planned acquisition of Pfizer’s consumer healthcare unit, GSK is to pay Novartis US$ 12.9 billion for its 36.5% stake in the Consumer Healthcare Business, with US$ 10.9 billion sales in 2017. This will give the pharmaceutical giant full control of a JV which owns products such as Sensodyne, Panadol and Nicotinell patches. To help pay for this purchase, it plans to sell its Horlicks brand, as well as MaxiNutrition and other of its nutrition products.

The EU has approved Bayer to buy its US competitor, Monsanto, for US$ 62.5 billion which will see the enlarged entity control 25% of the world’s seeds and pesticides market. This is the third merger of its kind following the earlier Dow/DuPont and ChemChina/Syngenta consolidations. No wonder then that many are concerned about the power and potential misuse of assets these three mega companies may, or possibly will, bring to the global arena.

On Friday, Dropbox shares jumped 35% on its first day of trading, valuing the company at US$ 12.7 billion. The eleven-year old tech company has yet to post a profit, although its 2017 losses narrowed to just over US$ 100 million, whilst revenue was up 31.4% to US$ 1.1 billion.

The latest in a long list of struggling UK retailers is fashion chain Next, posting its second consecutive annual profit fall (of 8.0%) to US$ 1.1 billion, with more bad news on the horizon. Whilst actual stores sales fell by 9.1%, (leading to an expected closure of ten outlets this year), on-line revenue increased by 11.2%.

Yet another UK retailer in trouble seems to be the House of Fraser with the banks calling in EY to see whether it can be rescued, as the crisis extends along the country’s high streets. With 59 department stores, it is saddled with debt, including a US$ 490 million publicly traded bond. The major 51% shareholder is Nanjing Xinjiekou who is apparently keen to sell his controlling share to a Chinese tourism group – Wuji Wenhua. During the Christmas period, it reported a 2.9% decline in store sales and a more worrying 7.5% fall in online sales.

The UK’s biggest independent furniture retailer, DFS, has reported a 58% fall in H1 profits to US$ 10 million, although there was improvement noted in the last two months of the period; revenue was 4.0% higher at US$ 555 million. Despite the sluggish market conditions, the retailer did acquire smaller rivals Sofology for US$ 35 million and Multiyork.

Conviviality, which includes Bargain Booze, Wine Rack and Matthew Clark in its portfolio, is the fourth UK retailer to announce financial problems this week. The troubled company, which supplies 700 off-licences and 23k pubs, has drafted in PwC to help with a turnaround in fortunes as it looks for a US$ 175 million lifeline, from a share issue; the company is currently valued at US$ 260 million.

The problem is not confined to British shores, with the world’s second biggest clothing chain, Sweden’s H&M, posting a 61% profit decline to US$ 151 million, in its latest quarterly report. The retailer, with 4.7k stores employing 171k in 69 countries, also saw sales fall for the second successive quarter. Apart from its own H&M stores, the retailer has mid-market chains such as & Other Stories, Monki and Cos in its portfolio and expects to open a further 220 outlets this year. Weak sales have seen an increase in stock levels (by 7%) that will result in the need for further future discounting, which will again negatively impact future margins. (It seems highly probable that the local Dubai retail sector will be undergoing similar problems as are being experienced elsewhere).

No wonder Zambian President Edgar Lunga is keen to see First Quantum Minerals settle a massive US$ 7.9 billion tax bill (including US$ 5.7 billion in interest).  The Canadian miner derives 84% of its turnover in the African country and accounts for over 50% of the country’s copper production.

After successfully carrying out stipulated economic reforms, Greece will finally receive a US$ 8.0 billion loan installment as part of the third international rescue package to service public debt and clear domestic arrears. Greece has been reliant on massive loans since 2010 but if all goes to plan, it should exit the ESM programme in Q3. During that time, the country has witnessed its economy contracting by 25% and unemployment levels of between 20% – 30%.

For the first time since October 2016, Germany has posted a decline in import prices which fell 0.6%, year on year, in February, compared to a 0.7% rise a month earlier; excluding oil products, import prices fell by 1.0%. Over the same period, year on year export prices gained 0.5%, slightly lower than January’s 0.7% return.

On Friday the US President signed a US$ 1.3 trillion federal spending measure to maintain the running of government services. The finance package included additional spending on defence but did not fully pay for his planned Mexican border wall and did not extend protection from deportation to some 700k “Dreamer” immigrants. Earlier in the day, he had used one of his famous tweets to threaten a veto that would have resulted in a government shutdown.

The US current account deficit (the net sum of income flows from goods and services) moved 26.3% higher, quarter on quarter, in Q4 at US$ 128 million, equating to 2.6% of GDP. Most of the deficit in goods derives from non-oil trade, whilst the oil and gas trade balance is nearing zero, accounting for 4.1% of the country’s economy. In February, both exports and imports rose month on month – by US$ 2.9 billion to US$ 136.5 billion and US$ 3.0 billion to US$ 211.9 billion. Whether the recently introduced Trump trade tariffs (along with the massive tax cuts) have the effect of reducing the deficit remains to be seen but is likely to see the balance go in the other direction.

It can only be Dubai when you read that the first Happiness Platform has been built to allow visitors to fish in a “positive and stimulating atmosphere”. At 125 mt long, the distinctively-designed facility on the Jumeirah-3 Beach is equipped with solar-powered lighting poles (for 24-hour use) and houses a beach library for general use. No doubt April will see a lot more residents and visitors have Gone Fishin’.

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When Irish Eyes Are Smiling!

In a bid to “shape the UAE’s ever-evolving skyline”, Aldar and Emaar have established a US$ 30 billion JV to target a range of local and international projects, with the initial focus on two developments – Emaar Beachfront in Dubai and Al Saadiyat Island in Aldar’s home market, Abu Dhabi. HH Sheikh Mohammad bin Rashid Al Maktoum indicated that the “partnership aims to create new opportunities for investment growth” and has reiterated that “we want our companies to collaborate with each other to explore creative ideas for strengthening the UAE’s leadership, and enhancing the happiness and quality of life of our people.” On the day, Emaar’s share value was up 1.7%, with Aldar 6.5% higher.

The Dubai Ruler broke ground on phase 4 of the US$ 3.9 billion Mohammed bin Rashid Al Maktoum Solar Park. Not only featuring the world’s tallest solar tower (at 260 mt), and the world’s largest thermal storage capacity, the project will generate 700 MW of clean energy at a single site. By 2030, it will generate 5k MW and will be producing the world’s lowest cost of electricity at US$ 0.073 kWh.

It was announced that a JV, between Roberts Constructions and Italy’s Impressa Pizzarotti & C, will build Omniyat’s Dorchester Collection project in Marasi, Dubai Canal. Due for a 2020 completion, the project will comprise two towers, housing a 5-star hotel and exclusive residences, upmarket  food and retail outlets and mixed use precinct  adjacent to a marina.

It seems that every week, Azizi Developments announces the unveiling of a new project and this week is no exception.  The developer has initially launched Azizi Mirage 1 in Studio City – an 8-floor building with 186 1-3 B/R apartments and two swimming pools; the second tower will come later.

It has also awarded a US$ 259 million contract to Prestige Constructions for the construction of phase 3 of Azizi Riviera. The contract covers thirteen mid–rise buildings (all between 8-10 storeys), with completion expected by Q3 next year. There is no doubt that the Trump economy is on the up, with the only nagging factor being the possibility of mini trade wars breaking out in the near future. (Consequently, the UAE lifted the repo rate by the same amount but to 2.0%).

The US$ 49 million “The Gate” in DIFC, a mixed use office and retail space as well as the emirate’s virtual exchange, Nasdaq Dubai, opened this week. Located in Gate Village, it covers an area of 147k sq ft, of which 22.4% will be used by retail.

A TopHotelProjects report anticipates that there will be an additional 239k rooms added to the region’s hotel portfolio over the next five years, overtaking Europe, with a 215k room pipeline. Dubai is the most active regional location where there are 222 projects, encompassing 126.6k rooms due to be added.

It was no surprise to see that, according to Knights Frank’s latest report, Dubai has witnessed the sharpest rise in the supply of hotel rooms over the past decade, among global hubs. The emirate has 29.9 keys per 1k of population, with Paris in second place way back at 17.6 keys. Furthermore, with an average overnight spend of US$ 2k, Dubai remained on top compared to the likes of Hong Kong, London, New York, Paris, Singapore, Shanghai and Sydney. Over the past decade, the tourism sector has seen its contribution to the emirate’s GDP grow by 138% to US$ 40.9 billion, with employment numbers 119% higher.

It is reported that DP World has a 70% stake (and the Democratic Republic of Congo’s government the balance) in the port at Banana. The Dubai operator will build and manage a deep water port – a major boost for a country with only a 50km Atlantic coastline and often relying on neighboring Congo Republic to handle its international trade.

Dubai’s Department of Finance has finalised a US$ 2.45 billion long-term finance package to fund the 15 km Metro’s Red Line extension, in time for Expo 2020. The funding was in two tranches – a US$ 1.45 billion 17-year loan, backed by the French and Spanish credit agencies and the balance a 10-year conventional facility amortising over six years and commencing in 2022.

DEWA is to add a further four 400/132kV substations, at a cost of US$ 349 million, to bring its total to 25, as the demand for Dubai power generation continues to expand. All four will be in operation by the end of 2020 and will be built by four different parties – Grid Solutions SAS (Canal Garden), Siemens (Dubai South), Al Fanar (Dubai North) and ABB (Shams).

There was disappointing news for Emirates that could cost the airline money, as an EU ruling refused it permission to appeal in a case involving passenger compensation for missed connections, occurring outside the bloc. The end game seems to point to the airline having to amend its current policies and procedures and pay old claims that it had previously rejected.

A major US$ 129 million, 25 km highway extension opened yesterday that will be a major route for Expo 2020 visitors. The road will have four lanes either way and is one of many RTA projects that is trying to keep up with Dubai’s rapid expansion and increased vehicle population.

Dubai’s year on year February inflation rate was 2.33% higher driven by major increases in the prices of tobacco products (74.6%), restaurant prices (12.6%), transportation (9.3%), clothing (6.6%), communications (5.5%) and food & beverage (5.0%); most of these increases are attributable to the introductions of Excise Duty in October and VAT at the beginning of the year.

Dubai’s 2017 non-oil trade was 2.0% higher, at US$ 355 billion, with direct trade – at US$ 226 billion – and free zone trade at US$ 118 billion accounting for the bulk of the balance. Imports, reexports and exports attained totals of US$ 228 billion, US$ 98 billion and US$ 39 billion respectively. Of the total trade, air accounted for 45.6%, followed by sea and land at 35.9% and 23.5%. As last year, the three biggest trading countries were China (13.6%), India (7.6%) and the US (6.5%), with the highest traded products being mobile phones, gold and diamonds at US$ 47.4 billion, US$ 43.3 billion and US$ 28.6 billion.

A JV, between DP World and India’s National Investment and Infrastructure Fund, has acquired 90% in the logistics company, Continental Warehousing Corporation Ltd. Hindustan Infralog Private Limited did not give any financial details but indicated that it was less than 5% of DP World’s net asset value and that the Reddy family, founders of CWCNSL, would retain a 10% stake and continue to be involved with the business.

The port operator has also paid US$ 316 million for a 50% stake in Cosmos Agencia Maritima, Peru’s second largest container terminal. DP World also operates in the country’s Port Callao, as well as several other ports in South America. Only last week, it announced a credible 14.9% hike in 2017 profit to US$ 322 million.

Emaar Industries & Investments has bought a stake in Gutmann Systems Middle East – both financial details and the size of the investment were nor readily available. The architectural aluminium glazing systems company has been involved in many Dubai and regional projects and expects to expand its business interest because of the local influence of EII.

It seems that Aabar Investments has sold its 5.55% stake in Egypt’s Palm Hills Development to UPP Capital Investment for US$ 30 million, bringing its total shareholding to 16.51%; the sale involved 128 million shares, valued at US$ 0.23.

With its latest US$ 1.25 billion Sukuk listing, the Islamic Development Bank now has nine issues, totalling US$ 11.5 billion, with Nasdaq Dubai. The Dubai bourse, with a total of US$ 57.7 billion, is rated as the world’s leading centre for Sukuk listings by value.

Dubai Investments’ subsidiary, Masharie, has sold its 50% stake in Dubai International Driving Centre (Drive Dubai) for a reported US$ 10 million.

Dubai Investments, itself a subsidiary of Dubai Holdings, has an 11.54% stake and  is leading a group of investors to establish a US$ 100 Islamic financial institution – Arkan Bank – on Nasdaq Dubai, within the next twelve months. The bank, to be located in the DIFC, will have a paid up and authorised share capital of US$ 100 million and US$ 500 million respectively.

The DFM opened on Sunday (18 March), at 3197, and having gained 40 points last week, fell 47 points this week to close 1.5% lower at 3150 by Thursday, 22 March. Emaar Properties traded US$ 0.02 down at US$ 1.60, with Arabtec flat at US$ 0.63. Volumes traded lower at 173 million shares on Thursday, valued at US$ 98 million (compared to 173 million shares worth US$ 98 million the previous Thursday – 15 March).

By Thursday, Brent Crude had traded northwards over the week, gaining US$ 1.51 (2.4%) to US$ 65.12, with gold heading the other direction – down US$ 3 (0.2%) at US$ 1,318 by 22 March 2018.  One reason for the recent uplift in oil prices is a marked decline in US crude oil inventories which fell this week by 2.6 million barrels to 428 million barrels

This week, the world’s third largest miner Glencore acquired two Queensland coal operations from Rio Tinto for US$ 1.7 billion – the 15-year old Hail Creek open cast mine and Valeria. This comes at a time when many energy companies are in the throes of divesting their coal divisions, with Rio already having sold all its thermal coal assets – and now selling all its coking coal assets – with Anglo American ridding itself of its South African thermal coal properties. However, Glencore has bucked the trend and sees a future for quality “clean” coal assets, including Japan who seem to have turned their back on nuclear power, following the 2011 Fukushima plant disaster.

BMW headquarters has been raided by German prosecutors, as they continue investigations into the car-maker’s suspected usage of emissions cheating software. It is thought that if there is any fraud found, it will not be nearly as large as that found in VW and could cover the use of a test bench-related defeat device involving 11.4k vehicles of its 750d and M550d luxury models.

In what must be the biggest pay deal in the world, Tesla shareholders have agreed to pay its Chief Executive a staggering US$ 2.6 billion on condition he reached predetermined sales and share price targets. Elon Musk owns 20% of the company that is still making losses but one of the targets is for the market cap to leap from US$ 55 billion to US$ 650 billion before full payment is made.

Worryingly, of the US$ 328 million that UK individuals and businesses lost to fraudsters, involving 43.9k cases of authorised push payment (APP) scams, 74% of the duped money was unable to be returned to victims. This is because, as they had agreed to make transfers, they have no legal right to seek bank reimbursement; this is in contrast to those scammed using credit or debit cards that usually have a reclaim recourse. 88% of victims were retail customers who lost on average US$ 4k, whilst companies made up the balance, losing on average US$ 34k. Meanwhile, 2017 fraud figures, relating to payment cards, remote banking and cheques, were 5% lower at just over US$ 1 billion.

The UK retail sector is going through sorry times with profit warnings this week from menswear business Moss Bros, as well as the owner of the DIY chain B&Q (Kingfisher) reporting a slump in sales. Furthermore, Mothercare is in discussions to secure new funding, as it struggles through troubled times. Then there is Carpetright, that employs 2.7k, which is seeking a Company Voluntary Arrangement which could involve closing at least 100 of its 409 shops. It is reported that the retailer has secured funding of US$ 17 million from a major investor.

Australian billionaire, 50-year old James Packer, (worth an estimated US$ 3.2 billion), has resigned as a director of his casino empire Crown Resorts and is “suffering from mental health issues”; in 2015, he had stepped down as chairman and director for the Group and only re-joined as director last August. He still retains a 47% stake in the company despite selling US$ 76 million worth of Crown shares earlier in the month. Late last year, it was reported that he told Israeli investigators that he had given the embattled Prime Minister, Benjamin Netanyahu, and his wife Sonia, gifts.

Having acquired Hewlett Packard Enterprise’s software business for US$ 9.5 billion (which included troubled British computer firm Autonomy) and subsequent problems with integrating issues, Micro Focus has seen its revenue fall. UK’s biggest tech firm, which specialises in upgrading old IT systems, has now issued a profits warning which then saw its share value sink to US$ 11.88, as well as the resignation of its COO, Chris Hsu.

Another tech company in trouble this week was Facebook, whose share value dropped by 8.1% on Monday to US$ 170 – its biggest intraday fall since August 2015 and wiping out all its 2018 gains in one hit. It lost another 2% on Tuesday, losing over US$ 60 billion in market value over the two days. Now regulators on both sides of the Pond are demanding answers as to how UK’s Cambridge Analytical was able to harvest the personal information from of its customers. The knock-on effect was felt by other social media companies including Twitter which shed more than10% in value.

At last, the UK inflation rate is steadily heading south, falling to 2.7% last month. With wage growth edging higher to 2.6%, it is hoped that real wage expansion will follow by Q3 and that the days of rising inflation and stagnant wage growth are finally over. It has to be remembered that wage growth before the GFC used to be higher than 4%.The decline in consumer price inflation was driven by petrol prices falling by US$ 0.028 on the month and food prices being only 0.1% higher, compared to 0.8% a year earlier. The news could see a May interest hike of 0.25%.

Following news that the UK and the EU have agreed on the terms of a transition period, sterling rose 1.0% to reach US$ 1.409 and was 0.8% higher against the euro. It seems that there will be a 21-month change-over period starting next March and ending on 31 December 2020, during which there will be little change in bilateral trading conditions. It was also announced that there had been progress made on the broader withdrawal treaty.

Last Saturday, the Irish rugby team won the Triple Crown by beating England at Twickenham, on St Patrick’s Day. It was not only on the sports field that the country is proceeding well but its economy has performed better than expected, being the fastest growing in the eurozone for the fourth consecutive year; last year, it grew by 7.8%, compared to 5.2% in 2016, driven by a surge in the IT sector being more than triple the eurozone average. The country has made great strides and massive progress from the 14.8% contraction, posted just eight years ago. The unemployment rate has halved to 6.1% since the GFC, even though the population has grown by more than 10% since 2009. The ‘Celtic Tiger’ is roaring again – When Irish Eyes Are Smiling!

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Up Against The Wall!

To help finance its recently unveiled US$ 365 million Dorchester Collection project at Dubai Water Canal in Business Bay, Omniyat has signed a US$ 136 million loan facility contract with Ajman Bank. Similar agreements with the iconic London hotel brand are expected, as the 13-year old Dubai-based developer seeks to expand its US$ 6.2 million portfolio, to include a number of high-end lifestyle partnerships.

According to its chairman, PNC Menon, Sobha is hoping to double its annual revenue stream to US$ 681 million by 2021 (equating to 1.2k units), as well planning an IPO. The developer is currently involved in building the US$ 1.1 billion Sobha Hartland project in Mohammed bin Rashid City and the US$ 2.3 billion District One with Meydan Group. The company will start work in June on the US$ 1.1 billion lifestyle project, Firdaus Sobha, in association with the government. It also hopes to announce another mega mid-market development in Downtown Dubai. With regard to the local real estate market, Mr Menon is confident that it will continue to grow and that recent price falls have bottomed out.

Azizi Development expects its Healthcare City project, Aliyah by Azizi, to be handed over by the end of July. The 17-floor building will house 346 units, ranging from studio – 2 B/R, and will have a retail space of 16k sq ft. The company also announced that it has started accepting prequalification applications for US$5.4 billion, including the world’s fifth tallest tower; construction on the various projects will commence in Q2.

Two Azizi contracts, totalling 409 million, have been awarded to Green Modelling Contracting and Modern Civil International Contracting Company for the construction of phase 1 of Azizi Victoria. This stage of the development encompasses 32 buildings housing 4k units and should be completed by the end of 2019. Located in MBR City, the whole project, covering an area of 33 million sq ft, will have 105 mid and high-rise residential buildings, with 30k apartments, two hotels and a retail district.

Dubai’s Seven Tides has signed a US$ 3.2 billion agreement with Revolution Precrafted to design, supply, and install 2-3 B/R condominium apartments and hotel villas in nine of The World Islands. The exact number of units is being finalised but the Philippines-based developer expects total sales to be worth up to US$ 500 million.

Following the success of its initial property foray in the emirate, (the US$ 108 million Continental Tower in Dubai Marina), Continental Investments is to develop a 2.6 million sq ft plot, located adjacent to Arabian Ranches. The US$ 272 million Rukan Residence in Dubailand will comprise a range of apartments, townhouses and villas, alongside commercial and recreational facilities.

Work has started on the US$ 79 million Cassation Court, with the project being managed by Dubai Courts along with a private entity. The building, comprising the court’s sessions (including the Appeals Court), a legal library, offices and a sports club, will be completed by 2021.

MAG Robotics International has signed a contract with Emaar to develop a fully automated parking facility at Dubai Marina. With a capacity of 700 vehicles, it will see the MAG subsidiary run the business on a BOT (build, operate and transfer) basis.

US courts threw out all claims made by Dubai-based Five Holdings against the Viceroy Hotel Group over its running of the Viceroy Palm Jumeirah Dubai. The hotel operator is not only trying to retake control of the 5* star property but is also instigating recovery of attorney fees as well as filing claims for fraud, extortion, conversion and unfair business practices against Kabir Mulchandani’s Five Holdings which maintains that it is still the legal operator of the hotel. In 2013, a 30-year agreement was signed by Viceroy for Five Holdings to manage a luxury hotel on the Palm Jumeirah Island. The show goes on.

A JLL report indicates that Dubai is among the world’s top cities for foreign realty investments, with the local sector making great inroads to tighten up regulations, and the market more transparent. The consultancy classifies the emirate as a “hybrid city” – one which “competes in specialised markets, which benefits from access to large domestic markets .   .   .   . and has a superior liveability equation compared to their national and regional peers.”

The Dubai Land Department had a record 2017, carrying out 8.2k real estate valuations, worth over US$ 78.2 billion.

Both Dubai and Abi Dhabi will host new Microsoft data centres, making them the first such offices for cloud services in the Middle East. No figures were given but the US tech giant has made a “significant investment” to offer cloud-based service to its network of some 17.8k regional partners as from 2019.

Several of the 150 new outlets in the one million sq ft expansion of Dubai Mall have opened for business in what was already known as the world’s largest shopping destination. The three levels of the extension, so far started, have expanded the mall’s high-end Fashion Avenue, now housing the likes of Cartier, D&G, Gucci, Hermes and Rolex. Work is still continuing with the fountain-facing restaurants, still closed.

Local retailer, Lulu, is set to spend US$ 81 million on a logistics hub in Dubai Wholesale City. When completed by 2020, the development, covering 1.3 million sq ft, will service the group’s growing number of malls and hypermarkets in the country; including the wider region, Lulu has 144 outlets and is in the global top 50 of fastest growing retailers, according to a recent Deloitte report.

Having seen its pharmacy chain increase by over 10% last year to 100, UAE-based chain BinSina is to open fifteen new outlets across the country this year.

Dubai-based Al Banna Engineering has been awarded an Enoc Group two-year engineering, procurement and construction contract for a 16.2 km jet fuel pipeline to link its Jebel Ali storage facility with Al Maktoum International Airport. No costs were readily available but the pipeline will have the capacity to carry 2k cb mt of jet fuel per hour to DWC – an airport that will eventually be capable of handling 220 million passengers and 16 million tonnes of cargo annually.

There are reports that local businessman, Saeed Al Falasi, may bid for AC Milan. His International Triangle Group could acquire the Italian football club from China’s Yonghong Li, who only took over last April.

The Multinational Companies Business Group has been established in Dubai, comprising thirty companies from a range of industry sectors. Its prime aim is reportedly to assist the government in shaping its strategy, particularly trade and fiscal policy.

DP World posted a 13.2% hike in 2017 revenue (6.0% on a like-for-like basis), as profit increased by 15.1% to US$ 1.2 billion; container volumes were 10.1% higher. The major factors behind the welcome figures were a marked improvement in efficiency as well as the company’s increased focus in other areas expanding into areas such as port-related, maritime, transportation and logistics sectors.

Dubai Silicon Oasis Authority reported a 9.5% hike in 2017 profits to US$ 56 million on the back of an 11.5% improvement in revenue to US$ 161 million. 339 new companies in 2017 resulted in a 16.0% hike in numbers to 2.5k, 82% of which specialise in technology.

Takaful Emarat posted a 25.3% increase in 2017 profit to US$ 5 million, as net income came in 35.6% higher at US$ 33 million and Takaful contributions rose 30.2% to US$ 175 million. During the year, the Islamic insurance company’s assets were 14.9% higher at US$ 229 million.

A subsidiary of troubled Dubai-based construction services company, Drake & Scull International has won a US$ 30 million contract in Moldova. Germany’s Passavant Energy & Environment (PE&E) will carry out rehabilitation works on a wastewater treatment plant and new sludge treatment facilities. The DSI group’s total bank debt at the end of Q3 last year got to US$ 796 million and it reached agreement with nine of its lenders to restructure US$ 154 million of corporate debt, by extending maturities by up to three years. It also expects to finalise a US$ 272 million restructure of debt, raised for projects in Saudi Arabia by the end of the month.

Emirates NBD, whose major shareholder is the Investment Corporation of Dubai, announced plans to increase its capital base by 32.4% to US$ 2.0 billion, by way of a new share issue; shares will be offered at a 10% discount at the appropriate time, with existing shareholders having priority.The bank is also awaiting shareholders’ approval to increase foreign ownership from 5% to 20%. The bank’s shares jumped more than 13.6% to US$ 2.70 on the news.

The DFM opened on Sunday (11 March), at 3157, and having lost 538 points (9.1%) over the past nine weeks bucked the trend this week and was 40 points higher (1.2%), to close at 3197 by Thursday, 15 March. Emaar Properties traded US$ 0.01 lower at US$ 1.62 – a two-year low – with Arabtec also down – by US$ 0.02 to close on US$ 0.63. Volumes traded lower at 173 million shares on Thursday, valued at US$ 98 million (compared to 382 million shares worth US$ 139 million the previous Thursday – 08 March).

By Thursday, Brent Crude had traded northwards over the week, gaining US$ 1.51 (2.4%) to US$ 65.12, with gold heading the other direction – down US$ 3 (0.2%) at US$ 1,318 by 15 March 2018.  Oil markets bounced back as the number of active US rigs dropped to 796 but the US economy, steaming north, will almost inevitably increase their need for higher fuel.

It is reported that Shell and private equity firm, Blackstone, are interested in purchasing BHP’s US shale division for a reported US$ 10 billion. This JV could be just one of several interested parties in acquiring the world’s biggest miner’s assets. The shale auction should be finalised by year-end but the Australian giant will probably go ahead with a separate IPO for the division if the final bid does not meet their expectation.

JCB, the construction equipment giant, is planning to add a further 600 jobs to its UK payroll because of growing global demand for its plant and machinery.

GKN’s board has rejected Melrose’s third and final offer of US$ 11.2 billion, indicating that the hostile takeover bid “fundamentally undervalued” the FTSE 100 engineering company. The unsuccessful bid would have given GKN shareholders a 60% stake in the new entity. As an aside, Airbus has come out stating that it would be “practically impossible” to give new business to GKN if Melrose were to take over the company, as the plane maker relies on long-term investment and strategic vision.

PZ Cussons lost 25% of its share value in one day after issuing a profits warning that reduced an earlier forecast by 20% to US$ 110 million for the year end of 31 May. The maker of Imperial Leather and Original Source has blamed falling sales in the UK soap market and its Nigerian milk business, caused by the “usual suspects” – increased competition, consumer caution, as UK inflation continues to outstrip wage growth, and, of course, Brexit.

The 70-year old Toys R Us is slowly dying and not only is it to close all its UK stores by the end of next month but also close or sell all its 885 US stores in the US, after failing to find a buyer (and the loss of 30k jobs).

At least one retailer has come in with impressive 2017 results, helped by an increase in online sales to 10%. Inditex, which includes Berksha, Massimo Dutti, Pull & Bear and Zara in its portfolio, posted net profits 7.0% higher at US$ 4.2 billion, on the back of a 9.0% hike in revenue to US$ 31.4 billion. During the year, store numbers increased by 2.5% to 7.5k.

Disgraced CEO and founder of drugs company, Theranos, Elizabeth Holmes has been fined US$ 500k and forced to surrender 19 million shares in her company. She has been found guilty by the US Securities and Exchange Commission of conning investors of US$ 700 million to keep the company afloat. She had duped people by wrongly claiming that Theranos had the technology to run thousands of medical tests using the blood from a tiny finger prick.

As expected, the US President has played the security issue card to block the massive US$ 140 billion takeover of Qualcomm by Singapore-based rival Broadcom. The deal would have seen the expanded company move into third spot of the world’s largest makers of microchips, behind Intel and Samsung, One other reason is that the US company is considered a leader in the lucrative 5G wireless technology race and there were fears that a takeover could see Huawei take the lead. (In January, the Chinese telecoms giant was unable to seal a deal to sell its new smartphone via a US carrier, thought to be AT&T).

Just two months after BAE Systems retrenched 2k staff because demand for the Typhoon had slowed, Saudi Crown Prince Mohammed bin Salman placed an order for 48 of these fighter jets. This will come as a welcome boost for the UK’s aerospace industry, as BAE Systems and its UK supply chain have a 37.5% work share in the Typhoon programme. It is reported that a target of US$ 90 billion worth of trade and investment had been agreed between UK and Saudi officials during the Crown Prince’s three-day visit.

IATA reported that January ME air passenger demand fell at its slowest pace since September 2008, at only 0.5% higher than a year previously, with one factor being the North American ban on some electronic devices; this compared to a 4.6% hike on a global scale. On a regional basis, capacity was 4.6% higher, with load factor 3.1% lower to 76.8% compared to 5.3% and load factor down 0.5% to 79.6%, wordlwide.

Chinese inflation levels rose more than expected to 2.9%, compared to 1.5% a month earlier – its highest level since November 2013. However, the Producer Price Index was down in February at 3.7%, from 4.3% a month earlier.

Even after nine years of on-going growth, US job creation continues unbounded, with February figures indicating 313k new jobs – far in excess of market forecasts; the unemployment rate stayed at 4.1%. However, wage growth dipped by 0.2% to 2.6% but as the labour market tightens, it is almost inevitable that these figures will start heading north again, as the impact of both an uptick in global growth and the recent tax cuts take effect. The positive labour news makes a March rate hike of 0.25% all but certain, as the Fed keeps a close watch on wage growth data.

In a case of the pot calling the kettle black, the EU has indicated that it will stand up to the bullies, meaning President Trump and his Commerce team.  The EU has been hit with a 25% tariff on imported steel products and 10% on aluminium. Even EC head Jean-Claude Juncker has indicated that they would match “stupid with stupid” – and the Luxembourgian poacher turned gamekeeper should know better than most.

There was a marked increase in the UK’s January trade balance deficit – up US$ 835 million from a month earlier and US$ 4.7 billion to US$ 12.0 billion YTD; the main drivers were a US$ 1.8 billion increase in imports, coupled with a US$ 1.6 billion fall in exports, to and from non-EU countries.

In his Spring Statement, the UK chancellor has claimed there is “light at the end of the tunnel”, with the economy due to grow by 1.5% this year but marginally lower for subsequent years. This puts the UK at the lower end of major economies, where average growth could be as high as 3.9%, compared to say China, Japan, Germany and the US where growth will be 6.5%, 1.5%, 2.4% and 2.9% respectively. Government debt for the current financial year, ending April, has fallen from November’s forecast of US$ 69.3 billion to US$ 62.8 billion – the first annual decline in 17 years.

The woes bedeviling the local F&B market are not confined to Dubai, as a 15-group of restaurant bosses have petitioned the UK Chancellor of the Exchequer to highlight problems facing the industry there. This comes after a string of chains hit the buffers including the likes of Jamie Oliver’s Barbecoa going into administration, the Italian chain, Carluccio’s calling in KPMG and pizza chain, Prezzo, closing 94 outlets. There is a warning that the government must act to avoid “damaging closures and job losses” and that a “perfect storm” had hit their sector; the main drivers being “soaring business rates, rising employment costs and Brexit-fuelled inflation”. It is reported that over a third of the top 100 chains are in a loss-operating environment, where sluggish consumer spending power sees less people eating out.

The problems for the UK industry – and probably here in Dubai – are that there is over capacity in the market, with consumers having too much choice, changing eating habits and reduced spending power. (That being the case, it seems a brave move that the Dinner by Heston Blumenthal restaurant is to open in the new Royal Atlantis Resort & Residences next year).

The other sector that seems to be facing headwinds in Dubai may be private education. Supply and demand will never be in equilibrium and judging by the number of school ads appearing in local media, there is every possibility that supply is currently outstripping demand. Whether this is a short-term problem remains to be seen but for the time being, some schools must be operating Up Against The Wall.

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It Ain’t Right!

Arabtec Holding has been awarded a US$ 116 million Damac contract to build 916 villas at the developer’s massive Akoya Oxygen project. Covering phase 6 of the development, work on the 148k sq mt site will be completed by the end of 2019. The once-troubled contractor has a US$ 4.7 billion project backlog and is well on its way back to stability and profitability.

UAE-based Binghatti Developers reported that it had sold 60% of the 230 units in its US$ 109 million Millennium Binghatti Residences tower, following its 03 March launch. Located directly on the waterfront, the 29-storey building will be completed by Q4 2019.

This week, Emaar Development launched the 62-storey The Grand, located in Dubai Creek Harbour. The super luxury development will have a mix of 1-3 B/R apartments, 4 B/R penthouses and podium-level townhouses.

Danube Properties has announced the launch of its tenth project, Jewelz, at a cost of US$ 82 million. The building – G+2 podium+13 floors – will house 463 units and is located adjacent to a park.

Nakheel announced the 85% completion of the US$ 327 million Nakheel Mall, located in the middle of Palm Jumeirah The developer reported that retail fit outs will start soon and work has  already commenced on the 60k sq ft, 15-theatre VOX Cinemas complex.

Last year, second tier properties, older and poorly maintained, in areas such as Deira and Garhoud, saw annual declines of 17% and 14% respectively. Cluttons reported that high end office property remained largely unchanged but Grade A buildings in Business Bay jumped by up to 17%. The consultancy expects difficult conditions to continue in 2018, as the leasing market remains tight, with a slight downturn in most rentals.

A JV between ACCIONA Agua and Belhasa Six Construct has been awarded a US$ 237 DEWA contract to build a desalination plant in Jebel Ali.  The 40 million imperial gallons per day (MIGD) reverse osmosis plant is slated for a 2020 completion.

The Italian export credit agency has seen its portfolio of new projects in the MENA region grow 273% in just over two years to US$ 14.7 billion – of which US$ 6.1 billion is located in the emirate. SACE, which supports Italian trade and investment worldwide, has been involved in significant investments across a gamut of sectors, including a US$ 1.2 billion credit facility to assist the development of Dubai South and a US$ 300 million loan related to supplies for the first phase of the upcoming Meydan One Mall.

BEYOUland, founded by Sheikha Mayha Hasher Al Maktoum, is using 17 abra type boats to launch the country’s first ever-floating boutique. Stretching 1.8 km, the venture will host local and international brands and artists in a unique selling environment whilst incorporating part of Dubai’s traditional culture and history.

The federal government is gearing up for phase 2 of the UAE federal railway network which will connect Mussafah to Khalifa Port and Jebel Ali Port, as well as to the Saudi and Omani borders. Phase 1 covered 264 km and has already started commercial operations, moving granulated sulphur from Shah and Habshan to the port of Ruwais. When completed, the network, which will also include passenger traffic, will cover 1.2k km and link all seven emirates and the rest of the GCC.

DP World and the Somaliland have signed an agreement in Dubai to develop a greenfield economic free zone in the country, in tandem with the growth of the Port of Berbera. Located adjacent to the port, the 12 sq km site will be a catalyst for the development of a regional trading hub which will prove a fillip for the Somaliland economy and job creation.

Dubai Airport Freezone Authority continues on its growth path during 2017, recording a 25% year-on-year increase in registered companies, as leasable space increased by 6%; licensing revenue was 16% higher and total assets were up 2% – but no figures were readily available. The total number of companies stands at 1.6k, with MNCs now accounting for 36% of that total. DAFZA is estimated to account for 7% of Dubai’s non-oil trade and 18% of the total Dubai free zone trade.

Emirates is reportedly in negotiations about a possible US$ 1 billion sukuk issue and is arranging a global investor roadshow to discuss with interested parties; Citi and Standard Chartered will act as joint lead managers. In 2015, the airline raised US$ 913 million through a sukuk backed by the UK Export Finance.

Established in 2001, Emirates loyalty programme now boasts 20 million members. 30.5% of Emirates Skywards’ customer base can be found in the UK (2.6 million), USA (1.8 million) and Australia (1.7 million). Last year alone, 35 billion miles were redeemed by members on flights and other rewards.

Of the 2.2k billionaires on the Forbes annual list, seven are to be found in the UAE, two more than last year. The Magnificent Seven are Abdulla bin Ahmad Al Ghurair and family (US$ 5.9 billion), Majid Al Futtaim and family (US$ 4.6 billion), Hussain Sajwani (US$ 4.1 billion), Abdulla Al Futtaim (US$ 3.3 billion), Saeed Bin Butti Al Qebaisi (US$ 2.7 billion), Saif Al Ghurair and family (US$ 1.9 billion) and Khalifa Bin Butti Al Muhairi (US$ 1.5 billion). It seems that those with interests in healthcare, money exchange and property had a good 2017 – with better than average returns – whilst declines were noted in sectors such as banking, automobiles and other industries. The number of Dubai ultra-wealthy individuals (with personal assets of US$ 30 million+) is 1.1k, whilst the number of multi-millionaires (assets of US$ 10 million+) is put at 2.4k, according to New World Wealth.

The latest monthly Emirates NBD’s seasonally adjusted PMI sees a weakening in the country’s non-oil private sector economy – at its slowest pace in 18 months – as business confidence splutters to a six-month low; the main drivers appear to be sluggish job creation and output growth, both at  nine-month lows. Overall the economy is still growing with strong domestic demand but on the flip side, business confidence is slowly heading south, with February optimism levels “well below” the historical average.

The Federal Tax Authority added some clarification on transitional rules involving goods and services being delivered fully or partially in 2018, but had been contracted in 2017 – before the 01 January implementation of VAT. In short, it stated that the only case where consumers are directly responsible for paying VAT on received services, that are delivered fully or partially in 2018, is where the contract states that the amount due is exclusive of tax. In all such “overlapping” cases, the supplier remains liable for accounting for the tax and paying it to the FTA, even if it cannot be recovered from the consumer.

There has been a major improvement in the state of Dubai’s credit default swaps, which in 2009 stood at 1k basis points and now has fallen below 100 bp.  At the height of the GFC, the emirate was on its economic knees, after splurging out on so many construction and acquisition projects and relying on Abu Dhabi for financial assistance.

The total sukuk value listed on Dubai’s two exchanges has now reached US$ 56.5 billion, making it the largest amount of any listing centre in the world, with this week’s two Indonesian government’s listings, totalling US$ 3.0 billion. These transactions make that government the largest sukuk issuer on Nasdaq Dubai, by both value (US$ 14.5 billion) and number of listings (10).

Etisalat is to spend up to US$ 2 billion to buy back up to 5% of its paid up capital (equivalent to 434.8 million shares). It has a current market value of US$ 41.1 billion.

Dubai National Insurance and Reinsurance posted a 9.0% hike in 2017 profits to US$ 14 million, as gross written premiums were 24.0% higher, at US$ 96 million, along with an 18.0% hike in net underwriting income to US$ 12 million.

Union Coop posted a record profit in 2017, with revenue 16.8% higher to US$ 796 million, resulting in a 16.8% increase in shareholders’ equity to US$ 684 million. Over the year, the number of families associated with the supermarket chain was 3k higher at 31k, whilst in October it launched its on-line shopping website.

DIFC reported that its 2017 net profit jumped 25.3% to US$ 99 million, as revenue remained flat at US$ 221 million. Last year, the financial hub, rated in the top ten global financial centres, saw a record 315 new companies to bring the total firms to 1.85k; occupancy was at 99%.

Dubai-listed Amanat Holdings continues with its expansion strategy by paying US$ 87 million for a 35% stake in Abu Dhabi University Holding Company. The health and education sectors speciality investment firm has bought into a leading private higher education provider which, with a 21.7% holding, is the largest investor in Taaleem Holdings.

The DFM opened on Sunday (04 March), at 3209, and having lost 486 points (9.1%) over the past eight weeks was again down – by 52 points (2.4%) – to close at 3157 by Thursday, 08 March. Emaar Properties traded US$ 0.06 lower at US$ 1.63, with Arabtec also down – by US$ 0.02 to close on US$ 0.65. Volumes improved to 382 million shares traded on Thursday, valued at US$ 139 million (compared to 99 million shares worth US$ 39 million the previous Thursday – 01 March). There is no doubt that the DFM is currently in the doldrums, having shed 6.3% already this year, and this despite attractive valuations of 8.1 times expected earnings, as against the 12.3 times found on the MSCI Emerging Markets Index.

By Thursday, Brent Crude had traded slightly lower over the week, shedding US$ 0.22 to US$ 63.61, with gold heading the other direction – up US$ 16 (1.2%) to US$ 1,321 by 08 March 2018.

Indian telco, Aircel is set to start bankruptcy as it is unable to pay outstanding debts of US$ 7.7 billion of which 30% is owed to secured financial creditors, with the balance being unsecured liabilities. The court has to rule whether the company, owned by billionaire, T Ananda Krishnan, should be placed in liquidation as early as today.

2017 proved a difficult year for Lego which posted its first fall in annual sales since 2004, 17.0% lower at US$ 1.7 billion, as revenue dipped 8.0% to US$ 5.8 billion. The main drivers behind the “challenging year” were a decline in its core markets, North America and Europe, and a major clear-out of excess stock. In September, the privately-owned Danish company announced the retrenchment of 8% of its global workforce so as to “reset the company”. (The company, with six stores and Legoland theme park in the emirate, is planning to open a Dubai office this year).

Following its dubious role in mis-selling financial products in the lead up to the GFC, RBS has agreed to pay a fine of US$ 500 million to settle with the US authorities. 80% of the settlement will be paid to those affected, whilst US$ 100k will be for the New York State. However, the bank, still majority-owned by the UK government, is facing a potential fine that could top US$ 5 billion, from the US Department of Justice, for selling risky mortgage-backed securities.

Because of order declines for both its A380 and A400M planes, there is a possibility that Airbus could slash 3.5k staff from its payroll. By 2020, the plane maker will only be producing six jumbos (only thanks to Emirates’ recent 36-plane order) and  eight military aircraft, (which has incurred losses of almost US$ 10 billion to date) a year. Other models are performing well.

Although no numbers were made public, Rolls Royce is another company set to introduce further job cuts following 600 managers leaving over the past two years. This comes despite 2017 profits of US$ 1.5 billion, 25% higher than the previous year when one off costs, including a costly corruption scandal settlement and sterling’s post Brexit collapse when the pound was trading 19% lower to the US$ at around the US$ 1.20 mark, saw the engine maker posting a U$ 6.3 billion loss.

With an adjusted 0.4% Q4 GDP growth – for the eighth consecutive quarter – Japan’s economy expanded 1.6% last year, well above initial 1.0% forecasts.

Turkey joined the likes of Brazil, Costa Rica and Croatia when Moody’s cut its credit rating by a notch to Ba2 – junk status. The main drivers behind the decision appear to be geopolitical tensions, an erosion in public institutions and lack of effective monetary policy by the Erdogan government.  The lira has remained steady so far this year at 3.81 to the greenback, compared to a 2.5% gain witnessed by the MSCI index of emerging market currencies, but ten year bond yields are at a relatively high 12.3%.

Alarming data from the UK’s Office for National Statistics reports that “total accrued-to-date gross pension liabilities of UK pension liabilities” amount to  a massive US$ 10.5 trillion – 20.8% higher than in 2010. Of this figure, US$ 7.3 trillion is owed by the UK government and the balance, US$ 3.2 trillion, relates to promised pension payments, mainly to those in the private sector. The worrying news is that US$ 5.5 trillion is in future “unfounded” state pension payments which are paid from taxes of current workers, as does a further US$ 1.3 trillion of pensions for those employed in the public sector.

The CBI estimates that UK business grew at its fastest pace in more than two years in the February quarter, measured at +20 last month compared to +9 in January. Despite the uncertainty surrounding Brexit, retail was the only sector that did not post figures higher than the long-run averages, with manufacturing and business/professional services stand-out performers. The economy, that many predicted would fall off the cliff after the referendum, continues to head north, driven by an uptick in the global commercial environment.

The first two months of trading has seen eurozone’s retail trade volume posting 0.1% declines in both January and February – when analysts expected a positive 0.3%. However, the figures should be more positive over the year as the impact of on-line sales takes effect. For the eurozone, the year on year retail trade volume growth is expected to be 2.3% (and 2.7% in the bigger EU bloc).

China expects a slight downturn in its economy, with this year’s forecast growth being 6.5% (compared to 6.9% in 2017). Over this year, its two main economic targets are to maintain inflation running at around 3% and trim its budget deficit by 0.4% to 2.6%. President Xi Jinping has been keen to crackdown on big-spending conglomerates and curtail the worryingly high shadow banking sector, as he tries to bring a level of normalcy to the economy. (It is estimated that Chinese shadow lenders account for 15.5% (US$ 7 trillion) of the total global riskier non-bank loans). It will also be interesting to see his response to President Trump’s moves to impose weighty tariffs on steel and aluminium to protect US producers from “unfair” competition.

The President’s mutterings on tariffs have raised the hackles on some of the world’s financial elite. The EU’s Margrethe Vestager called the Trump action “one-sided protectionist measures, which hurt, not just jobs, but the whole system of rules that makes our global economy work”. The IMF’s Gerry Rice has reiterated that such action will cause damage to both the United States (particularly in the manufacturing and construction sectors, both major users of aluminum and steel) and its trading partners.

President Trump wants to see a reduction in the US 800 billion trade deficit (not including the US$ 244 billion services surplus). This has expanded by 16.2% to US$ 56.6 billion, since he took office last year – not helped by cheap imports and in some cases dumping of steel and aluminum. Last month, the Commerce Department commented that the global glut of steel and aluminium threatened US national security. According to US data, it has a US$ 22.3 billion automotive vehicle and parts trade deficit with Germany and a US$ 7.0 billion deficit with the UK. Surely he has a right to be upset by the imbalance and, for instance, to take a pot shot at European carmakers when US-made cars into Europe face a 10% tariff but the other way it is only 2.5% on cars assembled in Europe and sold in the USA. In anyone’s language, It Ain’t Right!

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The Winner Takes It All

HH Sheikh Mohammed bin Rashid Al Maktoum announced this week that all federal government fees will not be increased for the next three years. According to his Twitter account, he commented that “we decided not to increase the federal fees during the next three years, to restore the economic and social stability of the state and to support our industrial and commercial sectors and attract more foreign investments.”

The Dubai Land Department reported that last year 90 projects were completed, whilst a further 150, worth US$ 22.3 billion, were registered. Director General, HE Sultan Butti bin Mejren, confirmed that recent reports about a change, that would have seen developers having to deposit 50% of a project value (rather than the current 20%), were untrue.

Azizi Developments expects to complete the building of the world’s fifth largest tower by 2021. Located adjacent to the Dubai Creek, the 122-floor building will house residential units and then a luxury hotel from the 100th floor up. The total project, including land, is expected to cost US$ 817 million, with work starting on the 570 mt structure, designed by Atkins, in Q2.

Azizi Developments is also set to launch 200 realty projects this year, costing US$ 10.9 billion, of which 190 will be located in the Meydan District. The developer expects to add 55k residential units, with some completion by the end of 2019.

Emaar Development released its latest development on Sunday – Saffron Community in Emaar South. The new townhouse community will comprise 3-4 B/R units and will also host an18-hole championship golf course.

Dubai-based Binghatti Developers has launched a US$ 109 million project on Dubai’s Water Canal in Business Bay. Millennium Binghatti Residences will comprise 230 apartments (studio and 1-2 B/R), with prices starting at US$ 170k.

China State Construction Engineering Corporation has been awarded a US$ 163 million contract to build one of Damac’s towers in Aykon City, a four million sq ft development around Safa Park. The tower will have 53 residential floors, along with seven podium levels and two basements.

ART Marine has been appointed by Dubai Properties Group to be the exclusive operator of Marasi Marina. The leisure marine company will be responsible for managing the entire premises including its water and onshore areas. The marina will hold 130 boats (up to 35 mt in length) and comprises eight interconnected piers.

With the logo “Fresher, Cheaper, Better shopping to its customers”, Landmark Group is set to revolutionise local retail in the way Aldi and Lidl have in the UK. It is to introduce VIVA, as the region’s first food discounter, which will offer a range of private label quality products up to 30% cheaper than other established outlets. With four stores opening soon (including one in Dubai), there could be fifteen in operation by the end of the year. The long-established UAE retail company also owns, Babyshop, Centrepoint, Home Centre and Splash.

Cityland Mall, the world’s first nature-inspired shopping destination, is set to open by year-end, with 60% of the US$ 300 million project already complete; over a half of the available retail space has been let. The landscaping contract for Central Park – the focal point of the mall – has been awarded to Miracle Garden Landscaping, which also runs Dubai Miracle Garden and Dubai Butterfly Garden.

Having seen its 2017 revenue grow 5.6% to US$ 1.9 billion, Dubai Duty Free expects a 3.5% hike this year to US$ 2.0 billion and by 57.9% to US$ 3.0 billion within four years. The bullish forecast is based on more traffic at Dubai International, as tourist traffic increases from the current level of 88.2 million to an expected 118 million by 2022. The duty free operator also expects an uptick in the number of high spending Chinese and Russian visitors, with the former accounting for 9% of sales. Another factor for the positive forecast is the weakness of the US$, resulting in a strengthening of both the euro and sterling, with Western Europe being DDF’s main source market.

DP World is looking at further opportunities to expand into Latin America, where it is currently working on land reclamation and road network works for Guayaquil Port in Ecuador. The world’s third-largest ports operator is set to invest US$ 1.2 billion on the project which when completed will give the country its first deep-water port and allow mega vessels to berth.

A new agreement was signed this week by SCZone and DP World that will see the start of an integrated industrial and residential zone in Sokhna, Egypt, the first phase of which covers 30 sq km. The JV, which sees the Suez Canal authority holding 51%, empowers the Dubai-based port operator to manage the zone which will not only see an expansion to Sokhna port but the development of a comprehensive industrial zone.

Having been awarded a government concession in 2006 – and posting annual profits ever since – DP World has evidently lost control of the Doraleh Container Terminal in Djibouti. The port operator has now accused the government of illegally seizing control of the facility in a move to force a renegotiation in the concession’s terms. Interestingly, the terminal is the country’s largest employer and biggest source of revenue.

Last year was a record year for public transport with 551.7 million users – a 1.5% increase on the previous year. 96% of this total used the three main transport modes – Dubai Metro (36%), taxis (32%) and public buses (28%). In addition, Dubai Tram saw an 11.1% uptick in users to over 6 million, whilst marine transport had 13 million passengers. Public transport accounts for 17% of all people movement in Dubai (up from 2006’s figure of 6%), with the RTA targeting 20% by 2020.

January passenger traffic at Dubai International was 1.0% lower than in 2017 at 8.0 million. The top growth areas were South America and CIS – up by 22.6% and 19.7%.

UAE petrol prices will be lower this month, starting today, 01 March– this time, Special 95 falls 1.3% to US$ 0.605 per litre, whilst diesel, at US$ 0.643, is 2.4% lower.

Despite posting a 44.4% hike in 2017 profits to US$ 354 million, the country’s listed insurers face a tough 2018, driven by the introduction of VAT and comparatively low energy prices. The 30-member bloc, which accounts for about 50% of total written premiums, benefitted last year by the introduction of both compulsory medical insurance and the Unified Motor Insurance Policy; over the period, their total revenue or gross written premiums jumped 15.8% to US$ 6.0 billion. Five insurers account for 59% of the market share, led by Orient Insurance and Oman Insurance.

The UAE’s Federal Tax Authority has decided not to issue penalties for businesses that have been late to register (the original cut-off date was 31 December) for VAT. Businesses now have until 30 April to become VAT-registered. It is estimated that 260k businesses have already registered but there could be a further 100k that have not.

At the end of January, the UAE Central Bank reported that foreign assets were 12.1% higher, year on year, at US$ 88.8 billion, whilst foreign deposits were 96.3% to the good at US$ 69.5 billion. At the end of January, government deposits and bank deposits stood at US$ 55.5 billion and US$ 117.1 billion.

The Central Bank Governor, Mubarak Rashed Al Mansoori, reported that the federal government’s 2017 expenses showed a 23% increase on the previous year. He also confirmed that the country’s 2017 non-oil GDP was 2.95% and is expected to reach 3.5% this year.

Etisalat is planning to invest US$ 1 billion in the modernisation of mobile and fibre-optic networks, infrastructure development and future technologies. The aim is to maintain its leading position in the region and play a major role in future technologies such as AI (artificial intelligence), IoT (internet of things) and robotics, as well as concentrating on its traditional business.

DEWA posted a 7.1% rise in 2017 net profit to US$ 1.8 billion, as revenue was 5.0% higher at US$ 5.9 billion. During the year, its assets grew 11.0% to US$ 35.7 billion, whilst the demand for electricity and water rose by 5.18% and 3.12%, respectively.

The Dubai Statistics Centre reported that January’s inflation rate rose 2.69% year-on-year, driven by the introduction of VAT and the increase in fuel prices. Major increases were seen in the prices of tobacco (9.06%), hospitality (7.69%), communication (5.91%) and recreation/culture (5.12%).

According to HSBC, its Expat Explorer Survey is the world’s largest study of expat life and it rates Dubai as one of the best global places for both job prospects and a great social life – even ahead of the likes of LA, New York, Paris and London. When it came to salary levels, Dubai’s average came in at US$ 138k, some way behind Mumbai’s US$ 217k.

It is reported that the New York-based Apollo, which oversees US$ 250 billion in global private equity, credit and real estate assets, is winding down its partnership with DIFC’s Frontier Management Group, after nearly three years. It had planned to use Frontier to gain a footing in the regional investment sector but had little success despite a 2015 bid for Saudi Arabian supermarket chain, Al-Raya Foodstuff Co.

Emirates Global Aluminium, jointly owned by Investment Corp of Dubai and Abu Dhabi’s sovereign fund Mubadala Investment Co, posted a hefty 57.1% jump in 2017 profits to US$ 899 million, on the back of a 20.0% increase in revenue at US$ 5.6 billion; a major contributing factor was aluminium gaining 34% in 2017. There is a possibility that there may be an IPO, that could raise up to US$ 3 billion, in the next twelve months – subject to favourable market conditions.

First Abu Dhabi Bank has denied any interest in merging its NBAD Securities, with Dubai’s SHUAA Capital.

Ithmaar Holding posted a disappointing Q4 loss of US$ 56 million (compared to a US$ 3 million deficit in the same period in 2016) and an annual loss of US$ 72 million, following a US$ 14 million profit a year earlier.

The founder of Abraaj Group, Arif Naqvi, is to relinquish control of Abraaj Investment Management in a major reshuffle that will see the appointment of joint chief executives, Omar Lodhi and Selcuk Yorgancioglu. The Dubai-based firm, that manages assets in excess of US$ 13.6 billion, has hired independent consultants to review its corporate governance and controls.

Depa Limited has withdrawn its application to be listed on the London Stock Exchange citing that the volume of global depositary receipts traded was negligible and thus not worth the expense for the  Dubai-based interior design company. It had earlier in the month appointed Shuaa Capital as its liquidity provider. The company posted  a 26.0% rise in 2017 profit to US$ 37 million, as revenue increased by 4.0% to US$ 490 million; its backlog declined 7.0% to US$ 488 million

Union Properties’ subsidiary, UPP Capital Investment, has increased its share in Egypt’s Palm Hill Developments by 0.74% to 10.18%, by acquiring 17 million shares for US$ 4 million. The Cairo-based company posted a 19.2% hike in 2017 profits to US$ 53 million.

The DFM opened on Sunday (25 February), at 3287, and having lost 330 points (9.1%) over the past six weeks was again down – by 78 points (2.4%) – to close at 3209 by Thursday, 01 March. Emaar Properties traded US$ 0.03 lower at US$ 1.69, with Arabtec marginally higher by US$ 0.01 to close on US$ 0.67. Volumes slid at to just 99 million shares traded on Thursday, valued at US$ 39 million (compared to 192 million shares worth US$ 98 million the previous Thursday – 22 February). For the month, Emaar was down US$ 0.11 at US$ 1.68 from February’s opening of US$ 1.79 as was Arabtec, US$ 0.05 lower for the month to US$ 0.66.

By Thursday, Brent Crude had traded lower over the week, shedding US$ 1.56 (2.4%) to US$ 63.83, with gold heading the same direction – down US$ 28 (2.1%) to US$ 1,305 by 01 March 2018.  For the month, Brent was down (6.0%) from US$ 68.89 to US$ 64.73, whilst the yellow metal also fell US$ 26 (3.0%) from US$ 1,343 to US$ 1,317.

OPEC chief Suhail al-Mazrouei considers that the oil market will be balanced this year following the crash of 2014.This has been made possible because of the late 2016 agreement between both OPEC and non-OPEC producers, agreeing to cut output by 1.8 million bpd. Furthermore, he estimates that up to US$ 10.5 trillion of investment will be needed, with demand set to rise by 15 million bpd by 2040.

Better known for its iconic hand dryers and vacuum cleaners, Dyson is keen to establish itself in the electric car sector. Having doubled the number of scientists working on its battery programmes in the past twelve months, it already has a 400-strong team in place and plans to hire a further 300 engineers, so as to be in a position to launch its first vehicle in 2020. Last year, it posted a 27% hike in earnings to US$ 1.1 billion.

The UK seems to be the favoured location for Toyota as it has invested US$ 3.5 billion in the country – far more than any other country in Europe. This week, the Japanese car-maker confirmed that it will build the next generation of the Auris hatchback at its Burnaston plant, with most of the engines being built at its Deeside factory in North Wales. This will ensure the security of 3k jobs across both plants. Despite Brexit scaremongering, the car industry is alive and well, with the likes of BMW (assembling its electric Mini in Oxford) and Nissan (its next generation of Qashqai and X-Trail sports utility vehicles) still showing their commitment to the UK.

As expected, an international consortium, including the likes of the Saudi and Singaporean sovereign wealth funds, acquired a 55% stake in AccorHotels for US$ 5.4 billion. This will enable the French firm to expand its portfolio from its current level of 891 properties and continue to manage its brands, including Mercure, Novotel, Pullman and Raffles.

Comcast has joined the race to acquire Sky with a US$ 31 billion offer – 16% higher than 21st Century Fox’s offer of US$ 25.9 billion to buy the 61% remaining share it did not already own. The biggest cable TV firm in the US plans to “use Sky as a platform for our growth in Europe”. It was no surprise then to see Sky shares 20% higher on the day at US$ 18.30, with Comcast shedding 7% in value.

The Swedish music streaming service, Spotify is aiming to raise US$ 1 billion in an IPO on the New York Stock Exchange. With 159 million monthly users, including 71 million paying subscribers, revenue was 38.0% higher at US$ 5.0 billion but its net loss stretched out to US$ 1.5 billion. Despite being unable to return stable returns, the twelve-year old company, co-founded by the then 23 year old Daniel Ek, is valued at US$ 23.4 billion.

Following its first loss in twenty five years in 2015, Standard Chartered posted a US$ 409 million profit in 2016. Last year, it went even better with a US$ 2.4 billion profit, of which US$ 642 million emanated from the Africa & Middle East region – a 49.0% year on year improvement. Operating income was 2.6% higher at US$ 14.4 billion, whilst there was an 11.6% growth to its loan book.

Two major UK retail entities – ToysRUs and Maplin – are facing the possibility of going under this week, with the loss of 5.9k jobs. The toy retailer has had various discussions with possible suiters over the past three months but to no avail. The electricals chain, which employs 2.5k, had been in last minute rescue talks with Edinburgh Woollen Mill but these broke down.  This could be the start of a bad year for the high street as the perfect storm (on-line shopping, rising costs and soft consumer spending) starts to brew.

Disneyland Paris, that employs 16k and accounts for 6% of the French tourism income, is set to invest US$ 2.5 billion to further develop its troubled theme park. Investors are concerned that since its 1992 opening, it has only produced seven years of profit. Walt Disney took full control of the park last year, when it bought the shares in Euro Disney that it did not already own. Development will only start in 2021 and include new areas devoted to hit films such as Frozen and Star Wars.

Despite opposing President Trump’s recent tax cuts, Warren Buffet has probably been the main beneficiary receiving some US$ 29 billion as a result of the reforms. In reporting Berkshire Hathaway’s quarterly Q4 and annual profits, the US billionaire indicated that of the US$ 65 billion profit, 44.6% was directly attributable to when “Congress rewrote the US Tax Code.” It is estimated that future earnings could continue to rise by 12% because of the tax change.

According to the latest ICAEW/Oxford Economics’ report, ME growth this year will reach 2.9% and 3.6% in 2019, following an eight year low of 1.1% last year; the major drivers behind the welcome improvements are higher energy prices and expansionary government budgets.

Chinese authorities have woken up to the fact that there has been an ongoing problem with some large enterprises picking up “trophy assets” around the world. Like certain western companies, including banks, they thought they were too big to touch, especially with their political clout, Things are beginning to change – this week, authorities took control of insurance and financial giant Anbang, known as a “grey rhino” (previously unheard of conglomerates with access to large amounts of money, splurging out and paying premium prices for assets – often unrelated to their core business – and then trampling over everything in their wake). If any of these grey rhinos were to fail, there will be a negative impact on both the Chinese economy and the government’s international standing.

With China’s economy posting only a 6.8% increase in Q4, India surpassed that with a credible 7.2% – its fastest rate in five quarters. Asia’s third largest economy, after China and Japan, is expecting 2018 growth in the region of  6.6%, after recovering from the introduction of sales tax last July, with its disruptive aftermath  for the country’s manufacturers  and service industries. Despite the encouraging outlook, it is unlikely that the Reserve Bank will lift interest rates in the short term, at least.

The recent Florida school massacre has resulted in several big name businesses cutting ties with the powerful National Rifle Association which may result in some much-needed changes in the country’s gun laws. Delta, Enterprise, Hertz and United have ended discounts for NRA members, whilst others including Allied Van Lines, Avis Budget Group, Chubb, First National Bank of Omaha and Symantec Corp have been distancing themselves from the lobby group. Activists continue to put pressure on companies that have a commercial relationship with the NRA and it will be interesting to see how FedEx and Amazon (which distributes NRA television programmes) react. This could be the start of some sense being introduced to the country’s archaic gun laws.

The US Labour Department posted a 3.1% decline in jobless claims to 222k for the past week – its second lowest figure since 2009 – as the monthly average also fell – by 1.0% to 226k; the unemployment rate stands at 4.1% – a 17-year low. It is estimated that the improvement will continue over the coming months as the impact of recent tax cuts take effect. January new home sales in the US slid 7.8% to an annual rate of 593k. Median sales prices stood at US$ 323k, with a total of 301k new houses – equating to a six month supply line at current rate of sales.

The US economy grew by 2.5% in Q4, down from the 3.2% the previous quarter; annual growth came in at 2.3%, compared to just 1.5% in 2016. Not a bad first year for President Trump who is looking at a 3.0% expansion this year. Incoming Federal Reserve chairman, Jerome Powell, is bullish on the economy stating that “some of the headwinds the US economy faced in previous years have turned into tail winds”. With faster growth, higher inflation (moving to the 2% target) and falling unemployment, care has to be taken to avoid the economy overcooking. It seems more than likely that he will chair over three rate hikes of 0.25% this year.

With an imminent introduction of new laws effecting credit card companies, UK’s Financial Conduct Authority estimates that borrowers could save up to US$ 1.8 billion in lower interest charges. It is primarily aimed at those in, or at risk of being in, persistent debt, with the FCA indicating that some four million accounts were currently paying, on average, around US$ 3.50 in interest and charges for every US$ 1.40 they repaid of their borrowing.  This practice is not only a UK problem but can be seen in most other countries.

Crown Prince Mohammed bin Salman is certainly making his presence known and has commented that his anti-corruption drive was the “shock treatment” the country needed. He has made a point of appointing “high energy” people who could modernise the kingdom and overhaul government bureaucracy. If his reforms are carried through, the economic boost to both the Kingdom and the region will be noticeable. No doubt, The Winner Takes It All!

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