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Although most of the sector’s players have predicted a dismal 2016 for Dubai’s real estate market, official figures paint a brighter picture. The Dubai Land Department reported that, by 22 February, YTD transactions have totalled US$ 18.7 billion, with a 2016 annual forecast reaching US$ 81.6 billion – this would be 14.0% and 37.6% higher than the past two years’ returns.

Dubai Holding’s property unit, Dubai Properties Group, is expecting to finish work on stage 1 of its affordable housing Serena project within two years. The first of five phases will include 2-3 bedroom townhouses and 3-bedroom semi-detached villas. The project will be located on Emirates Road and will also include 100k sq ft of retail space, a clinic and swimming pools.

At the other end of the property spectrum, Damac has announced that it will build car lifts in its 4 million sq ft Aykon City. The development, next to Dubai Canal, will comprise two 30-storey luxury residential units, an 80-floor hotel, a 63-floor office building and an office tower with 65 levels.

Yet another shopping centre in Dubai – this week saw the opening of the US$ 109 million The Mall in Jumeirah, adjacent to the Burj Al Arab. Encompassing 81k sq ft of area, the centre will have 66 outlets, which have all been let, and basement parking for 200 vehicles.

According to Cluttons Dubai Office Market Bulletin, office rents have remained stable, as high demand persists to offset new supply. The report highlighted the fact that of the 22 submarkets analysed, 13 had remained unchanged, 2 had recorded decreases and 7 had registered notable increases during 2015.

The RTA has extended its deadline to the end of the month for developers to register interest in building five mixed-use towers above the Union Square metro station in Deira. In a bid to garner more interest from the private sector, there will be offers of a minimum revenue guarantee to participating companies.

Dubai World has signed two major contracts – with Dutco Balfour Beatty and BAM International Abu Dhabi LLC – to carry out work on its new Container Terminal 4 on reclaimed land in Jebel Ali Port. Phase 1 will be completed by 2018 and, by adding 3.1 million TEUs (20’ equivalent units), the port’s capacity will increase by 16.3% to 22.1 million TEUs, with a further 4.7 million TEUs on completion of phase 2 in 2020. Also this week, the port operator was selected as preferred bidder for operations at the Cypriot port of Limassol.

With 70 hypermarkets and 90 supermarkets in 14 regional countries, Majid Al Futtaim is planning its first of two Kazakhstan Carrefour hypermarkets – the first in Almaty to be followed by one in Astana. Last month, MAF announced a US$ 1 billion expansion plan for two malls in Riyadh.

Emirates has augmented its global position as the largest single player in sports sponsorship. Its latest deal, with the Los Angeles Dodgers, includes signage, a 70 client hospitality section and becoming the outfit’s official carrier. This is the airline’s first foray into baseball but it already has a growing US sporting presence, with sponsorship arrangements including New York Cosmos, US tennis Open and the US rugby team.

Having spent US$ 1.7 billion last year to acquire Dragon Oil, Enoc is again gearing up its expansion plans. The 23-year old state-owned company is to build a further 54 petrol stations in Dubai and increase its condensate capacity at its Jebel Ali refinery

It was no surprise to see that the Mercer’s 2016 Quality of Living Survey again rated Dubai as the leading ME city for expatriate living. However, its 75^th position ranking, out of 230 cities surveyed, will baffle some observers. (Vienna, Zurich and Auckland claimed the top three spots, with Baghdad and Damascus at the other end of the scale).

Strangely, since fuel subsidies were removed last July, pump prices have actually decreased. Despite this anomaly, ratings agency Moody’s estimate savings from this are equivalent to only 0.5% of GDP, compared to the estimated 12.4% of GDP deficit from the lower oil prices.

The weakening market conditions, allied with low oil prices, have begun to impact on the local economy. Etisalat has curtailed plans to raise a 3-year, US$ 2 billion loan. Meanwhile the country’s central bank reported that its foreign assets dropped by 13.0% in January to US$ 80.9 billion, whilst overseas bank deposits decreased 30.0% to US$ 33.3 billion. Not surprisingly, the capital’s SWF, the second largest in the world, could lose 5.4% of its value in 2016 to US$ 475 billion.

Empower – owned by DEWA and TECOM Investments – has also stalled plans to go public, in the wake of adverse market conditions. The Dubai A/C provider reported impressive 2015 results with profit up 26.0% to US$ 141 million, whilst revenue was 12.0% higher at US$ 463 million. It still requires a further US$ 327 million for on-going expansion plans, of which 20% will be internally generated.

Once the darling of the local market, Arabtec has again returned disappointing results. Last year, it posted an annual loss – US$ 627 million – compared to a US$ 59 million profit in 2014. The Q4 loss of US$ 98 million fell short of analysts’ expectations and was a lot worse than the US$ 26 million deficit a year earlier.

The bourse opened Sunday at 3093 and nudged up 1.1% to 3124 by Thursday (25 February 2016). Bellwether stocks, Emaar Properties and Arabtec, were mixed – with the former lower by US$ 0.02 to US$ 1.53 and the latter up US$ 0.02 to US$ 0.31. Trading volumes on Thursday were well down on last week at 358 million shares, valued at US$ 105 million, changing hands, (cf 584 million shares for US$ 170 million, the previous Thursday).

Brent crude, having surged 14.0% the previous week, continued its upward trend jumping 3.5% (US$ 1.20) to US$ 35.48, whilst gold rose by US$ 8 to US$ 1,234, by Thursday (25 February) close.

Although it seemed a done deal last month, with a US$ 2.27 per share offer, J Sainsbury’s attempt to purchase Home Retail Group has been topped by Steinhoff International’s offer of US$ 2.47. The UK supermarket, 25.1% owned by the Qatar Investment Authority, was hoping that this sale would help in its on-line business and expand into new areas such as consumer goods.

On Tuesday, Standard Chartered announced abysmal results with an annual loss of US$ 2.36 billion, compared to a 2014 profit of US$ 2.51 billion. The bank, with 90% of its business in emerging markets, recorded an 87% hike in loan impairment losses to US$ 4.0 billion. It has not been helped by having to close most of its SME accounts in the UAE, regulatory infractions and senior management changes. To some outsiders it seems that the bank has lost its way and treated many customers with corporate disdain.

In contrast, HSBC came in with a 1.2% lower 2015 profit at US$ 13.5 billion but this included a US$ 1.3 billion Q4 loss – maybe a portent of the bumpy economic road ahead? The usual suspects – lower commodity prices and a slowing Chinese and global economy – were the drag factors for the weak results. Over the next two years, the bank hopes to slash its overheads by US$ 5 billion.The bank confirmed that it faces tax probes from several countries, including Indian authorities who are investigating citizens’ accounts in Switzerland and Dubai.

Over the past two years, Qantas has managed to surprise the aviation world as it transformed itself from an industry basket case to recording a record H2 profit of US$ 663 million – well up on the previous half year figure of US$ 264 million. Although lower fuel prices and the weaker AUD were prime factors for this turnaround, it must be noted that its arrangement with Emirates has seen the number of annual Australian passenger traffic to Europe surge fourfold to over 1.5 million.

The dire condition of the global dairy industry has badly hit Australian milk producers. Murray Goulburn – which buys 37% (3.6 billion litres) of the country’s total milk production – has seen annual profits sink by 34%. Consequently, there will be no relief for the “cockies”, as the price of milk solids will be at US$ 4.12 per kg – equivalent to US$ 0.31 per litre. For many, these prices are at best marginal and for many loss-making.

Following January’s HNA’s proposed US$ 6 billion acquisition of US-based Ingram Micro and Haeir’s US$ 4.5 billion agreement to buy GE’s appliance business, another Chinese-state enterprise is looking for overseas trophy assets. ChemChina is set to spend US$ 43 billion to buy Swiss pesticide and seed company Syngenta which gives the company a share value of US$ 465.

Meanwhile Taiwan’s Foxconn has agreed to pay US$ 4.4 billion for Sharp. Latest figures show that the Japanese electronics maker recorded a US$ 978 million 9-month loss to December 2015.

Although Japan is showing signs of moderate recovery there are still concerns about the impact of a slowing global economy, resulting in flat output and worrying export figures. A US$ 27 billion stimulus package will be introduced this month but whether this has any long-term impact remains to be seen. Sluggish consumer demand and low oil prices mean that Japan’s inflation rate remains stubbornly low.

It seems that a recent EU tax ruling may result in some companies leaving Belgium. One of that country’s tax schemes has been declared illegal, resulting in several multinationals having to repay hundreds of million US$. The 10-year old excess profit scheme allowed certain corporations to reduce their tax base by between 50% – 90%.

The IMF has estimated that last year, the lower oil prices cost the MENA oil producers as much as US$ 340 billion in revenues, equivalent to 20% of their combined GDP. Its Managing Director, Christine Lagarde, seems keen to introduce a tax regime to help increase government revenues in these troubled times. For example, she reckons a single digit VAT could net the equivalent increase of 2% in GDP and seems keen to see the introduction of taxes on corporate and personal income as well as on property. Low oil prices will not last forever and the country has done much better without tax (and external meddling) in the past – let the IMF worry about real economic problems elsewhere and Leave Us Alone!

The RTA expects to make a surplus this year, from a 14.5% hike in revenue to US$ 2.04 billion, less total budgeted expenditure of US$ 1.92 billion. The authority has also reconfirmed that the much-vaunted Dubai Canal project will be completed by year-end.

Damac became the first big developer to purchase land at the site, acquiring 4 million sq ft for US$ 343 million. With more deals forthcoming, it proves that the government’s decision, to spend US$ 463 million to extend the waterway by 3 km to connect Business Bay with the sea, has been justified.

The latest property report – this time courtesy of KPMG – paints a glum picture on the 2016 state of Dubai realty. The sector will continue to suffer because of the many expounded reasons – a strong greenback, the slump in oil revenues, geopolitical regional turmoil and the slowing global economy. The Big 4 accounting firm sees a brighter future from 2017, as the hype around Expo 2020 starts to kick in. As indicated in previous blogs, many other firms see further declines this year but seem to be using unreliable and/or incorrect data to reach these conclusions.

The first Rove brand hotel, an Emaar concept, is currently being built, near to the Dubai Parks and Resorts in Jebel Ali. The 458-key property is part of the developer’s strategy, in association with Meraas Holding, to have 10 hotels operating by the time of Expo 2020.

An Alpen Capital report estimates that the UAE healthcare sector will grow by 12.7% per annum and will be worth US$ 19.5 billion by 2020. The country accounts for 26% of the total GCC spend of US$ 40.3 billion, with a per capita of US$ 1.6k.

Following the recent visit of HH Sheikh Mohammed Bin Zayed Al Nahyan, DP World announced a US$ 1 billion investment plan in India. The ports operator has six port concessions in the country, where it has already spent US$ 1.2 billion. Last month, the company signed a Russian US$ 2 billion deal to develop ports in that country.

Cargo traffic at Dubai World Central – ranked 18^th for international freight volumes – showed a 7.7% rise, to 889k tonnes, in 2015, despite a Q4 blip which registered a 10.0% decline to 229k tonnes. Not surprisingly, passenger numbers dropped over the year by 45.2% to 463k; this is mainly because of Dubai International’s runway maintenance work in July of that year which saw increased use being made of the second airport. Q4 passenger numbers were up 62.1% to 180k as a result of a partial shift of flydubai flights.

The Al Habtoor Group has purchased the Hotel Imperial in Vienna for US$ 79 million, bringing its international property portfolio to seven – the same number of hotels it has in Dubai. The seller, Starwood, will continue to manage the establishment that will see a complete renovation over the next four years.

It is reported that government-owned Nakheel is in initial bank negotiations for a US$ 1.4 billion 10-year loan to be used for future construction projects. The developer has a US$ 1.2 billion sukuk, maturing this August, and has sufficient funds to meet its obligation.

The government has resubmitted a bid for the newly named “Khor Dubai” (formerly Dubai Creek) to be recognised as a UNESCO World Heritage Site. The new name – translated to “The Traders’ Harbour” – highlights the waterway’s history in making Dubai an international trading hub.

Dubai International Financial Centre’s 2015 company registrations rose by 27.7% to 309, as the total work force was up 11.0% to 19.8k. The number of active registered firms is at 1.44k – an annual increase of 27.7%.

Emirates REIT returned an impressive 26.0% rise in 2015 profits to US$ 61 million, as its net assets grew 8.7% to US$ 470 million. The NASDAQ-listed Sharia compliant real estate investment trust also reported a hike in its investment properties to US$ 673 million.

Mainly because of a 4.1% year on year fall in transport costs, Dubai’s January inflation rate dipped to 1.9%, from 3.1% a month earlier. However, increases in education costs may see this sort of reversal short-lived.

It is the time of the year when school fee hikes are posted for the next academic year. The increases are based on the Education Cost Index (set by the Dubai Statistics Centre at 3.21%) and a school’s individual rating. This time, the KHDA (Knowledge and Human Development Authority) confirmed rises of 3.21% – for ‘acceptable’, ‘weak’ and ‘very weak’ schools – and 4.81%, 5.61% and 6.42% for ‘good’, ‘very good’ and ‘excellent’ schools respectively.

With the reporting season in full swing, both telecoms reported mixed results. Etisalat posted a 2.7% rise in Q4 profits to US$ 632 million, as its annual profit fell by 3.8% to US$ 2.25 billion. On the other hand, Du announced a 10.1% fall in Q4 profits to US$ 126 million, whilst its 2015 profit dropped 8.1% to US$ 529 million, as revenue was flat at US$ 3.36 billion.

Despite a 58.0% hike in revenue to US$ 10.9 million, Shuaa Capital saw a Q4 US$ 44 million loss, compared to a US$ 4 million deficit over the same period in 2014. Over the year, the finance company recorded a 21.0% hike in revenue to US$ 44 million but had a net loss of US$ 52 million, largely due to a US$ 42 million bad debt provision taken by Gulf Capital.

Troubled Gulf Navigation surprised the market with a doubling of 2015 profit to US$ 5.5 million, as revenues rose 12.0% to US$ 39 million. The improvement came about mainly due to increased revenues from its shipping services division and rising tanker rates. However the shipping company still carries US$ 168 million of current liabilities on its balance sheet.

Following a US$ 23 million loss in 2014, Amlak Finance, 45% owned by Emaar Properties, posted a US$ 38 million profit. This follows a restructuring in late 2014 which saw the company return to the DFM, after an absence of 6 years, when it suffered from the GFC and the sinking of Dubai property prices.

The Dubai-based retailer, Marka, reported a more than doubling of its losses in 2015 to US$ 9.4 million, of which US$ 4.1 million was attributable to an acquisition. Its revenue for the year reached US$ 62 million, whilst its assets were valued at US$ 289 million.

With 2015 revenue up 15.0%, the Dubai Holding Commercial Operations Group posted a 25.0% hike in net profit to US$ 1.59 billion. This Dubai Holding unit has Dubai Properties (which leases 15k residential units), Jumeirah and TECOM in its portfolio. The latter has seen the number of companies, operating in its business parks, increase by 11.0% last year to 5.1k, employing over 76k.

Drake & Scull announced a Q4 profit of US$ 4 million, with revenue jumping 27.2% to US$ 381 million. However, the annual 2015 loss came in at US$ 255 million (after a US$ 27 million profit the previous year), mainly because of substantial impairment costs in Q3.

Emirates REIT returned an impressive 26.0% rise in 2015 profits to US$ 61 million, as its net assets grew 8.7% to US$ 470 million. The NASDAQ-listed Sharia compliant real estate investment trust also reported a hike in its investment properties to US$ 673 million.

Brokers will be badly hit as the Securities and Commodities Authority’s moved to cut their commission from 0.15% to 0.125%. They are already reeling from Q4 data that sees trading volumes down 40% on the same period in 2014.

The bourse opened Sunday at 2981 and jumped 3.8% to 3093 by Thursday (18 February 2016). Bellwether stocks, Emaar Properties and Arabtec, were mixed – with the former up US$ 0.09 to US$ 1.55 and the latter dipping US$ 0.01 to US$ 0.29. Trading volumes on Thursday were well up on last week at 584 million shares, valued at US$ 170 million, changing hands, (cf 330 million shares for US$ 130 million, the previous Thursday).

This was a bad news and good news week; Brent crude regained all last week’s 12.5% losses and surged 14.0% to US$ 34.28. Conversely, the yellow metal lost a little of its lustre, dropping US$ 22 to US$ 1,226, by Thursday (18 February) close.

Four major oil exporters – KSA, Qatar, Russia and Venezuela – have agreed to cap production at January levels – only if other producers follow suit. Some hope! Meanwhile Bloomberg reports indicate that parts of the shale oil sector could be facing financial problems, with interest payments of U$ 9.8 billion due this year. It could be a precursor for a major banking crisis, if cash-strapped and highly geared fracking companies go under and asset sales come under pressure.

Anglo American, hit by tumbling commodity prices, has posted a US$ 5.5 billion annual loss – more than double the loss of 2014. Consequently, the mining giant is planning to divest itself of Kumba Iron Ore – the world’s 4th biggest iron ore operation – and some of its coalmines to claw back up to US$ 4 billion, to shore up its finances. Little wonder that Moody’s cut its credit rating to junk status.

Apple was one of several companies in the corporate bond market this week and is expected to raise US$ 12 billion, with the sale of 10 tranches of bonds.

Despite problems with their economy, Chinese firms are still splashing out big money for overseas acquisitions. The latest has HNA paying US$ 6.1 billion for Ingram Micro, a US distributor for Apple and Microsoft. On the flip side, US-based Uber estimates that it is losing US$ 1 billion a year in China, as it tries to make a profit in a fiercely competitive market.

India has not given up hope in collecting a US$ 2.1 billion tax bill from Vodaphone. The disagreement between the parties involves the telecom giant’s 2007 US$ 11 billion takeover of Hong Kong-based Hutchison Whampoa’s Indian division. It is claiming that as the transaction was conducted offshore, Indian tax was not applicable.

It is estimated that the UK’s Big 4 banks – Barclays, HSBC, Lloyds and RBS (73% owned by taxpayers) – will award 2015 bonuses totalling US$ 7.2 billion. HSBC fat cats will award themselves 50% of that total, followed by 24% for Barclays. The bonus payout is roughly the same as the four banks’ new provision for PPI mis-selling which seems to indicate that the banks’ executives continue with bad habits, without any pecuniary penalties.

After months of discussions, HSBC has decided to maintain its head office in London’s Canary Wharf. The previous government had introduced a banking levy, that badly hit the bank’s profits, prompting it to discuss moving to Hong Kong. But a change in government policy saw the levy changed to a surcharge which was a boon for the bank – but not so for banks with mainly British business.

Rolls Royce has cut its dividend for the first time in 23 years, as a result of dismal 2015 results, which has seen its share value dive by almost 40% in the past year. The company posted a profit before tax fall of 12.0% to US$ 2.0 billion and has consequently halved its dividend payment to US$ 0.103 per share. Its marine division, where profits have plummeted by 94%, has been badly hit by the depressed oil and gas sector.

In the UK, the “battle of the grocers” is on in earnest, with the German discount stores Aldi and Lidl now having a combined 10%+ market share – doubling their stake in the past three years. This should increase even further, as the former is expanding its store numbers by 16.7% to 7k by the end of the year; this will see an additional 5k to its current 28k workforce. To add to the impact overseas companies are having in the retail sector, Which? has just named Iceland the leading national online shopping supermarket, although the UK’s Waitrose maintains its position as the top in-store brand.

With a US$ 5.03 cash / 1 share bid, equivalent to US$ 6.44 billion, Qube Holdings outdid the Canadian infrastructure giant Brookfield to finally acquire Asciano, the Australian rail and ports operator. The winning Qube consortium comprises Canada Pension Plan Investment Board, China Investment Corporation and GIP.

After taking over as MD of the IMF from the disgraced Dominique Strauss-Kahn in 2011, Christine Lagarde has been nominated unchallenged for a second term.

Even after two years in power, PM Shinzo Abe’s attempts to kick start the Japanese economy have stalled, as Q4 saw a 0.4% contraction, with an annualised rate dip of 1.4%. Despite a massive QE programme and negative interest rates, his efforts have failed because of continuing weak domestic demand, disappointing investment, a stalling yen and a too-low inflation level.

Along with Japan, Greece has had poor economic news – now edging back into recession, following a Q4 contraction of 0.6%, on top of the 1.4% fall in the previous quarter. This week witnessed high-profile protests from farmers who disagree with proposed industry tax breaks being abolished – in line with the terms of their latest EU and IMF bailout conditions which also includes unpopular pension reforms. Troubles are again welling up in the Hellenic nation that has seen its bourse lose almost 30% in the first 7 weeks of trading this year – the worst global performer.

The OECD has cut its 2016 global growth rate to 3.0%, as trade, wage growth and investment weaken, despite monetary policies including QE and interest rate cuts. Major economies such as US, UK and Germany have had their forecasts cut to 2.0%, 2.1% and 1.3% respectively.

2015 Growth in the 19-bloc eurozone was up 1.5%, whilst the 28 countries in the EU recorded slightly better at 1.8%. Worryingly, December industrial production was down 1.0% – an indicator that more stimulus measures are required by the ECB, probably in the form of further QE.

To calm market fears, ECB chief Mario Draghi has played down any problems with the European banking system. His assertions – that banks were now better protected than ever from financial collapse, with improved “capital buffers” than was the case during the 2012 crisis – came after many banks had seen their market value fall almost 25% in the first weeks of 2016.

Trade figures in January reaffirmed that all is not well with the Chinese economy, with year on year falls for both exports, by 11.2% to US$ 177.5 billion, and imports down 18.8% to US$ 114.2 billion. The world’s second largest economy continues to suffer from weak demand – both domestically and globally – as rival countries becoming smarter and more competitive. The country is in the process of trying to transform to a more consumer-spending focus economy and is not being helped by massive capital outflows – in December totalling US$ 160 billion – as traders bet on a further weakening of the yuan.

Some more worrying news from China as its Banking Regulatory Commission announced that Q4 non-performing loans had jumped 7.0% to US$ 196 billion. Troubled loans, where there is a risk in future repayment but still considered ‘performing’, rose to US$ 648 billion, equal to 5.5% of total advances. When the country’s shadow banking, estimated at over US$ 6 trillion, also comes into play, it is becoming more of a case of Money’s Too Tight To Mention.

With HH The UAE President Sheikh Khalifa declaring 2016 as the year of reading, it is apt to see HH Sheikh Mohammed bin Rashid Al Maktoum announce a US$ 272 million library which will include 2 million e-books, 1.5 million traditional tomes and 1 million audio volumes. The seven-storey building, covering 1 million sq ft, will overlook Dubai Creek and open late next year.

SsangYong Engineering & Construction and Belhasa Six Construct will build the US$ 1.4 billion Royal Atlantis Resort at Palm Jumeirah. The Investment Corporation of Dubai owns the 46-storey building, housing a 780-key hotel and 232 serviced apartments. The Korean company – whose last Dubai project was the Grand Hyatt in 2003 – has had a chequered past and applied for court receivership to reschedule debts two years ago. Subsequently, the ICD reportedly bought a controlling stake in SsangYong for US$ 182 million.

SsangYong, along with China State Construction Engineering Corporation, was also awarded a US$ 281 million Nakheel contract to build the 3-tower Palm Gateway. The 2-year project will see 1.3k apartments being built above the existing Palm Monorail terminal – along with retail, dining and fitness facilities.

With three new properties, adding a further 900 keys to its portfolio, Damac’s growing hospitality sector will boast 2.35k rooms and 8 hotels by the end of this year. Damac Hotels and Resorts is planning to have 13k rooms under its operation within the next four years.

Last year, Kier had a JV with Al Shafar General Contracting to build 700 apartments on the Bluewaters Island. This week, developer Meraas awarded the UK builder another US$ 36 million contract for infrastructure work.

Meydan is planning to redevelop its former beach club site in JBR, replacing it with a 5-star, 260-key property. Work has already started and the project is expected to take three years.

As expected, Dubai hospitality continued with weakening returns in December, as occupancy levels dropped slightly to 80.2% and average room rates down 4.6% to US$ 316. All other indicators also headed south – total revenue per available room by 10.3% to US$ 434 and gross operating profit per available room by 14.3% to US$ 201.

Meydan Sobha has announced phase 3 of its US$ 10 billion Mohammed Bin Rashid Al Maktoum City – District One project, due for completion late next year; handover for the villas of the first two phases is later this year.

Nakheel’s new hospitality division has opened the first of 10 new hotels – the 251-key ibis Styles in the Dragon Mart area. The retail hub has over 4k shops, with foot traffic reaching 100k daily.

The company also posted a 19.0% increase in 2015 profit to US$ 1.2 billion. Although still focusing on its core business – development – the company has been branching out into other sectors, including hospitality, residential and retail. During the year, Nakheel handed over only 847 residential units – which may surprise those analysts who were predicting an over-supply for the Dubai real estate market.

In a similar vein, the same doom and gloom merchants will be shocked to hear that Danube Properties has already sold 85% in its Ritz project of 452 units, located in Al Furjan. Notwithstanding Danube, there are other developers entering the low to mid-end of the local housing sector, including the MAG Group (in Dubai South) and Omniyat (IMPZ), with the Sobha Group now considering this sector.

Apparel Group, with a 55-brand portfolio including Tim Horton’s, Tommy Hilfiger and Calvin Klein, plans to add a further 300 stores to bring its total of outlets to 1.8k by year end. The Dubai-based retailer is expected to spend US$ 120 million this year to meet these ambitious targets.

John Lewis, the UK fashion department store, is set to open next year in Dubai Festival City. The 15k sq ft outlet will be located within the recently announced Singapore’s Robinson’s brand department store.

MAF reported that 2015 revenue surged 8.0% to US$ 7.44 billion, with profit up 6.0% to US$ 1.04 billion. Its healthy balance sheet shows total assets at US$ 13.9 billion, with a net debt of US$ 2.5 billion.

Emaar Properties has formed a new Sharjah-based property company with Sharjah’s Investment and Development Authority (Shurooq) and Abu Dhabi’s Eagle Hills. Omran Properties will initially focus on real estate development including residential, retail and hospitality in the emirate. UK company Kier is also in discussions with Shurooq about establishing a JV construction firm in Sharjah.

It is reported that Adeptio, led by Mohammed Alabbar, has agreed to buy a 69% stake in Kuwait Food Co (Americana), via its purchase of Al Khair holding company. There has been no news on financial data but according to Thomson Reuters, the Kuwaiti-owned company, which has the KFC and Pizza Hut franchises, is valued at US$ 2.5 billion.

The locally based e-commerce site, Mumzworld, established in 2009, has received a financial boost of “millions of dollars” from a consortium of investors, including Endeavour Capital, twofour54 and Wamda Capital. The money will be used for expansion in the regional market, with an emphasis on Saudi Arabia. (According to Payfort, the fast expanding regional e-commerce market will be worth over US$ 13 billion by 2020).

Following recent redundancies in the local international banking sector – including HSBC (150 staff) and Standard Chartered – it is reported that Barclays will release 150 Dubai staff and close its Emaar Square office.

It was no surprise to find that Dubai International has retained its position as the leading global international hub, with a 10.7% hike in passenger numbers to 78 million. In relation to passenger numbers, the ME carriers surpassed the rest of the world – with traffic growth of 10.5%, compared to the global average of 6.5%. Over the same period, aircraft movements were up 14.1% to 403.5k. (Although still the best performing region in the world, ME air freight dipped in December, growing by only 4%, but for the year was up 11.3% compared to the global average of 2.2%).

Emirates is still the most valuable global airline brand with a 17% jump in its value to US$ 7.7 billion – a figure that has almost doubled over the past 6 years. It is ranked 171^st in the world’s top brands listing from the latest Brand Finance Global 500 report.

As part of the increased ME investment in the European hospitality sector, which has seen a US$ 5.22 billion spend over the past two years, the Al Habtoor Group has now six international hotels, having just acquired the 361-key Hilton Hotel Wembley in London. No financial details were made available but the Chairman, Khalaf Ahmad Al Habtoor, indicated, last December, that the Group had put aside US$ 545 million for 2016 overseas investments.

DEWA’s strategy is to see that 75% of Dubai’s energy is clean (solar, natural gas, nuclear and clean coal) by 2050, with 7% by 2020 and 25% by 2030. To help meet this target, the authority is planning a US$ 27.2 billion clean energy fund, partly to finance low cost loans to potential investors, and has now called for tenders from interested parties for advisory and regulatory development services.

Another indicator that the economic environment is not all doom and gloom was that the Department of Economic Development in Dubai recorded a 17.4% rise in the total number of licences (to 22.7k) issued last year. Furthermore, the number of renewed licences rose 7.8% to 102.8k.

The Australian Tax Office is reportedly chasing Dubai residents, Pankaj Oswal and his wife Radhika for an unpaid US$ 132 million tax bill. A six-day Perth court case has involved alleged fraud claims surrounding the now infamous “Taj on the Swan” in the state’s upmarket Peppermint Grove.

Dubai Police have failed to sell a rare 2002 Enzo Ferrari, impounded in 2012, because of an on-going Interpol enquiry which indicates that the vehicle may have been stolen property (or bought with stolen assets). A US buyer had bid US$ 1.6 million before the enforced removal.

Although Aramex reported a 36% fall in Q4 profits, it still has 2016 plans to purchase three more international firms, following its January US$ 81 million acquisition of New Zealand’s Fastway Couriers.

The recent sluggish real estate performance has hit Union Properties’ 2015 profit with a 49.8% fall to US$ 118 million. Revenues dipped by 29.5% to US$ 398 million, with total assets dropping 2.4% to US$ 2.2 billion. The company is in bank discussions to borrow US$ 202 million for project funding purposes.

Dubai Investments, 11.5% owned by the ICD, posted a 2.7% hike in 2015 profits to US$ 97 million, with its total asset base expanding a further 6.9% to US$ 4.2 billion. The company is expected to move into the burgeoning education and healthcare sectors, as well as targeting Saudi for further growth potential.

With impairment charges up 51% to US$ 116 million, Commercial Bank of Dubai recorded an 11.3% fall in 2015 net profit to US$ 290 million. Operating income was 5.0% higher at US$ 640 million but expenses surged 13.8% to US$ 234 million, as total assets rose sharply by 23.4% to US$ 15.8 billion. (Local banks, in line with their international peers, will have to closely monitor their loans, as impairment charges are reaching a critical high level – this could have a massive negative impact on the world economy).

DFM posted a massive 65.6% fall in 2015 profit to US$ 71 million, as a result of weak trading volumes for most of the year. Revenue was 51.9% off at US$ 123 million, with trading value 60.3% down at US$ 41.2 billion.

The DFM had shed 15.0% in the first 18 days of January but gradually recovered to close the opening month of 2016 only 4.9% down at 2998. The bourse opened Sunday at 2857 and continued its recovery – up by 11.1% – to 3058 by Thursday (04 February 2016). Both bellwether stocks, Emaar Properties and Arabtec, were again in positive territory, up US$ 0.20 to US$ 1.47 and US$ 0.01 to US$ 0.32 respectively. Trading volumes on Thursday were slightly down on last week at 458 million shares, valued at US$ 165 million, changing hands, (cf 474 million shares for US$ 131 million, the previous Thursday).

The month of January witnessed erratic trading in both oil and gold with Brent crude down 1.4% to US$ 35.90 and the yellow metal stronger, Both commodities strengthened this week – Brent crude up 17.8% to US$ 34.36 and gold by US$ 60 to US$ 1,158, by Thursday (04 February) close.

Having set a 30 million barrels a day production quota early last December, the end of January sees OPEC pumping a record 33.1 million bpd. Indonesia, currently with 815k barrels, re-joined the cartel on 01 January after a 7-year hiatus, whilst Nigeria increased production by 109k bpd to 2.03 million.

BP came in with its biggest annual loss last year – US$6.5 billion – as low oil prices continue. Consequently, the company will slash a further 7k jobs (equivalent to 9% of its workforce) over the next two years, as it targets cost cutting measures totalling US$ 3.5 billion. Other companies are reporting similar results – Chevron returned its first quarterly loss in 13 years and Shell did not fare much better with Q4 profit down 45.5% to US$ 1.8 billion and annual profit sinking 80.0% to US$ 3.8 billion – its biggest fall since 2002. Unsurprisingly, the energy sector will slash 2016 spending to its lowest level in six years at US$ 522 billion, down 12.3% on 2015.

Not to be outdone by the energy companies, the world’s biggest steel company, ArcelorMittal, announced a US$ 7.9 billion 2015 loss – compared to a US$ 1.9 billion deficit in 2014. Although sales fell 20% to US$ 63.6 billion, over half the loss was attributable to a write down in its mining operations.

With its 2015 profit up 4.3% to US$ 4.9 billion, Google’s parent company, Alphabet surpassed Apple to become the most valuable listed company in the world, with a market value of US$ 568 billion. It was over five years ago that Apple surpassed another tech giant, Microsoft to become the world’s number 1.

Rolls Royce has been handed a lifeline with a recent US$ 2.7 billion order from Norwegian. The struggling UK company, whose market value has fallen by a third in the past 12 months, will manufacture and service Trent 1000 engines for 17 of the Nordic airline’s Dreamliners. The order could be extended if Norwegian take up the option for a further 10 planes.

With its Chairman, Subrata Roy, currently languishing in jail, the Sahara Group has reported debts of US$ 5.9 billion, including monies owing to 30 million investors. The Indian conglomerate is hoping to raise US$ 488 million if it can sell Grosvenor House Hotel in London’s Mayfair which it bought for US$ 677 million five years ago. Other assets under the hammer could include Mumbai’s Sahara Star hotel, 4 aircraft and its 42% share in F1 team, Force India.

A major Ponzi scheme, involving US$ 7.6 billion and 900k defrauded investors, has been broken in China. Police have arrested 21 employees of Ezubao – a peer-to-peer lender and the country’s largest online finance business which only commenced business in July 2014.

With Brookfield Infrastructure Partners still awaiting approval from the Australian Competition and Consumer Commission, another local company has entered the race to take over the ports and rail operator, Asciano. Qube is leading a consortium, including a Chinese SWF and the Canada Pension Plan Investment Board, in a US$ 6.3 billion counter bid for the logistics company, of which it already owns 19.99%.

Following a loss over the same period last year, Sony reported a 9-month profit of US$ 1.95 billion. The Japanese company’s growth in its PlayStation 4 video game consoles (with sales of over 30 million units since its November 2013 launch) and the recent popularity of the James Bond movie, Spectre, were the main drivers behind the recovery.

Both Rio Tinto and BHP have seen their share prices slide over the past year by 40% and 50% respectively. Standard & Poor’s have reservations about the two major Australian players in the mining sector, resulting from falling global commodity prices. Both companies have been placed on negative watch with BHP – the world’s biggest miner – having its rating cut a notch from A+ to A; Rio Tinto’s rating remained at A-.

A weak Ozzie dollar, sluggish global growth and recent turmoil in the financial markets are the main drivers behind consumer confidence dropping as the ANZ-Roy Morgan consumer confidence index fell 4.4% in January. Partly because of the index’s first negative start to a New Year since 2008, the RBA left rates on hold on Tuesday.

The Australian inflation rate, up 0.4% to 2.3%, is now within the government’s targeted band of 2.0% – 3.0%. A weaker currency is slowly resulting in higher imported costs and this is being closely monitored by the RBA, whilst there were the expected rises in communication, education and health expenses. On the flip side, falling oil prices have seen continuing falls in petrol prices.

Swiss prosecutors believe that up to US$ 4 billion may have been pillaged from the 1MDB fund, as they investigate the Malaysian account’s reported US$ 11 billion debt. The Swiss allegedly suspect “corruption of public foreign officials, dishonest management of public interests and money laundering”. PM Najib Razak launched 1MDB in 2009 and is also chair of its advisory board.

According to the January Purchasing Managers’ Index of 49.4, (its lowest level since 2012), China’s manufacturing sector continues to contract – an indicator that the New Year still sees the economy struggling. It also shows that all the monetary and fiscal stimulus measures, introduced last year, have not had the expected positive impact, whilst the country will struggle to meet its 2016 lower growth target of 6.5%.

The EPL reported record transfer fees this season of over US$ 1.5 billion, of which 83.3% came in the summer transfer window. Manchester City’s purchases of Kevin De Bruyne from Wolfsburg (US$ 79 million) and Raheem Sterling from Liverpool (US$ 71 million) were the two biggest deals of the season. Starting in August, for the next three seasons, TV rights have rocketed, with Sky paying 83% more at over US$ 6 billion and BT US$ 1.4 billion. Among the highest paid players in Europe are Ronaldo, Messi, Bale and Rooney whose annual earnings are US$ 81.3 million, US$ 75.4 million, US$ 35.8 million and US$ 27.5 million respectively. With that sort of money floating about, football is indeed The Name Of The Game!

According to the 2016 RERA (Real Estate Regulatory Authority) official index, apartment rents have fallen by between 4.5% -11.0% in some areas such as Business Bay (11.0%), International City and JLT (both – 10.0%), Downtown and Palm Jumeirah  (both – 5.5%) and Discovery Gardens (5.9%). In most other locations, rentals have remained flat.

For the second straight month, Dubai property values remained flat according to the ValuStrat Price Index, registering 97.9 (compared to a January 2014 base of 100). The report indicated 4.5% and 5.6% yields for villas and apartments respectively.

HSBC became the first major bank to lift mortgage rates, in the UAE, by 0.25%, in line with the recent US Fed hike. Other financial institutions are expected to follow suit in the coming weeks, with rates as high as 7.0% likely. This seems a little out of kilter with the current EIBOR which ranges between 0.20% (overnight) to 1.52% (1 year).

The start of the New Year has seen the first tenants move into the US$ 300 million Sustainable City. The Diamond Developers’ project has a community farm and currently two operational biodome greenhouses – with a further nine by April – for home-grown produce for exclusive use of the residents. The 5 million sq ft development will house five clusters of residences, each with a communal area, playground and a central wind-tower.

Saudi-based Abdul Rahman Saad Al-Rashid & Sons is launching Mada Residences in Downtown – its first foray in the Dubai real estate sector. The project will contain 193 apartments but no other details – including cost and completion date – were made available.

AccorHotels will open its 3^rd hotel within the Dubai World Trade Centre area. The 588-key ibis One Central will almost double the number of rooms that the operator manages in that location.

SRG Holding, a Dubai-based developer has paid US$ 200 million to Blackstone, for High Holborn Estate in London. It is reported that this could be four times the amount the US private equity firm paid for the 9-property office building in 2012 but it has since seen extensive refurbishment. The Abdul Salam Al Rafi Group also has a Dubai property portfolio including the Sheraton Grand, Chelsea Tower, Du Tower, Burj Al Salam and the Marquis Square development in Business Bay.

Dutco has landed the contract to restore fire-hit The Address Downtown to its former glory. No timetable has been released but it is expected that it will be speedily carried out.

Dubai Shopping Festival started on 01 January, with one of its major supporters, Damac Properties, yet again announcing attractive deals. The real estate developer is offering latest model BMWs or Lamborghinis to buyers of selected properties during the one-month event.

Krzysztof Kotala is still keen to build an underwater tennis stadium off Dubai’s coast. He has indicated that the project, now in its final stage, involves seven arenas, with a carbon-glass glazed dome. The Polish architect is in talks with US investors.

Dubai Duty Free recorded a marginal US$ 16 million increase in 2015 revenue to US$ 1.93 billion with average daily sales transactions of 73.6k. Perfume (US$ 310 million), liquor (US$ 291 million), cigarettes (US$ 161 million), confectionary (US$ 152 million) and gold (US$ 150 million) accounted for 55.2% of all sales.

DEWA’s 2016 budget sees a spend of US$ 6.4 billion, with US$ 2.4 billion being for capex – a 3.4% increase on last year. Power and transmission will account for 39.2% of the total (US$ 931 million), followed by generation (US$ 806 million). The authority will also utilise PPPs (public private partnerships) to help finance other projects as it moves to ensure that by 2050, 75% of Dubai’s energy will be “clean”.

The latest Emirates NBD PMI’s reading of 53.3 indicates that the country’s non-oil private sector is growing at its slowest rate since September 2012. More worryingly is that although any figure over 50 shows expansion, the latest is well down on the 59.3 recorded 12 months ago. Most indicators headed south pointing to lower demand – both domestic and external.

For some time, DFM volumes have been wafer thin – down 60.3% year on year to an average daily value of US$ 164 million – so it is little wonder that the current 49 brokerages are feeling the pinch. It is inevitable that brokers will be forced to close and / or consolidate. Nothing exciting will happen in this bourse until liquidity returns to the market, which has not materialised, as when expected because of its 2014 MSCI upgrade to emerging market status.

The DFM opened Sunday at 3151 and closed the week on Thursday (07 January 2016), taking a 5.9% tumble to 2966. Both bellwether stocks, Emaar Properties and Arabtec, were in negative territory down US$ 0.15 to US$ 1.40 and US$ 0.03 to US$ 0.31 respectively. Trading volumes on Thursday were up on last week at 317 million shares, valued at US$ 106 million, changing hands, (cf 182 million shares for US$ 74 million, the previous Thursday).

The first week of the New Year was a disaster for oil, as with Brent crude sank 9.3% (US$ 2.65) to US$ 33.75 whilst gold surged US$ 48 to US$ 1,108 by Thursday (07 January) close. Latest research from Deutsche Bank indicates that the UAE breakeven price is US$ 65 per barrel – almost half the current price. Put another way – if the country is pumping 2.9 millions barrels a day it will have an annual shortfall of US$ 38.1 billion (2.9 million * 365 * US$ 31.25).

The financial markets started the year in spectacular fashion with China’s CS1300 share index falling 7% in its first session before trade was suspended for the day. Two factors caused the problem – disappointing factory activity and the early prospect of the share sales ban being lifted some five months after its imposition on listed companies’ major shareholders.

There are reports that two of France’s four telecoms operators – Orange and Bouygues – are in merger talks. If the deal, valued at US$ 10.7 billion, were to go ahead, the new entity would control almost half the national market.

Another potential takeover would see Sainsbury’s take control of Home Retail Group (owners of Argos and Homebase). A November bid was rejected so that the group, which has 16.7% share of the UK grocery market, has until next month to return with a better offer. Coincidentally, Sainsbury’s co-founded Homebase but sold it in 2000 for US$ 1.4 billion.

Following years of losses, the Netherlands’ largest department store chain has declared itself insolvent. With 67 stores, Vroom & Dreesman employs 10k staff and could partially be saved, if restructuring is successful. The current owners, Sun Capital, a US private equity firm, bought the flagging business in 2010. (The country is the 18^th largest global economy, with growth slowing from its current 2.1% level whilst its unemployment is on the high side at 6.8%).

The US retail giant, Macy’s, is struggling to keep up with technology changes in the sector, as it reported a difficult holiday season. For the year, the company expects same store sales to drop by 2.9% so as to maintain profit margins it has to look at drastic cost cutting measures. In Q1, 4.7% (or 36) of its outlets will close, there will be 600 back office staff made redundant and its St Loud call centre will close; all in all, this will cost an extra US$ 200 million in one-off costs.

Hyundai / Kia reported a 2.3% fall in forecast 2015 vehicle sales at 8 million units – the first time the group has missed its annual target since the GFC. There is no doubt that the South Korean carmaker is suffering from intense competition, a Chinese slowdown and very weak sales in countries such as Brazil and Russia. Meanwhile, whilst car sales in the US headed north. (UAE is expecting to show a drop in 2015 numbers).

UK car sales are expected to reach the record level of 2.63 million – up 6.0% on 2014 (and could have been higher if not for declines in VW sales in Q4).  The sector benefitted from low interest rates, a strong £ v euro and strengthening consumer confidence.

VW expects 2015 sales of 5.8 million units – its first annual fall since 2004. Meanwhile it is reported that the company may have to buy back 115k vehicles (or 20% of its diesel vehicles affected) because of the emission scandal. This is petty cash compared to Monday’s announcement that the US Justice Department would be suing the German carmaker for US$ 48 billion for allegedly violating US environmental laws.

A huge financial scandal is brewing in India as a property investment company is accused of defrauding 55 million investors of US$ 6.8 billion. The founder of PACL Ltd, Nirmal Singh Bhangoo, claimed that he was selling land but has allegedly been running an illegal investment scheme.

Jermyn Street Real Estate Fund, a group of international investors including from the UAE, has spent US$ 434 million to buy Astir Palace, a luxury seaside resort, from Greece’s privatisation agency. 75% of the total is expected to go to the National Bank, which owns 85% of the resort, with the balance to the agency.

Despite a target of US$ 54.2 billion to raise from government asset sales, to date only US$ 3.8 billion has landed in government coffers. Meanwhile the country will continue to face a difficult year, as it needs to introduce unpopular economic measures; these include pension and tax reforms, so as to meet the requirements of its US$ 93.4 billion bailout funds from the troika, the IMF, EC and the ECB.

Turkey reported that its 2015 trade deficit contracted by 25.5% to US$ 63.1 billion – as exports fell 10.1% to US$ 11.7 billion and imports were down 14.5% to US$ 207.1 billion.

Germany’s December unemployment rate remained at a record low of 6.3%, indicating that the economy is on the right track for growth in 2016 – and this despite the recent influx of an estimated 1.1 million migrants. With this record employment and annual inflation at its lowest ever level, it appears that the main growth driver will be private consumption because of increased consumer purchasing power.

Prior to this week’s economic meltdown, the World Bank had cut its 2016 global growth forecast from 3.3% to 2.9%, in the wake of weak data from emerging countries. With the exception of India (which also has its problems), the BRICS are all slowing down simultaneously which could have a negative impact on other global economies.

Markets do not like uncertainty and volatility and this week saw an abundance of both. The first four days of 2016 trading have witnessed:

• US$ 2.5 trillion being wiped off the value of global stock markets
• S&P having its worst ever opening in history
• the FTSE losing US$ 2.5 trillion by Thursday’s close
• Brent crude dropping to its lowest level since June 2004
• China actively moving to weaken its currency, with the Yuan now at 6.565 to the US$, dipping to an 6-year low, as weak economic data becomes its norm
• on-going regional problems
• North Korea’s claims to have tested a hydrogen bomb
• increasing tensions and a diplomatic impasse between OPEC’s dominant partner, Saudi Arabia, and fellow cartel member Iran

I Wasn’t Expecting That!