Rolling In The Deep

Posted on October 20, 2014 by howesdubai

lego-manThis week, Emaar’s directors approved a special cash dividend of US$ 2.46 billion, following a US$ 2.2 billion pay-out earlier in the year
As at 16 October, the developer’s market capitalisation was US$ 19.3 billion, down some US$ 3.0 billion this week.

Emaar Properties is also planning to sell a Downtown commercial plot, measuring 506k sq ft. It is expected to raise at least US$ 83 million – based on a rate of US$ 163 per sq ft – and the winning developer will be allowed to build up to 30 storeys.

Nakheel seems to have upset some residents by raising application fees for those wishing to add extensions to their property. For example, it is reported that fees in Jumeirah Village have risen from US$ 40.9 to US$ 103.5 per sq ft. Meanwhile the cost to Emaar residents is US$ 545.0 per application.

Dubai is set to become Lego’s 7th global theme park location when it opens in 2016. Based in Jebel Ali, and encompassing three million sq ft, it will be operated by Merlin and developed by a Meraas subsidiary – Dubai Parks & Resorts Limited. It will have 40 interactive rides, with six distinct areas inside the park.

There was good news for Shuaa Capital with a 628% increase in profit for the first nine months of the year to US$ 7.1 million.

As expected, a group led by Fajr Capital has taken a significant minority stake in Dubai-based GEMS Education for an undisclosed sum – although there were some reports valuing the company in the region of US$ 2.5 billion. The educational operator runs more than 50 schools, in 19 countries, but under the new arrangement, GEMS will have two entities – one focussed on the MENA region and Asia and the other in Europe and N America.

Flydubai becomes the latest government related entity to look at raising additional finance through a bond issue, whilst favourable market conditions still continue. Funds raised would be used for general operating expenses and for new aircraft.

The UAE cabinet has approved a 6.3% increase in the 2014 federal budget to US$ 13.4 billion. Further analysis indicates that US$ 6.5 billion has been allocated to social sectors – health, education and social services – and US$ 5.4 billion on government expenditures. Lesser allocations see US$ 534 million on infrastructure, US$ 436 million on financial assets and US$ 272 million to federal spending.

Q3 saw Dubai’s inflation rate jump to 3.07% – three times higher than the same period last year. The main reasons for this rise were housing-related costs, which accounts for 43.7% of the basket, and food / beverage (11.0%) both up 5.11% and 3.15% respectively, whilst education saw a 4.31% hike. (The IMF had forecast a 2.2% UAE inflation rate for this year).

Following the success of the Emaar Malls Group recent IPO, next week will see Amanat going to the market, floating 55% of the company. The UAE-based healthcare and education provider will be selling shares at US$ 0.27 but is unlikely to be as oversubscribed as Emaar’s US$ 1.58 billion flotation that attracted over US$ 47 billion. (Some entity must have benefited from this temporary cash inflow).

As part of its restructuring plan, the much-troubled Gulf Navigation has managed to convert US$ 60 million bonds into share capital. The company saw its shares fall, at the close of this week’s trading on the DFM, to US$ 0.11.

With the UAE retail sector growing at an 8% annual rate and valued at over US$ 102 billion, of which US$ 10 billion originates from apparel and footwear, the newly listed Marka plans to open four new fashion outlets over the next twelve months. As a “greenfield” IPO, the company had no assets or real business when it commenced trading last month but has a current share value of US$ 0.32 – up US$ 0.05 on its issue price.

There was blood on the floor of the local bourse as the DFM saw 673 points wiped off as the index fell 13.6% from its Sunday opening of 4943 to its Thursday close of 4270. This week, Emaar and Arabtec shares sank from US$ 3.12 to US$ 2.70 and from US$ 1.23 to US$ 0.98 respectively.

Bank of America is the latest financial institution to report a massive fall in Q3 profits from US$ 2.5 billion to US$ 168 million on revenue of US$ 21.4 billion. This was the result of a multi-billion dollar mortgage-related settlement with the US authorities. To rub salt into their wounds, banking rivals, JP Morgan and Citigroup, announced profits of US$ 5.6 billion and US$ 3.4 billion.

Following a marked slowdown, the German government has once again cut its 2014 growth forecast from 1.8% to 1.2%, as well as for next year from 2.0% to 1.3%. Much of the blame for this turnaround is attributed to falling exports and the worrying eurozone and international economic environments.

Falling oil prices are now giving serious concerns with the International Energy Agency announcing higher output and reduced demand growth. On Thursday, Brent Crude was trading at US$ 85. It is inevitable that prices will fall even further under this scenario as Opec September production was its highest in the past year – so there is no indication that the organisation, that produces 35% of the world’s crude, is cutting back on supply. It is also estimated that oil demand growth is at its slowest rate since 2009. A fall in oil demand is a good barometer that the global economy is slowing.

Six years since the last recession, the eurozone is caught out on two fronts. First, it has not fully recovered from the battering it took then and it has not learnt too many lessons from its earlier mistakes. High unemployment, sluggish growth and too much bureaucracy continue unabated in most of the bloc. Furthermore it seems that the likes of the French and Italians do not understand the meaning of the word “austerity” and would prefer the easier option of borrowing and spending their way out of their troubles. It seems certain that for the next few years, the eurozone will be beset by stagnation with little or very subdued growth.

The US and the UK introduced QE policies – something that seems an anathema to Mario Draghi and the European Central Bank. As a result, it is a fair bet that it will soon slump back into another recession and a triple dip recession will be a contagion around the world, including here in Dubai. Then we have other issues – IS, Ukraine, ebola and a Chinese slowdown – that do nothing for confidence and little wonder that the markets are Rolling In The Deep…

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A Bad Moon Rising

Posted on October 18, 2014 by howesdubai

full-moonNakheel reported a 46.9% surge in profits to US$ 708 million for the first nine months of 2014. This improvement was aided by a handover of 950 properties and a strong performance from its retail sector.  Although it has paid its bank debt earlier than planned, the company still has to face major debt issues but it does seem to be heading in the right direction.

According to latest H1 data from Dubai Land Department, GCC nationals invested US$ 5.2 billion in Dubai realty. Local law (Act no 7 – 2008) dictates that only such nationals can own property in non-freehold locations which was again highlighted by a case in the Cassation Court. A Pakistani had signed an agreement with an Emirati friend who consented to hold the registration for a block of land in his name. Unfortunately, the local died and there was a dispute with the heirs relating to the ownership. Despite having acknowledgment from the deceased, the court found that any contract contrary to the current law was void.

Knight Frank’s Q2 report claims that Dubai annual rents (at 14.1%) had the fastest growth rate in the world. However the Q2 figures, with a 2.0% increase, (compared to Q1’s 6.0%) indicated that the steam had been taken out of the market.

The importance of Eid Al Adha for the local economy was brought home by government figures indicating a 12% hike (to US$ 7.7 billion) in foreign trade in Eid-related products, such as cosmetics and clothing. Imports accounted for US$ 5.7 billion of the total with exports and reexports of US$ 300 million and US$ 1.7 billion respectively. Both the retail and hospitality sectors benefitted from an influx of over 600k visitors over this important holiday period.

There is no doubt Healthcare City is fast becoming another Dubai success story as there has been a 20%+ rise in H1 patient numbers to 600k whilst there now over 4.1k  licensed healthcare professionals. More significantly, the number of overseas patients has jumped to 90k – another indicator that health tourism is becoming a valuable revenue driver for the emirate’s coffers.

Surprisingly, the UAE accounts for 6.3% of the global exports of copper cable, with a value of US$ 1.325 billion. Russia is the biggest exporter at US$ 2.94 billion followed by Germany, Belgium and the US with UAE coming in fifth place. With Ducab a major player, the local industry has a trade surplus of US$ 923 million, with imports at US$ 397 million.

MA Yussufali’s Lulu Group has spent US$ 82 million in buying 10% of the UK-based East India Company and 40% of its fine foods subsidiary. The company has four outlets in the UK and three in the Middle East and is planning to expand in the US and Europe.

Abraaj Capital has bought a majority stake in South Africa’s Liberty Star Consumer Holdings for an undisclosed amount. With over 4.2k employees, Libstar is a personal care product and food manufacturer with plans to expand into other sub-Saharan African countries. With over US$ 7.5 billion of assets under management, the Dubai-based private equity firm has been recently active in consumer businesses in the region, including Egypt, Saudi Arabia and Turkey.

Dubai-based Global Student Accommodation, together with the Creedon Group, are planning to develop a 2.5 acre Dublin site at a cost of US$ 52 million to accommodate 400 students in the Irish capital. This will be phase 1 of a US$ 316 million investment plan and will expand GSA’s operations which currently run in the UK, Japan, China and Australia.

Following the region’s biggest ever bond issue (at US$ 4.3 billion) in Q2, it is reported that Etisalat is again going to test the market with a planned US$ 500 million bond issue.

Having fallen 0.2% the previous week to 5042 points, the Dubai bourse opened the shortened week on Tuesday. Over the ensuing three days’ trading, it closed 2.0% down, on Thursday, at 4943.  So far this year, the market has jumped 46.7% from its 01 January opening of 3370. Bellwether stocks, Emaar and Arabtec closed on US$ 3.12 and US$ 1.23 respectively. With the global stock markets heading south, it seems plausible that the local bourse will follow suit next week.

Following GlaxoSmithKline’s recent US$ 489 million fine for corruption charges in China, it seems that the British company and another drugs company are investigating bribery allegations – this time in this region. GSK is looking at claims of corrupt behaviour in the UAE, as well as Lebanon, Syria and Iraq. Sanofi has notified the US authorities that it had been made aware, by a whistleblower, of improper payments in connection with the sale of pharmaceutical products in unnamed countries in the ME.

China’s services sector continues to decline with its non-manufacturing PMI dropping from 54.4 to 54.0, with a marked decline in the realty sector which dropped to levels last seen in 2008.

All is not well in the eurozone as its stock markets had a bleak week with fears deepening for the global economy. The IMF once again cut back on its previous growth estimates as the ebola epidemic joined the Ukraine crisis and IS to become a major drag, pulling the single currency bloc closer to recession. Official data indicates that Germany recorded its biggest fall in exports (down 5.8% in August) and industrial production (down 4.0%) since 2009 with growth half of that of the UK – now the fastest growing economy of the G20 countries. If this is happening to the powerhouse of the eurozone, the future is going to be messy for the bloc and the outlook for the euro is indeed gloomy.

The IMF has also lowered its growth forecasts for the Mena region down from its 3.2% estimate in April to 2.6% this year and from 4.5% to 3.8% in 2015. Over the same time period, Iraq’s 6.7% forecast has been slashed to a negative 1.5% because of the current geo-political turmoil. However, the world body actually upped expected growth in the UAE for this year and 2015. However, there has to be a caveat – if the oil price were to fall even further there would be an inevitable negative impact on growth forecasts and a major cutback in its fiscal surplus.

Although part of Dubai will soon become an island, in economic reality it will always be affected by external factors beyond its control.  As global demand weakens, the Brent crude oil price dipped below US$ 90 – its lowest level in four years – on Thursday.  If this continues to fall, then this could result in problems for the country’s exchequer as analysts indicate breakeven estimates of between US$ 70 – US$ 85. If the world’s economy continues to stagnate, this will have a knock-on effect on the country’s fiscal surplus as well as on Dubai’s trade, tourism and travel industries.

As stock markets around the world tumble and the outlook for the global economy deteriorates, October could once again prove to be a portent for economic malaise. The Wall St stock market crash occurred in October 1929, signalling the start of the Great Depression and Black Monday in October 1987 saw the Dow Jones lose 22.61% in one day. There are now real fears that October again could see A Bad Moon Rising.

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You Can’t Get Me I’m Part Of The Union

Posted on October 10, 2014 by howesdubai

aus-portTwo events have reaffirmed the buoyancy and confidence in Dubai’s resurgence: last week’s Cityscape unveiling of 27 projects, totalling US$ 10.9 billion, and Emaar Malls Group’s recent successful IPO. With the institutional side of the sale being 30 times oversubscribed and retail 20 times, it is no surprise that the share price was set at US$ 0.79 – the high end of expectations, valuing the new entity at US$ 10.3 billion. The 2 billion shares on offer equated to 15.4% of the market valuation of the company.

Following this success, it looks increasingly likely that Emaar’s hospitality division will be the next in line for a listing on the Dubai bourse.

Emaar announced that it had sold 72 units in The Address Residence Sky View project with prices of over US$ 1,090 per sq ft. On completion, the 50 storey, 230 mt twin tower building will house 532 luxury apartments and a 180-room business hotel.

R Hotels has been awarded the management of a new 192-bedroom hotel in Jumeirah – their fifth in Dubai. The Ajman-based hospitality company expects to welcome its first guests in Q2 2015.

Teyban is now open for interested parties wanting to buy into their JBR development, Sparkle Towers – one with 29 floors and the other 14. The luxury resort style towers will house a myriad of Swarovski crystal ornaments and will target the top end of the market.

Nakheel have awarded their US$ 41 million Palm Jumeirah Boardwalk project – including two 100 mt piers – to Overseas AST Company. Construction of the 11 km long, and 6 mt wide, piers will start in Q4 and be completed by mid-2016.

It is expected that over the next six years, heading into Expo 2020, Dubai will build a further 60k hotel rooms, of which over half will be in the mid-price range. The plan for the emirate is to increase the inventory to 150k to meet the expected demand then. To encourage development in this segment, Dubai Municipality have waived certain fees for developing such buildings.

Over the same six year period, the emirate is planning to spend US$ 8.2 billion on infrastructure projects, including a 15 km extension to the Metro’s Red Line.

A deal has been struck between Dubai World and its biggest creditors relating to an extension of its repayment timetable on its huge US$ 25 billion debt.

Target & Jima Construction Co has won a US$ 33 million contract, from Nakheel,for phase 2 infrastructure work in Al Furjan. The Dubai-based contractor will install 16 km of new roads and prepare almost 500 new villa plots, ready for building.

Six months after announcing a US$ 40 billion deal to build one million houses for the Egyptian army, Arabtec has announced that it has nearly completed the planning and design stage. The first phase is due to be finalised within three years and the whole project slated for completion by 2020. Arabtec has reiterated that it will be able to raise the required finance.

The Knowledge and Human Development Authority (KHDA) has forecast that there will be a 47.0% increase, to 250, in the number of private schools in Dubai over the next six years, as student numbers expand from an estimated 243k to almost 400k.

Depa has won two new contracts, totalling US$ 39 million. The troubled Dubai-based fit out company won tenders for work on the 412-room Novotel World Trade Centre and the 345-key Emerald Palace Kempinski Hotel, Palm Jumeirah.

The Chinese Real Estate Development has announced that it will start work on The Royal Gardens project, located in MBR City – District 11. The development – the first in the emirate by a Chinese company – will include 878 villas and townhouses. It is expected that completion will be well before the 2020 Expo.

Dubai Development Co, partly government owned, along with the Al Mulla and Al Owais families, may well be sold. Formed in 1975, and listed on the DFM, the shareholders have agreed to consider any offers for the company since there are no further projects on hand.

According to Forbes, Micky Jagtiani, head of the Landmark Group, is the richest Dubai-based Indian, with an estimated US$ 5.2 billion to his name. The next two on the ranking were Lulu’s Yusuffali MA (US$ 2.3 billion) and GEMS Sunny Varkey (US$ 1.8 billion).

Another sign of the rude health of the local bourses was the announcement by Amanat Holdings that it will be looking at a listing on the DFM. The healthcare and education group is planning to divest 55% of the company by selling 1,375 billion US$ 0.27 shares to raise US$ 375 million. The current 37 investors have already paid for their 45% of the new listed company.

Having fallen 0.9% the previous week, the Dubai bourse opened Sunday on 5054 points to close 0.23% down on Thursday, at 5042.  So far this year, the market has jumped 49.6% from its 01 January opening of 3370. Bellwether stocks, Emaar and Arabtec closed on US$ 3.04 and US$ 1.22 respectively. In Q3, the market recovered from its 22.1% Q2 loss to jump 28.0% from 3943 to 5049. Emaar Malls Group had its first day trading on Thursday and rose from its opening price of US$ 0.79 to close 12.1% up on US$ 0.89.

The noose is tightening around the necks of six international banks as the UK regulator is set to levy record fines for their alleged rigging of the forex market, which turns over an estimated US$ 5.3 trillion daily. UBS, RBS, HSBC, Barclays, Citigroup and JP Morgan Chase hope to coordinate a settlement with the FCA by the end of the year. Any such settlement – that could reach US$ 3 billion – does not preclude possible criminal charges on individuals.

The IMF issued a stark warning that the large net foreign liabilities of some nations make them more susceptible, in times of economic turmoil. The debt of some countries has not stopped expanding, even after the GFC, and that the global imbalance could be a recipe for economic disaster.  For example, Spain and Italy have seen their net foreign liabilities, to annual output, jump from 70% to 103% and 24% to 36% respectively.

Finance Minister, Michel Sapin confirmed that, yet again, France will be unable to reduce its budget deficit to below 3% of GDP – the EU’s threshold – until 2017. The country is beset by a myriad of problems including almost non-existent growth, high unemployment and a reluctance to curb public spending, by at least US$ 63 billion.

Europe may have won the Ryder Cup this week, but it is the US that is leading the economic race as it is well on the growth trail when compared to the other side of The Pond, where the eurozone is heading to a potentially damaging recession. Whilst the US was not afraid to increase public spending, there seems to be a regional reluctance for the eurozone bloc to do likewise. As it slides deeper into an economic mire and worrying deflation, the economic outlook has been further hit by the marked slowdown in China and the two major CLOBAL geo-political issues – Ukraine and IS.

Africa, the world’s second most populous continent, was on Dubai’s radar this week as HH Sheikh Mohammed bin Rashid Al Maktoum sat in on the Africa Global Business Forum held in the emirate. The city is a natural link between Africa and Asia and Dubai government entities have not been slow to forge relationships. DP World intimated that it may develop a port in Senegal. Meanwhile Emirates signed a 10-year agreement with TAAG Angola Airlines to provide management support and supply other related services. Having recently spent US$ 300 million for a 1.4% holding in the Nigerian conglomerate, Dangote Cement, Investment Corporation of Dubai is looking at further business opportunities with the group.

It is estimated by Dubai Chamber of Commerce that Gulf companies and development agencies have invested over US$ 30 billion in infrastructure since 2004, of which 65% was targeted for North Africa.

Ireland has been accused, by no less than the European Commission, of giving illegal government aid to Apple which employs 4k in that country. With an already low corporation tax rate of 12.5%, it seems that because of nefarious accounting practices, the American giant pays an effective 2% rate. People are becoming fed up with such companies flaunting a system that allows them, for example, to declare their UK revenue at US$160 million (despite having 37 stores) and pay 11% tax. No wonder it pays dividends for entities to report high profits in a low tax jurisdiction and low profits in a high tax authority. The fact that the USA  could be losing upwards of US$ 90 billion a year because of transfer pricing, or advance pricing arrangements, may result in some drastic action being taken by governments around the world.

It seems that DP World and the Maritime Union of Australia have differing views, resulting in work stoppages at Sydney and Melbourne, with a possibility of extending to other ports. Both parties have been in discussions since January but still cannot agree on a new enterprise bargaining arrangement, as well as a 4% pay rise. It remains to be seen what happens and whether, in Australia, it is true That You Can’t Get Me I’m Part Of The Union.

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Oh What A Circus!

Posted on September 30, 2014 by howesdubai

cityscape-dubai

The circus came to town this week in the shape of the 13th Global Cityscape – 25% bigger than last year (using 31k sq mt of hall space) and the largest since the hedonistic days of 2008. With 280 exhibitors and attendance well up, numerous new developments were launched.

The largest was La Mer – Meraas Holding’s four-zone mixed-use development of a 9.5 million sq ft in Jumeirah. The four areas – the beach, a leisure and entertainment hub, North Island, and South Island – will include 699 apartments and villas, hospitality (a 160-room hotel) dining, leisure and  two marinas. Although the project will use reclaimed land, there is no doubt that public beaches will be affected.

Nakheel’s offering of the week was The Palm Gateway, comprising 1,300 waterfront apartments in three tower blocks, the tallest of which will reach 260 metres. With its own private beach club and park for its tenants, the towers will be constructed on the existing Palm Monorail Gateway terminal.

Another was the announcement involving Tecom’s Dubai Design District (d3) – covering 21 million sq ft, with a 1.8 km water frontage. Phase 1 of the project will start in Q1 2015 and will include residential, dining and retail outlets along with several hotels (adding 4k rooms) and art galleries – all with the aim of making the area the artistic centre of Dubai. It is expected that up to 4k designers will use d3 as their base.

Indigo confirmed that its US$ 408 million Dubai Golf City project will start early next year which will comprise 346 villas, numerous parks and, in keeping with its Zen theme, several meditation areas. Completion date is expected in Q1 2017.

With Donald Trump in town, it came as no surprise to see Damac  announce another golf course project, in liaison with the American property tycoon. The Trump World Golf Club will be located in the 55 million sq ft development – Akoya Oxygen (Dubailand). The first golfers will be teeing off by the end of 2017.

Damac also announced their fourth Paramount-related hotel which – with 1,250 rooms – will be the third largest in the emirate after Atlantis and JW Marriot Marquis. The Dubai-based developer is not concerned about diluting the brand, with all four hotels being released around the same time, and is confident of selling all the hotel rooms.

As part of Salim Ahmed Al Moosa’s Falcon City development, the planned 20-storey glass structure – Taaj Arabia – will be open by 2017. The 350-room, 5-star hotel, to be managed by Leela Palaces, Hotels and Resorts, will be modelled on the original Taj Mahal.

Some may say not before time as Union Properties announce the building of three new hotels in MotorCity. In addition, the once-troubled developer is also planning a leisure and entertainment area which would replace a proposed F1 theme park that was officially scrapped last year. It also came up with three other projects –  a US$ 300 million 5-tower block in Motor City – The Vertex, US$ 177 million on Phase 3 of Green Community DIP and US$ 109 million on phases 2 and 3 of Green Community Motor City.

Dubai Wharf is yet another new development announced by Dubai Properties, a division of Dubai Holdings. The US$ 218 million project will be based near the Creek in the middle of Culture Village. Its central feature will be a canal promenade.  The developer is also planning to open a 270-room luxury waterfront hotel in early 2018, to be operated by Anantara Hotel Resorts and Spa.

The company announced their latest Downtown project – Maram Residence – two 27-storey towers with apartment prices for a one-bedroom unit costing US$ 463 million. The development will have a 19th floor viewing bridge along with the usual retails, and leisure accessories.

Dubai Municipality’s plans, for its US$ 9.5 billion smart Desert Rose city, are gaining pace with news that phase 1 of the project will be tendered next year. The new satellite city, approved by the government in May, will be flower-shaped and will be located near Al Lusail desert on a 14k hectare site. The infrastructure design work is currently being carried out.

As part of phase 2 of the US$ 5.7 billion Mohammed bin Rashid City, Meydan is planning to construct 1.5k 4-bedroom villas, specifically for use by Emirates deck crew. A further 700 villas will be built for sale in the area known as District Eleven which will include Kent College Canterbury – a private 2k pupil school, specialising in equestrian training.

Where else in the world would you expect to find the Perfect City as Dubai launches the first global property-related metropolis which will incorporate all facilities associated with the realty sector. These will include all government-related offices (including the Land Department, and RERA), court, university, brokers, agents and even a museum. It will have 75% green space, a 500-metre canal and will be 100% sustainable. (The pace of expansion in this sector can be seen from the fact that Rera have already registered 567 new brokerages so far this year).

One project that will not get built in Dubai is the locally based Invest Group Overseas confirming that it would be involved in a US$ 700 million mixed use development in the Texan town of Frisco.

A growing trend in the Dubai hospitality sector is the increase in hotel apartments which provide 28.1% of the total 88.7k room inventory. Guests tend to stay in serviced apartments on average 5.3 days – twice as long as traditional hotel guests – and pay US$ 118 per night, 31% less for their room. More and more of the bigger players, both local and international, are beginning to move in on this burgeoning sector of the market. It is estimated that 38% of properties are individually owned with the balance almost evenly split between local brands, such as Jumeirah Living and Golden Sands, and international.

Good news for Dubai tenants is that after ten successive quarters of growth, the rental market dropped by 1% in Q2. According to a recent CBRE report, rents in areas such as Media Production Zone fell by 3% whilst The Greens and Dubai Marina remained flat. This comes at the same time that property sales have begun to stabilise.

Although a recent report indicated that the current cost of living in Dubai is still 16% lower then it was in 2008, Savills has Dubai as the 9th most expensive city in the world.

July and August had 2,525 property transactions, totalling US$ 1.41 billion – down 22.5% on the same period in 2013.  The latest CBRE study indicated that The Palm Jumeirah, Emirates Living and Dubai Marina were the main locations, by value, accounting for 58.9%, 18.8% and 17.0% of the total value.

Drake & Scull have been awarded a US$ 129 million contract by Gulf Related for a residential compound in Riyadh.

After a summer slowdown, not helped by the 80-day runway upgrade, business returned to normal at Dubai International which reported a 10.8% rise in passenger numbers to 6.6 million, bringing the YTD total to almost 44 million – a 5.7% rise over the same 2013 period. Monthly cargo returns of 192k tonnes were up 4.3%.

The Executive Director of the RTA, Mattar Al Tayer, has been attending InnoTrans 2014 in Berlin. He told the conference on how fast the Dubai transport system has grown, with a further 35 projects coming on stream, including extending the Red Line, acquiring a further 39 trains, expanding the bus network, with 18 new districts, and introducing the initial 10 km tram system, by the end of the year. Over the past eight years, the Agency has invested US$ 20 billion upgrading the emirate’s transport infrastructure including 75 km of Metro track, 47 stations, expanded the road network by 43.9% to 12,545 lane km and refurbished the bus and taxi fleets along with the marine transit. Accordingly the number of persons using the public transport system has risen almost fourfold to 446 million over the period.

Having already invested US$ 5.4 billion in space science and technology, the newly established UAE Space Agency has been discussing the progress to date of their Mars probe project, The unit is confident that  the UAE will become the first Arabic nation to explore the Red Planet, within an estimated 7-year target.

Last year, Dubal and Emal merged to become Emirates Global Aluminium, valued at over US$ 15 billion. Now the 5th largest global aluminium company plans a further US$ 3 billion expansion to build a refinery, ready for operations within three years.

An increasing number of GREs (government related entities) is making use of the more favourable financial climate as borrowing costs fall. Dubai Duty Free has just renegotiated their July 2012 US$ 1.75 billion loan for the second time. This – along with another US$ 750 million facility – now carries improved terms of 1.5% above Eibor (for the dirham balance) and 1.75% above Libor for the dollar part.Following the success of this week’s heavily over-subscribed Emaar Malls partial IPO, Nakheel is reportedly looking at going sown the same road. The government-owned developer is considering various avenues to raise much needed funds, with an IPO one of the options available.

Dubai-based Ithmar Capital, founded in 2005 and managing over US$ 800 million in equity capital, is planning the listing of US$ 436 million to raise funds to then make private investments, mainly in the healthcare and education sectors. If all goes well, the listing could take place next month with a Dubai bourse listing. DIFC Investments is reportedly preparing to raise US$ 700 million by way of a sukuk to finance further investment in the DIFC and to refinance a current loan balance of US$ 650 million.

It is reported that Habtoor Group may be planning a US$ 2.5 billion IPO, two years after pulling out of a similar move due to the then economic climate. The current favourable financial conditions may see the conglomerate offer up to 30% of designated businesses within the group.

It seems that Citigroup is bucking the trend as it plans to expand operations in the UAE. just as other large financial institutions, including Barclays, HSBC and Standard Chartered, are cutting back. This comes at a time when the New York-based bank has closed retail operations in Greece, Pakistan, Romania and Turkey to concentrate on more lucrative markets.

After 23 years as governor of the UAE Central Bank, Sultan Nasser Al Suweidi is stepping down to be replaced by Mubarak Rashid Khamis Al Mansouri. The federal decree saw other changes to the Board.

HH Sheikh Mohammed bin Rashid Al Maktoum has approved a secondary financial market so that private companies can trade shares. The exciting new development will allow designated private companies the opportunity to test the share market and offer a further option for such entities to raise finance. Earlier in the year, the US NASDAQ introduced a similar exchange.

According to S&P, an extra US$ 700 million could flow into the local bourses as the result of attaining official emerging market status. It has joined 24 other countries.  The UAE has been given a 1% weighting and the money inflow will result from passive investors replicating this weighting of the market.  Major economies are listed as emerging markets, and these include the BRIC countries, Mexico and the Philippines. Not surprisingly the likes of China (24%) and Brazil (11.3%) have a larger weighting than the UAE.

Having risen 3.0% the previous week, the Dubai bourse opened on Sunday on 5098 points – and after a relatively quiet week closed 0.86% down on Thursday, at 5054.  So far this year, the market has jumped 50.0% from its 01 January opening of 3370. Bellwether stocks, Emaar and Arabtec closed on US$ 3.22 and US$ 1.25 respectively.

An indicator that some of the recent measures – introduced by the ECB to reinvigorate the sluggish eurozone economy – are not working is the fact that there is little appetite for the cheap bank loans on offer. Of the US$ 510 billion made available, only US$ 105 billion has been used despite an interest rate of 0.15% to the participating banks. More proactive measures are required to save the sluggish economy from nose-diving into a potential depression, as inflation drops to 0.3%, unemployment levels remain stubbornly high and manufacturing output has stalled.

GlaxoSmithKline, was fined a record US$ 480 million by a Chinese court for bribing medical personnel and hospital officials. The UK pharmaceutical giant accepted the verdict and admitted that illegal activities had taken place.

Jack Ma, the founder of Alibaba, was a happy man this week as the Chinese e-market company saw its IPO share price surge from its US$ 68.0 listing to US$ 92.70, making it the second biggest entity on the FTSE 100, behind Royal Dutch Shell. The flotation on the NYSE raised almost US$ 25 billion, making it the largest in US history. Yahoo invested US$ 1 billion in the company in 2005 and could be in for a windfall of US$ 10 billion if it decides to lower its stake.

Tesco has had a worrying twelve months as sales (and profits) have tumbled and now to make matters even worse, it has been found to have overstated H1 profit by US$ 405 million. On the news breaking, the UK grocery chain saw its value lose US$ 3.5 billion as the share price shed 11.6% to US$ 3.29.  The board, senior management and auditors face major questions on what went wrong.

Another organisation that is has been beset by alleged wrong-doings is FIFA – but, in this case, it seems business as usual as nobody will be held responsible. The international body commissioned high profile US lawyer, Michael Garcia, to look at the controversial bidding process involved in the 2018 Russian and 2022 Qatar World Cups. Now, having received a 350-page report, the opaque and sinister sports body seems to have decided not to publicly release the findings and have intimated that it will only be made available to two members of their inner cabal. Oh What A Circus!

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Both Sides The Tweed

Posted on September 20, 2014 by howesdubai

scottish-flagIt has been yet another busy week for HH Sheikh Mohammed bin Rashid Al Maktoum as he has reviewed and given his seal of approval to several projects, the largest of which was a for Royal Atlantis Resort on Palm Jumeirah. The new facility, with a cost of US$ 1.5 billion, will comprise 800 rooms and 250 hotel apartments and will be managed by Kerzner International Resorts – a company 46% owned by Investment Corporation of Dubai –  who already manage the 100% government-owned Atlantis The Palm.

The Dubai ruler was also briefed on the progress of the US$ 2.1 billion Dubai waterfront development. Phase 1, of three phases, will be completed by 2016 and have an area of around 820k sq mt.

ICD also published details of the One Zabeel project, located adjacent to Zabeel Park. At a cost of US$ 681 million, the development will include two towers, linked by a suspended bridge, that will house 550 apartments, two hotels and 130 hotel apartments.

Seven Tides have released twelve penthouse apartments, costing from US$ 5.6 million to US$ 10.9 million, at its prized Anantara Residence on Palm Jumeirah. These are part of two residential tower blocks which form Anantara Dubai Palm Jumeirah, Resort & Spa.

With prices starting at US$ 600k, Sun and Sand Developers will build 40 3-bedroom duplexes in Dubai Silicon Oasis. Construction will start shortly, with a 2016 completion date.

According to a study by Ventures ME, Dubai’s retail sector is set for a massive 33% expansion by the end of next year. The emirate is undoubtedly the regional leader in this segment and has more global brands than any other city in the world, barring London. Things can only get better as the number of new shopping experiences are expanded, including the US$ 6.8 billion Mall of the World.

Costing US$ 500 million, the RTA is planning two new roads – the first is in Zabeel and the other is the Al Ittihad bridge, replacing the current floating bridge which will be moved to moved further up the creek.

Following a disastrous July, the Dubai hospitality sector returned to some form of normalcy. Although supply increased by 8.6%, it was more than compensated by a 10.9% hike in demand. August saw occupancy up by 2.1% to 75.1%, compared to a year earlier. On the flip side however, both RevPAR (revenue per available room) and ADR (average daily rate) declined by 3.7%, to US$ 139.58 and 5.7% to US$ 185.89. With tourist numbers up in H1 to record levels of 5.8 million, it was expected that revenue would head north, which it did, ending the half year up 10.9% to US$ 3.47 billion.

As a prelude to next week’s Cityscape Global, Omniyat will showcase two new towers at the three day event. The first tower – costing US$ 245 million – will be located in Business Bay and will house 274 apartments in its 25 storeys. The other building in Dubai Maritime City, although bigger with 48 storeys, will only have 225 apartments and cost US$ 163 million.

Dubai Parks & Resorts has confirmed that 30% of the infrastructure on its massive US$ 2.72 billion leisure project has been completed. The Meraas Holding-owned company’s first phase will comprise three theme parks – Bollywood, Legoland and Motiongate – and cover an area of 25 million sq ft.

Jebel Ali Free Zone reported a 44.4% jump in H1 profits to US$ 122 million, compared to the same period in 2013,  along with a 9.3 hike in revenue to US$ 224 million. JAFZA’s performance was helped by lower finance costs  as it transferred its conference centre for US$ 300 million to its parent, Dubai World. The end result was that  its debt had fallen by 6.8% to US$ 1.26 billion and cash balance increased by 26.6% to US$ 275 million.

Although most reports show a softening in the local realty sector, a recent Knights Frank study indicates that for the fifth successive quarter Dubai’s growth – 24% annualised – is the highest in the world. However, Q2 saw only a 3.9% rise whilst H1 returns showed a 7.4% climb indicating that some of the steam has been taken out of the market and it will not attain the dizzying 2013 heights, that saw prices up by 35%.

The Al Futtaim Group has finally secured its first major African investment by currently owning 91.6% of Kenyan car dealer, CMC Holdings Ltd. Strangely, it does not hold any agency agreements with manufacturers that Al Futtaim represent in the UAE but does have major brands including VW, Ford, Suzuki and Eicher.

A new report puts Dubai as one of the hotspots for the world’s rich to purchase their second home with an estimated 8.2k multi-millionaires buying in the emirate. Dubai rose to fifth in the global ranking with London, New York and Hong Kong filling the top three positions.

In the UBS Billionaire Census 2014, Dubai has moved up to 8th in the world with 34 nationals with New York (103), Moscow (85) and Hong Kong (82) taking the top three rankings in a global list of 2,325 individuals.

To enhance its growing stature as a sector hub, the government has established a maritime arbitration centre which will settle marine trade disputes in the region.

DEWA announced record power generation in Q2 of a massive 10.692 GWh – 9.8% up on the same period in 2013. Despite a current production capacity of 9,565 MW, and a recorded requirement peak of 7,233 MW, the fact is that too much power is being consumed in Dubai. A 2013 report by World Resources Institute indicated that the country used 481 tonnes of oil equivalent for every US$ 1 million of GDP, compared to say Japan where the equivalent figure is 154 tonnes – 68% less!

A recent Hong Kong government US$ 1 billion 5-year sukuk was nearly five times oversubscribed, with the issue being listed on Nasdaq Dubai.

Meanwhile the DFM will see its first new share listing in five years as Marka, a retail group, goes public next week. (On Wednesday, the company’s chairman, Jamal Al Hai, announced that it had become the exclusive franchise operator for Cristiano Ronaldo’s CR7 footwear). Another indicator that investment confidence is buoyant is the fact that Dubai-based Ithmar Capital managed to sell 7.3% of its shares in Al Noor Hospital,  at US$ 16.73 per share, in a US$ 142 million deal.

Although not yet finalised, Emaar’s IPO of part of its Malls unit is expected to raise US$ 1.58 billion. Emaar announced that it had sold all the available allocated shares to institutional investors on Sunday which represents 60% of the 2 billion shares on offer for its Malls Group IPO. The offer closes next Wednesday, 24 September, for retail investors who have been allocated one share for every 36 held in the parent company. Some analysts consider the US$ 0.68 – US$ 0.79 offer price on the high side but only time will tell.

Having fallen 3.1% the previous week, the Dubai bourse opened on Sunday at 4961 points – and recouped most of that loss, by closing on Thursday, 2.98% up at 5098.  So far this year, the market has jumped 51.3% from its 01 January opening of 3370. Bellwether stocks, Emaar and Arabtec closed on US$ 3.16 and US$ 1.31 respectively.

It seems that the on-going Arabtec soap opera may be drawing to a close with news that the former CEO, Hasan Ismaik, who currently owns 27.90% of the company’s shares, is planning to sell half his stake to Aabar Investments who are the second largest shareholder with 18.94%.

In the US, the Federal Reserve confirmed that their quantitive easing program, which this time last year was pumping in a monthly amount of US$ 75 billion, will end in October. A decline in the energy price was the main driver in a fall in US consumer prices as the annual CPI levelled out to 1.7%. There is no apparent appetite among Fed members to tinker with interest rates which have now remained near zero for almost six years.

Oil prices have seen a decline with Brent Crude trading on Thursday at US$ 98.50 – down nearly 13% over the past three months, as inventory levels rise sharply. There are many reasons for this decline, including the role of speculators, but probably the most interesting fact is the position of the USA which now uses some 18.6 million bpd. It was not long ago that the country consumed 25% of the world’s output and imported 75% of its requirements. In 2005, the US imported 12 million barrels per day – today this figure is 7.5 million bpd – and this despite increased demand. In addition, the country exports 3.5 million bpd (1.1 million bpd – 2005). At this rate, the country will become a net exporter of crude which will have a significant impact on the global oil market, especially in this region.

The OECD (Organisation for Economic Cooperation and Development) joined the clamour for more positive action from the ECB coming out with a gloomy eurozone outlook and slashing its growth forecast for this year and 2015 to 0.8% and 1.2% respectively – from their May estimate of 1.2% and 1.7%. There is no doubt that if more aggressive measures are not taken soon to boost domestic demand, employment and economic growth, the bloc will be mired in a deflationary cycle and a major recession. Maybe this Friday’s G20 meeting in Brisbane may act as a catalyst.

It seems certain that Scotland will not get the independence that  Alex Salmond’s SNP dearly craved for. Outside of Scotland, most observers were for the “nae” vote, mainly for economic reasons and also all the niggly administration problems that would arise if the Scots got their independence. It is ironic that the two persons – Gordon Brown and Alistair Darling – headlining the push against independence were the same UK Labour leaders, who nearly turned the union into a banana republic with their mishandling of the nation’s finances. If the Scots get more devolutionary power, belatedly promised by the panic stricken CCM (Cameron, Clegg and Miliband) then there will be some form of satisfaction Both Sides The Tweed.

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Under African Skies

Posted on September 16, 2014 by howesdubai

african-skylineHH Sheikh Mohammed bin Rashid Al Maktoum has approved a massive US$ 32.7 billion expansion plan for Dubai World Central which, on completion of phase 1, will accommodate 120 million passengers. The facility will cover an area of 56 sq km.

Meraas Holding has announced details of its massive theme park project including Bollywood Park, Legoland and Motiongate, along with the Lapita hotel and Riverpark.  The whole project is expected to cost US$ 2.7 billion, with work commencing early next year. It will be managed by Dubai Parks & Resorts, a new subsidiary of Meraas, which is currently negotiating a US$ 4 billion loan facility to finance this and other ventures. Hill International has been awarded a two-year US$ 51 million consultancy contract.

Dubai Holding Commercial Operations Group – which includes Jumeirah, Tecom and Dubai Properties Group – reported a H1 net profit of US$ 572 million on revenue of US$ 1.53 billion. The 2013 annual return had 12 month profit at US$ 900k on revenue of US$ 3.16 billion.

Dubai Holding is going ahead with plans to build the world’s largest shopping complex, Mall of the World, expected to cost in excess of US$ 6.8 billion. Initially slated for the area around Dubai Police College, the 48 million sq ft climate-controlled facility will be located in Mohammed bin Rashid City. Apart from a shopping mall, covering 8 million sq ft, it will have a glass-domed theme park and 20k hotel rooms.

Dubai Holding Commercial Operations Group – which includes Jumeirah, Tecom and Dubai Properties Group – reported a H1 net profit of US$ 572 million on revenue of US$ 1.53 billion. The 2013 annual return had 12 month profit at US$ 900k on revenue of US$ 3.16 billion.

Dubai World is in the throes of restructuring its US$ 25 billion debt facility by extending the loan tenure by a further four years to 2022. To sweeten the deal, the company is prepared to offer DP World shares as collateral, a higher interest rate and an early repayment of the first instalment due next year. Although agreement has been reached with the creditor committee of banks, other lenders have still to be swayed with more than two-thirds having to agree before the original scheme of arrangement can be amended. In essence, the company would agree to pay the May 2015 US$ 4.4 billion tranche earlier but have the US$ 10.3 billion deferred until 2022.

Initially launched in 2006, Limitless is looking for developers to help kick start its US$ 19.1 billion Downtown Jebel Ali – a proposed 200 hectare residential/commercial development, between JAFZA and Techno Park. This week, the company awarded a US$ 5.3 million contract to Dar Al Handash to supervise and review infrastructure, with an aim to attract further development. To date, only the infrastructure in the first of four phases and four of the proposed eight towers in The Galleries have been built so the project has a long way to go before it will house an estimated 70k residents and 235k workers in 237 buildings.

Park Investments, a new UAE-based real estate investments company in UAE is launching its first Dubai project. Park Villas will comprise 93 4-bedroom villas, with a launch price of US$ 790k, and be located in Jumeirah Village Circle.

This Saturday will see yet another Emaar launch – this time for 280 one to three bedroom luxury apartments. BLVD Heights is located in Downtown and sales will take place concurrently in Dubai, Abu Dhabi, Hong Kong, Shanghai and Singapore.

Wasl Hospitality is already building the emirate’s first Mandarin Oriental, owned by Dubai Real Estate Corporation. Located on Jumeirah Beach Road, the 200-room property should be ready for business in 2017.

It seems that Jumeirah’s new hotel brand, VENU, will have its first home on the upcoming Bluewaters Island, off JBR. The island, expected to cost in excess of US$ 1.6 billion, will be developed by Meraas Holding. 

Abu Dhabi-based, Deyaar Development, is developing a US$ 123 million sharia-compliant hotel in Barsha. The company is also set to build a hotel apartment tower in DuBiotech with 180 units.

Time Hotels is planning to build a 277-room 5-star hotel in Dubai Health Care City. Awtad Investments will finance the US$ 55 million facility which should be opened within two years.

Mulk Holdings is to spend US$ 68 million building two 75-bed hospitals, one of which will be located in Dubai. The UAE-based company has recently opened a 14k sq ft diagnostic centre in Jumeirah – the largest of its kind in the ME, with plans for a further ten units in the MENA region.

Drake & Scull International announced their success in a US$ 30 million tender to design a district cooling plant in Qatar.

The latest Lloyds List sees Jebel Ali Port maintain its position in the top ten global container ports. Singapore and Pusan are the only other non-Chinese ports to make the listing.

Emirates NBD successfully launched a US$ 500 million Tier 1 6.375% bond this week which was nearly three times over-subscribed.

It seems strange that HSBC has reportedly closed many of its local SME accounts and at the same time announcing its second US$ 272 million tranche of payments to that category of customer. The money will be made available to businesses with a turnover in excess of US$ 8.2 million.

Emaar’s long awaited IPO of its shopping malls will open next Wednesday, 14 September,  will close on 24 September for retail investors and two days later for institutional buyers and will be listed on the DFM on 02 October. The plan is to sell at least 1.95 billion shares – but no less than 15% of the share capital – with the new share capital being valued at US$ 3.54 billion. The actual share price range will be divulged next week. Current Emaar’s shareholders are in line for a dividend pay-out of US$ 2.45 billion with 59% emanating from the IPO and the balance from a previously declared dividend. (There are reports that Emirates NBD customers will be able to buy the new shares via the bank’s ATMs – this would be a world first).

Having climbed 3.9% the previous week, the Dubai bourse opened on Sunday at 5121 points – and closed the week 3.1% down at 4961. So far this year, the market has jumped 47.2% from its 01 January opening of 3370. Bellwether stocks, Emaar and Arabtec closed on US$ 3.00 and US$ 1.21 respectively.

US August employment data proved disappointing with only an additional 142k jobs coming on-line – well down on the recent monthly average of 212k. Although  hourly earnings were up 2.1%, the number of employees looking to work longer hours has risen quite sharply – a sure indicator that the labour market continues to be sluggish.

Troubled Australian carrier, Qantas has announced that it will cancel five flights in the coming weeks, due to poor demand, with the slack being inevitably taken up by Emirates. It is estimated that Emirates now accounts for 60% of the UAE-Oz traffic with Etihad (20%) and the “Flying Kangaroo” trailing a distant third, with 17%.

It is not only the national airline that is causing concern in Australia but also the fact that their recent mining boom is well and truly over which sees a dramatic downturn in investment in the sector. For the only country in the western world not to experience a recession over the past twenty years, the party is well and truly over. Although off its dizzying heights of 1.05 to a US$ 1, the currency is still seen to be overvalued at 0.92 and there are continuing fears of a housing bubble. The outlook is not helped by the marked downturn in not only the Chinese economy but with their other trading partners.

France and Italy still dominate the eurozone news with the former announcing that the country will not meet the union’s budget deficit target of 3.0% of GDP until 2017; over the next two years, the forecast is for 4.4% and 4.3%. At the same time, growth levels have been revised downwards from 0.7% to 0.4% this year and 1.7% to 1.0% in 2015.

Meanwhile, the continent’s third largest economy is struggling with Matteo Renzi, already predicting zero growth this year as the county is mired in its third recession in the past ten years. The prime minister is keen to cut the bureaucratic red tape and corruption but this will take time, so his chances of boosting some level of growth and reducing the unemployment lines appear bleak.

Robert Mugabe has ruled Zimbabwe since 1980 during which time its GDP has dropped on average 1.2% per annum and life expectancy has fallen by three years. In H1, the country was the recipient of only US$ 67 million in direct foreign investment – down on the US$ 167 million received in the same period last year. Also exports fell by 13% in H1, not helped by falling commodity prices.

With the likes of Mugabe ruining a country, Ebola killing a growing number of people in western Africa, on-going civil wars in Southern Sudan and CAR, wars against militants / rebels in DRC, Mali, Nigeria, Somalia and Sudan, high corruption levels in a majority of the continent’s 54 countries, unemployment levels of 20%+ and 450 million people living in extreme poverty, life can indeed  be tough Under African Skies.

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Time After Time

Posted on September 10, 2014 by howesdubai

dubai-festival-cityNakheel is going ahead with another Palm Jumeirah project for 130 apartments. Costing US$ 20.4 million, the 12-storey tower will be built by Trojan General Contracting and should be ready within two years. The Dubai-based developer has also opened its first ever retail mall in Jumeirah Park – The Pavilion – a 10.6k sq mt shopping and entertainment complex. This is the forerunner of four more similar entities to be located in Al Furjan, Badrah, International City and Jumeirah Islands.

Dubai Sports City will be the home of yet another shopping mall, slated to be the same size as the massive Mall of the Emirates. The Arena Mall, covering 1.4 million sq ft of leasable area, will have a 140k sq ft anchor hypermarket as well as the usual attractions – food courts, children’s play areas, Cineplex etc.

Following in the steps of Mall of the Emirates, BurJuman, Ibn Batuta and Wafi, Dubai Festival City has become the latest mall to announce expansion plans. Its second phase will see an enlarged Creekside festival square.

A JV between Omniyat and Drake & Scull, that is developing a residential project on Palm Jumeirah, has enlisted Super Potato to help with the design. The Japanese firm is famous for its distinctive work seen at Zuma London, Grand Hyatt Singapore and Ritz Carlton Pudong.

A new entrant to the Dubai hospitality sector is Suba. Based in India, it has opened a 92-room 4-star hotel, located in Deira, and plans three more over the next two years.

It was interesting to note that latest Rera (Real Estates Regulatory Agency) data shows that rents in certain areas of the emirate are falling. For example, studio rents in Discovery Gardens and International City have dropped by 10.0% and 12.5% whilst in other locations, such as JLT and Silicon Oasis, they have remained flat.

As part of the US$ 817 million master plan for Rashid Hospital, its Trauma and Emergency Centre extension will see an additional 160 beds, at a cost of US$ 43.9 million, and be ready by June 2015. The main hospital will be completely rebuilt and have three 7-storey tower blocks, each housing 300 beds.

HH Sheikh Mohammed bin Rashid’s company, Meraas Holding, is reportedly in discussions to raise US$ 4 billion to finance a number of upcoming projects, including an island off JBR and a JV with Six Flags Entertainment Corporation for a theme park complex.

Tecom Investments, part of Dubai Holding, is apparently in the market for a US$ 1.1 billion loan facility. The company – which operates eleven business parks in the emirate – will use the funds for expansion purposes and “other strategic objectives”.

It seems that GEMS Education is in negotiations with a New York private equity firm, Blackstone  Group LP, about the latter’s first foray into the ME market, in liaison with Fajr Capital. There is talk that 20% of the Dubai education provider could be worth around US$ 350 million.

MAG F5 Holdings – a JV between two Dubai-based property investment companies, MAG and Fortune 5 Investments – has bought a 202-unit Abu Dhabi property. Formerly owned by Aldar, the Reem Island tower had been vacant for almost three years; no costs were available.

A report by Kuwait-based Global Investment House has indicated that UAE H1 corporate earnings rose by 31.2% to US$ 9.0 billion with Dubai showing an impressive 50.7% growth to US$ 3.3 billion, with the banking and real estate sectors leading the upward trend.

Having been temporarily delisted from Nasdaq Dubai last week, Depa returned to the bourse on Monday. The authorities had raised concerns about the composition of the six-member board, three of whom were Arabtec appointees and the fact that a new chairman had not been appointed. The company’s H1 results were disappointing with both revenue and profit down by 8.9% to US$ 251 million  and 24.0% to US$ 7.4 million respectively.

As widely expected, Emaar will release Emaar Malls Group as an IPO this month on the DFM. It is thought that about 15% of Emaar’s shares will be sold, equivalent to US$ 1.5 billion, which will be paid out as a dividend to existing shareholders, of which the Dubai government, via the Investment Corporation of Dubai, owns 30%. Based on this information, the new spin-off entity will be valued at a conservative US$ 9.5 billion.

Having risen only 0.4% the previous week, the Dubai bourse opened on Sunday at 4928 points – and closed the week 3.9% up at 5121.  So far this year, the market has jumped 52.0% from its 01 January opening of 3370. Bellwether stocks, Emaar and Arabtec closed on US$ 3.11 and US$ 1.30 respectively.

In the wake of last week’s disastrous results from Qantas, reporting a record US$ 2.4 billion loss, two other airlines have come in with poor figures. Malaysian Airlines will slash 6,000 jobs, cut back on its international routes and pump in US$ 1.9 billion to try and save the troubled carrier from bankruptcy. Meanwhile Virgin Australia has posted a US$ 332 million loss – more than triple the US$ 98 million of the previous year – citing weak demand, high taxes (including US$ 52 million in carbon tax) and strong competition from Qantas.

Following its relatively successful holding of the World Cup, Brazil now has to face the stark reality of a sluggish economy that is edging closer to a recession, with Q1 GDP contracting 0.2% followed by 0.6% in Q2. This pales into significance

considering that until recent times the world’s 7th largest economy was registering growth levels of over 7%. Just like Italy it is essential that the government gets to grips with overhauling its cumbersome red tape and archaic tax and labour laws.

Drastic measures are needed to save Italy’s ailing economy which this week recorded its first drop in consumer prices since 1959! Prime Minister, Matteo Renzi, has to find ways to revive the economy – the worst performing in the eurozone – that contracted by 0.2% in Q2 and saw the unemployment rate jump to 12.6% (and 43% for those under 24). His two major hurdles are to stimulate some sort of growth and cut back on the infamous Azzurri bureaucracy.

The German economy appears to be grinding to a halt with Q2 construction investment and gross capital investment sliding 4.2% and 2.3% respectively. Domestic demand is at best sluggish and its PMI fell yet again to 51.4, whilst foreign trade has fallen, albeit by a rather modest 0.2%. Perhaps more worrying is the fact that Europe’s leading economy manages to spend just 17.0% of its GDP on annual investment – well down on the 21.0% level seen in most other industrialised nations.

Falling consumer confidence in the eurozone was manifested in the fact that July retail sales fell 0.4%, month on month, as growth continued to stagnate. August’s PMI dipped again to 50.7 (from July’s 51.8) as manufacturing growth was at a 13-month low. With inflation also dropping to 0.3%, there is the distinct possibility of a period of damaging deflation. To cap off all their troubles, there is the on-going conflict in the Ukraine where the situation deteriorates by the day. The market is still awaiting more positive action from Mario Draghi and if recent past history has anything to go by, the vacillating European Central Bank president will continue to dither as he has done Time After Time.

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Foxy Lady

Posted on September 1, 2014 by howesdubai

Christine-LagardeThere is no doubt that the aviation sector is feeling the pinch from current geo-political, health and climatic issues. With conflict areas – such as eastern Ukraine and northern Iraq – becoming no-fly zones, airlines have had to take expensive detours.

For example, Emirates’ fuel bill last year came in at US$ 8.4 billion – or over 30% of operational costs. In addition, they have cancelled flights to both Erbil and Kiev and have seen reduced passenger loads to other troubled areas. The Ebola scare in western Africa has had a similar effect on air travel and, now looms the Icelandic Bardarbunga volcanic threat.  In 2010, the Eyjafjallajokull eruption saw 100k flights cancelled and a US$ 1.7 billion loss to the industry.  All these factors will have a negative impact on Emirates’ (and many other carriers’) top and bottom lines.

One of many airlines struggling is Qantas which has just reported its biggest ever loss of US$ 2.6 billion (which did include a US$ 2.4 billion write down on its international fleet). In addition, the usual suspects – high fuel prices and weak domestic demand – added to the airline’s woes.

Ryanair, the world’s largest budget carrier seems to be taking a leaf out of flydubai’s book. Over a year ago, CEO Ghaith Al Ghaith introduced business class on many of its routes and now the Michael O’Leary airline is following suit. Imitation is the sincerest form of flattery.

Established in 2006, the Emirates Institution for Advanced Science and Technology is finalising the first phase of its Dubai facility that will eventually build satellites. When completed, manufacturing will move from its current S Korean location to the emirate where  further development of the Khalifa Sat will take place. So far, the EAIST has successfully launched DubaiSat 1 and 2.

As the population grows so do the manpower needs of the medical sector resulting in Dubai Health Authority recruiting a further 531 nurses for work in the ever-expanding public hospitals and clinics. A recent report by Alpen Capital indicates that the UAE is the fastest growing GCC market in this sector. Indeed there has been a doubling of the UAE healthcare budget over the past six years but despite that, it is estimated that the country still spends US$ 2 billion in sending Emiratis for overseas treatment.

October will see the launch of medical tourism packages, involving a host of government departments and Emirates Holidays. The aim of the exercise is to see the number of medical tourists surge from 2012’s total of 107k, generating US$ 178 million, to 500k, and  US$ 708 million, by 2020.

There was no surprise to discover that phase 1 of  Damac’s Akoya Oxygen project was sold out in a day particularly when prices of 5-bedroom villas were going for US$ 681k. The development is branded as Dubai’s first green master development and will cover an area of 55 million sq ft. The company has already delivered 11k units to the market with a further 26k in the pipeline.

Dubai Properties also announced that its recent launch of Naseem townhouses has sold out and consequently the company is putting extra units onto the market. The same developer is also releasing a further 200 units in its Remraam development, following similar success with its May launch.

Tecom, one of the emirate’s largest commercial developers operating eleven business parks, is now moving into the residential market. It has announced that it will build 440 units in its Villa Lantana development, with prices starting at US$ 647k. Located near to its DuBiotech business park, the project will be finished by the end of 2015.

Already managing European operations in France, Germany, Romania and Spain, DP World is expanding its Belgian business by acquiring Euroports shares to take over the running of a planned container terminal in Liège. Due for completion next year, the new facility is expected to provide employment for 1k.

DP World recorded a 25.8% hike in H1 net profit to US$ 332 million, with a 9.9% increase in revenue to US$ 1.66 billion. The company operates 65 terminals around the world and has seen an 8.5% rise in throughput to 13.9 million TEUs (20’ equivalent units).

Jumeirah Palm is currently awash with 5-star hotels only but Byblos Hospitality is set to change this by developing a 144-room 4-star brand. The US$ 49 million hotel will be located on the island’s trunk, opposite the One and Only Royal Mirage. Interestingly Dubai has 351 hotels (70k rooms), of which only 38 (7.7k rooms) fall in the economy to upper mid-scale bracket.

Despite the abysmal July data, Dubai’s 634 hotels (and hotel apartments) had a mighty fine H1 as all indicators headed north, albeit at a reduced rate. The record number of visitors – at 5.8 million – rose by 2.3% (compared to 11% in 2013) and produced US$ 3.47 billion in revenues, with room sales up by 15.3% and F&B 3.8%. Saudi Arabia, India and UK were the top three contributors to visitor numbers.

Dubai Summer Surprises closes next week on 05 September and has reported a 39% surge in special festival promotions. The 27 participating malls have reported a 10% increase in footfall whilst hotels and Emirates have recorded major increases in traffic.

Atlantis, The Palm, becomes the latest government entity to consider refinancing its current loan facility. Last September, the hotelier, 100% owed by the Investment Corporation of Dubai, signed a US$ 880 million, five-year syndicated loan at 500 basis points over Libor. Last week it was reported that Dubai Duty Free was refinancing their US$ 1.75 billion loan at 175 bps.

Dubai World is hoping that smaller investors will buy into their new US$ 10.3 billion debt restructuring proposal  which reportedly proposes an early repayment of US$ 4.4 billion, followed by a four-year extension, to 2022, for the repayment of the balance at a high rate than the average 2.4 % currently agreed.

The 32-year old Emirates General Transport and Services Corporation has announced 2013 revenue of US$ 409 million, maintaining its 18% average annual growth over the past five years. The corporation, with a fleet of 13.5k vehicles, also reported total assets valued at US$ 545 million, spread over 41 sites across the country.

A recent report by G4S has estimated that the value of the facilities management sector could reach US$ 5.5 billion in 2015. The survey covered the likes of cleaning, pest control and building management but excluded security.

Dubai’s H1 foreign trade dipped 3.7% to US$ 178 billion, with imports at US$ 111 billion, exports – US$ 16 billion – and reexports of US$ 51 billion. The emirate’s biggest trade partners were China (US$ 21.9 billion), India (US$ 14.4 billion) and the US (US$ 11.1 billion).

Nasdaq Dubai has only two companies trading shares – DP World and Depa. On Monday the Dubai-based interior specialist company saw its trading suspended in relation to technicalities concerning the composition of its six-member board of directors, half of whom have links with Arabtec, their largest shareholder with a 24% stake. Depa is without a chairman as the former incumbent, Arabtec’s ex managing director, Hasan Ismaik, resigned in June. (Coincidentally, Mr Ismaik is reportedly interested in selling some of his 27.90% stake holding in Arabtec but he values each share at above the current market value).

Having risen 2.0% the previous week, the Dubai bourse opened on Sunday at 4908 – and closed the week marginally up 20 points at 4928.  So far this year, the market has jumped 46.2% from its 01 January opening of 3370. Bellwether stocks, Emaar and Arabtec closed on US$ 2.79 and US$ 1.28 respectively.

If the proposed US$ 11.4 billion Burger King takeover  of Tim Hortons goes through, the big loser would be Uncle Sam. Currently, the company, based in Miami, that gave the world “The Whopper” pays 35% corporation tax in the US but a move to Canada would result in a 15% tax burden. Strangely, Warren Buffet, a strong critic of companies using tax loopholes, is investing US$ 3 billion in the JV which will be domiciled in Ontario. Another tax inversion deal rears its ugly head!

A week after Bank of America’s US$ 16.65 billion legal settlement in its role of selling questionable mortgage securities, Goldman Sachs has been hit with a net US$ 1.2 billion penalty for similar offences involving Fanny Mae and Freddie Mac. Having already reached sixteen settlements with various defaulting financial institutions, the Federal Housing Finance Agency is still pursuing similar cases against HSBC, RBS and Nomura.

With over a 25% unemployment rate – equivalent to 8.3 million – South Africa has major economic problems. Despite a Q2 recovery which saw a GDP growth of 0.6%, compared to a 0.6% contraction in Q1, Africa’s second biggest economy recorded contractions of 9.4% in mining and 2.1% in manufacturing.The country needs to drastically cut its unemployment level before any meaningful recovery can take place.

Attending the Jackson Hole meeting earlier in the week, the ECB’s Mario Draghi is confident that his current polices will put the EU economy back on track but he reiterated that individual governments would have to get their own house in order. This may mean them going ahead with unpopular economic measures and introducing structural economic reform in many areas.

It is inevitable that the ECB has to introduce drastic measures to push up the eurozone inflation – well down at 0.4%, compared to their 2.0% target – and a major asset purchase by the central bank is becoming inevitable. Quantitative easing has already proved of some benefit to the US and UK economies but it seems that the eurozone may be coming to the party a little too late.

The French PM, Manual Valls, has had enough of François Hollande’s dithering with the country’s economy and has handed in his resignation. There is little chance of the Gallic country making a quick economic recovery, especially since there has been no growth this year and unemployment levels still hover over the 10% level. With a 0.8% July jump, there are now 3.42 million in the dole queue – a rise of 4.3% in the past year.

Another French personality has had a bad week with news that ex-finance minister – and now IMF chief – Christine Lagarde has been formally investigated in a political fraud involving Bernard Tapie and his ally, and former president, Nicolas Sarkozy. It appears that she signed off a more than favourable US$ 530 million payment to Tapie in an arbitration dispute with the then state-owned Credit Lyonnais. Foxy Lady!

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Non, Je Ne Regrette Rien!

Posted on August 31, 2014 by howesdubai

rolls-royce-dubaiThe boom in the luxury vehicle sector continues at an ever-increasing pace. Rolls Royce recorded a July sales hike of 117% and Lexus came in with a 26% rise in H1 revenue, whilst Bentley recorded a 29% jump in UAE H1 sales; their regional figures were helped by huge rises in Oman and Bahrain at 114% and 90% but interestingly, the UAE and Saudi Arabia still remain that company’s biggest two global markets.

Last month proved a stellar one for Nissan which reported that its Patrol model showed a 103% surge in sales of almost 3.9k models in the Middle East of which 39.1% (or 1.5k units) emanated from the UAE. This is yet another indicator of the buoyancy in the motor segment as H1 figures indicate a 17.6% jump in Japanese passenger car imports to US$ 1.6 billion.

In the wake of its recent 80-day maintenance and upgrade, Dubai International will soon have the capability to handle 36% more aircraft from 33 to 45 an hour. This is as a result of the introduction of an expanded facility for “high speed turn-off”. Within a decade, the airport will double its current 600k annual movements to 1.2 million. With these figures, the new airport at Jebel Ali could be under-utilised.

As local consumer confidence continues to bubble, it is predictable – and slightly worrying – that there has been a 21% increase in outstanding credit card bills, according to a new Lafferty Group report.

Azizi Developments has launched a US$ 37 million, 99 apartment development, a month after releasing a similar project in the same Al Furjan location. The Azizi.Iris project follows the Azizi.Orchid Residences, ready for completion by the end of next year.

Following its successful 2013 launch of Akoya by Damac, the Dubai developer has announced Akoya Oxygen, a residential development surrounding yet another golf course. Covering a massive 55 million sq ft, the project is slated to have the “greenest living spaces in Dubai” with parks, open spaces and even a forest of four thousand trees.

Likewise, Indigo Properties hope to start work on their 350-villa, US$ 409 million Zen project, adjacent to Arabian Ranches, early next year. The price of the villas will be around US$ 1.4 million and the 4.5 million sq ft development will have a Far East theme with parks, meditation zones and running waterways. However, the company is concerned that, because of a backlog in the approvals process, caused by the high number of new developments, there could be a long delay in finalsing all the required paperwork; this, in turn, could put back the construction start date.

According to a recent EC Harris report, there is currently US$ 212 billion of UAE projects under construction, with the 2014 total of both announced and planned projects coming in at a staggering US$ 315 billion.  Another report – by Jones Lang LaSelle – indicated that US$ 5.4 billion of residential contracts were awarded in the emirate in H1. With these figures, it is little wonder that there will be an inevitable backlog in start-ups.

Following their first UAE investment in Dubai, Star Tower, the Italian developer, Preatoni, has opened a local sales office. The company has already invested over US$ 3.3 billion in the MENA region and will be likely to announce more Dubai projects.

Nakheel has awarded infrastructure work to the value of US$ 16 million to Ghantoot Road Contracting. The work will be carried out in the developer’s phase 2 Al Furjan master community, covering 1.2 million sq mt, and should be completed within the year. The company also awarded a US$ 38 million contract to Metac General Contracting to build 84 villas, and eight retail blocks, on its upcoming Jumeirah Islands waterfront park project.

As expected, Nakheel has announced the early repayment of its entire bank debt of US$ 1.50 billion, having repaid US$ 650 million in February. Of the total, 62.3%, or US$ 940 million, will go to local banks, whilst the balance of US$ 560 million being paid to overseas financial institutions.

Brookfield Multiplex has won a US$ 75 million contract to build phase 1 MAF’s new City Centre in International Media Production Zone. The initial stage will see sixty international retail outlets, covering 1 million sq ft, and will include a 92k sq ft Carrefour Hypermarket, as well as a 750-space car park.

It seems that Indian nationals are pouring more money into local realty as latest Dubai Land Department figures show a 31.3% increase in their property investment to US$ 2.86 billion in H1, compared to the same period in 2013. In turn, Indians were the biggest foreign investors accounting for 28.0% of the total of US$ 10.2 billion, followed by British and Pakistanis at US$ 1.58 billion and US$ 1.23 billion respectively. Overall, H1 property deals were up 4.6% to US$ 30.8 billion. Rather surprisingly, Russian and Chinese investors were ranked 6th and 8th behind nationals from Iran and Canada.

As reported earlier in the month, July was a disastrous month for Dubai hoteliers as occupancy rates – for the 70k rooms in the 351 hotels – sank to 45% – an 18-year low. With a further 83 hotels – totalling 24.3k rooms – coming on stream, it is inevitable that hotels will struggle to maintain previous years’ levels. At least for the short-term, the premium end of the market may have reached saturation level emphasising the need for more budget-rated establishments.

Dubai Investments Park reported a 10.5% rise in H1 warehouse leases with 86 new companies taking up space. Having launched phase 8 only last year, the park is now almost 100% occupied, having leased nearly 1 million sq ft of warehousing in H1.

To take advantage of the more favourable terms currently on offer, Dubai Duty Free has decided again to reprice its July 2012, six-year US$ 1.75 billion split  loan and its September 2013 US$ 750k loan. The former was divided evenly between US$ and dirham, both at 325 basis points over Libor, which was further negotiated last year to 250 and 225 bps and now further renegotiated to both be at 175 bps. The later loan was initially at 225 bps and has now been reduced to 175 bps.

Although Emaar Properties has yet to take a final decision on its retail business IPO, there are indications that the announcement could come as early as next month. The listing could be on the local bourse and with a figure of US$ 2.5 billion being bandied around, it would bring a welcome boost to the local market.

DEWA has released tender documents, for phase 2 of the 100MW MBR Solar Park, to a 24-developer short list; the value of the contract is in the region of US$ 272 million. When completed in 2030, the park is expected to have cost US$ 3.3 billion and will produce 1k MW. DEWA is actively looking for a 49% partner for this massive project.

Gulf General Investments Co reported a 23.2% hike in Q2 net profit to US$ 8.5 million as H1 profits actually dropped 7.0% to US$ 14.8 million.

It has taken Apple six months after their CEO, Tim Cook’s February visit, to announce that the company will be opening a ME store – with Dubai the obvious choice.

The country’s Q1’s non-oil trade reflects its continuing economic growth as it reached US$ 69.7 billion with imports at US$ 45.3 billion, exports – US$ 8.2 billion and reexports – US$ 16.2 billion.

Forbes has ranked Dubai as the world’s 7th most influential city, only bettered by the likes of London, New York and Paris but ahead of Beijing, Sydney and Los Angeles. Some of the criteria used included air connectivity, racial diversity, number of regional head offices and the amount of FDI (foreign direct investment) it generates.

In a bold move to attract major asset managers, the DIFC has created a new class of funds that can be managed by senior and experienced managers which will require less supervision and regulations. The aim of the exercise is to attract more funds than the nine that are already domiciled in Dubai. The newly created QIF (qualified investor fund) is more flexible with a lower minimum subscription of only US$ 500k and can only be offered via private placements, with a maximum of fifty investors allowed.

Meanwhile, Jeff Singer, chief executive of the DIFC Authority, resigned with immediate effect after only two years in the position. Prior to that, he had been in charge of Nasdaq Dubai.

There was some disappointing news for Dubai SMEs with Standard Chartered announcing that it was planning to largely exit this segment. This follows a US$ 300 million settlement with New York authorities for their failure to closely monitor high risk transactions originating mainly from Hong Kong and Dubai. It seems that certain low risk, higher return clients will be retained by the Dubai-franchised bank.

The DFM reported that, with the exception of Amlak Finance, which is currently suspended from trading, the remaining forty-one listed public joint stock companies have followed regulations and all have issued their H1 financial results.

With a 1.6% rise the previous week, the Dubai bourse opened on Sunday at 4813 – and closed the week up 2.0%, again on very thin trading, at 4908. So far this year, the market has jumped 45.6% from its 01 January opening of 3370. Bellwether stocks, Emaar and Arabtec closed on US$ 2.85 and US$ 1.16 respectively.

Following an agreement to merge with Irish-based Fyffes, to form a company, with over US$ 4.6 billion in revenue, US-based banana producer Chiquita has subsequently rejected a US$ 611 million takeover bid by Brazilian companies – Cutrale and investment bank, Safra. One benefit for Chiquita would be that it could relocate its HQ to Ireland and, by utilising tax inversion, it could reduce its tax liability – a loss for the US Treasury but a gain for the Irish exchequer.

Going against current thinking, BHP Billiton, the world’s biggest miner, wants to contract so as to make operations quicker and to improve efficiency. The “Big Australian”, that saw its latest annual profits up 23% to US$ 14 billion, wants to demerge US$ 14 billion of its assets and form a spin-off metals and mining company, to be based in Perth.

Allied with a softening in July growth, China’s economy received a further knock with an H1 drop in incoming foreign investment to US$ 71.1 billion and a July return of US$ 7.8 billion – its lowest in the past two years.

Time is quickly running out for the eurozone as unemployment levels still remain stubbornly at double-digit levels, business growth stalls, manufacturing is losing traction and geo-political problems are beginning to take their toll. The bloc will have to take drastic steps to address the problems of low inflation (currently at 0.4%), patchy investment growth, high public debt levels and the over-valued euro. Quantitative easing can only be a matter of weeks away – if not, we will see its third recession in the past six years. Even then, the eurozone will see the start of  a phenomenon known as secular stagnation which will result in the continent falling further and further behind the rest of the world and will not return to the halcyon days of pre-GFC.

Having lost public confidence and his economic policies in tatters, Francois Hollande, has promised to accelerate long-needed structural reforms, cut back on red tape and introduce tax reforms.  With France recording another quarterly zero growth in Q2, its lowest housing starts since 1999, unemployment at 10.2% and a budget deficit of 3.8%, that exceeds EU targets, the beleaguered president is struggling to placate his electorate and is facing possible sanctions from his continental peers. He is blaming the eurozone’s austerity programme for his country’s problems and he will probably never admit that many of France’s economic woes can be laid at his door – Non, Je Ne Regrette Rien!

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Just Can’t Get Enough

Posted on August 23, 2014 by howesdubai

donald-trump-akoyaDamac reported a healthy 39% boost in H1 profits to US$ 463 million as revenue jumped 59% to US$ 991 million, with Q2 returns of US$ 253 million and US$ 556 million respectively – both up on Q1’s US$ 210 million and US$ 435 million. Over the half year, the developer’s asset base expanded by 41% to US$ 4.29 billion whilst it has already booked sales of US$ 1.44 billion for its much vaunted Akoya project. (Last month, the company announced that it would soon list on the local bourse and, with a market cap of some US$ 3.5 billion, it will soon become a big player on the DFM).

Dubai Refreshments Company posted a healthy 14.1% rise in H1 profits to US$ 18.7 million. The Pepsi distributor in Dubai and Northern Emirates saw sales increase by 11.7% to US$ 130 million.

Drake & Scull reported disappointing Q2 earnings with a 41.0% drop in profit to US$ 7.1 million, compared to the same quarter in 2013, as revenue dipped by 17.9% to US$ 300 million. The main reason given was delays in some projects in Saudi Arabia.

Although there has been a marked slowdown in the realty sector, Dubai Land Department reported that Emiratis splurged out US$ 3.4 billion on local real estate in H1, with a further US$ 1.8 billion being spent by nationals from the rest of the GCC. Reports indicate that prime property price rises have fallen from 11.7% to 6.3%, year on year ending 30 June 2014.

Even though July is recognised as a flat month for the hospitality industry, latest figures still come as a major jolt with occupancy rates of 45.4%, which, according to STR Global, are at their lowest in eighteen years. The figures were made worse because the holy month of Ramadan fell mostly in July. The 11.8% fall in occupancy was the result of the double whammy of an 8.3% surge in supply, allied with a 4.5% drop in demand. Consequently RevPAR (revenue per available room) dropped 5% to US$ 79, whilst conversely average daily rate rose 5% to US$ 174.

Emaar Middle East has awarded the locally-based Arabian Construction Company a contract for three buildings in its Emaar Square development in Jeddah, with handover for the first offices by 2016. No financial details were available.

The Telecommunications Regulatory Authority confirmed that there are over 16 million active mobile subscribers in the country giving an impressive penetration rate of almost 193% – one of the highest in the world. This is in addition to the 2.1 million land lines in use. Pakistan was the leading country for outgoing calls, with a staggering 2.1 billion minutes recorded.

Emirates has signed a five-year maintenance agreement with BAE Systems to provide technical support for its Boeing fleet of aircraft. No costs were available but this a major contract for the UK company, as the airline operates the largest 777 fleet in the world.

The airline has also arranged loan facilities, totalling US$ 425 million, from three local banks to finance the purchase of two Airbus 380s which brings their total to fifty one.

Following China, the UAE is now considered the world’s second fastest growing air passenger traffic hub, with an 11.7% hike in numbers to 45.3 million last year.

The latest project for the ever-expanding Jumeirah Village Circle is Al Manara Tower. Tiger Properties has already started work on the 300 apartments with the US$ 55 million project slated for completion by 2016.

Only two years after going international, Dubai-founded Doner Kebab now has presence not only in the GCC but also Pakistan, India and a London base. It plans a US$ 5.5 million investment to open a further twelve outlets in Dubai and build a factory here. It employs more than 300 in its 20+ outlets.

Max Hypermarket, part of the Dubai-based Landmark Group, and the French retailer, Auchan, have pulled out of arrangements to operate hypermarkets in India. The initial 2012 arrangement was for the Indian partner to operate the French chain of outlets and have up to 80 stores open by 2015.

By the end of June 2015, Dubai Municipality hopes to have completed the naming of all streets in the emirate. In total, 7.5k streets and roads will bear names that take into account Dubai’s history, heritage and culture.

In line with the emirate’s recent economic growth, Dubai Customs has reported a 9.8% H1 expansion in transactions to 4.5 million. Among the various delivery channels in use, Dubai Trade portal and Business to Government (B2G) saw transactions up 37% and 11% respectively.

Emirates District Cooling – a JV between Dubai Investments and Union Properties – obtained a US$ 245 million, 12-year loan facility from Dubai Islamic Bank. Emicool will use the funds largely for refinancing purposes, as well as for expansion plans.

There are rumours that Meraas Holding, backed by the Dubai government, is considering an IPO that would help finance its ever-growing order book. Major projects include its massive JV with Emaar Properties for building Mohammed bin Rashid City, the US$ 1.6 billion Bluewaters Island off JBR, US$ 535 million Dubai Creek development and partnership with Six Flags to develop a theme park.

A recent ISC report indicated that almost 47% (439) of all GCC international schools are based in the UAE, more than the combined total of the next three countries – Saudi Arabia (195), Qatar (130) and Kuwait (80). The total fees for all 982 schools were estimated at around a staggering US$ 6 billion.

There was no surprise news from Dubai Statistics Centre confirming a monthly increase in the emirate’s inflation rate from June’s 2.8% to 3.4%. This was the highest it has been since July 2009.

Better late than never, UNCTAD (United Nations Conference on Trade and Development) highlights that the UAE still maintains its second position in the Middle East, after Turkey, for foreign direct investment. The 2013 return of US$ 10.5 billion is a 9% increase on the previous year. FDI outflows last year were up 14.6% to US$ 2.9 billion.

The country’s official credit bureau – Al Etihad Credit Bureau – will start the first phase of its long-delayed operations next month by issuing consumer credit reports. Having processed six months of credit data from all the banks in the UAE, it will be able to give current information on all the banks’ clients who need to have their credit checked – a total of 5.2 million individual records are now on file.

All twenty eight of its financiers have approved Amlak Finance’s restructuring package, which is a forerunner for the institution to recommence trading on the Dubai Financial Market in early 2015 – almost six years after being delisted. The deal will see Amlak make an initial US$ 545 million payment to the financiers with the balance (a reported US$ 2.15 billion) being repaid over twelve years, including a US$ 380 million convertible bond; the outstanding debt due to the federal government will be repaid over six years. The deal has to be approved by the Sharia-compliant mortgage lender’s shareholders, of which Emaar Properties is a 45% stakeholder.

It is reported that DIFC Investments could issue a sukuk as early as next month and that proceeds therefrom could be used to refinance the US$ 1.2 billion syndicated loan taken out in May 2012.

Having dropped 2.0% the previous week, the Dubai bourse opened on Sunday at 4735 – and closed the week up 1.6%, on very thin trading, at 4813. Thursday saw total transactions at 301 million shares valued at US$ 108 million. Bellwether stocks, Emaar and Arabtec closed on US$ 2.74 and US$ 1.16 respectively.

Dubai Nasdaq is set to have a new listing as the Bahraini-based Gulf Finance House is planning a US$ 200 million sukuk. The money raised will be used to repay an existing Islamic bond of US$ 84 million and project development. Last month, the company signed a land sale agreement with Dubai Properties Group.

Poor economic news shows a 0.2% Q2 contraction in Germany and zero growth in France – a sure indicator that all is not well in the eurozone. Under the circumstances, France will not meet its 2014 deficit, as the country reels from lack of business investment and archaic labour laws. The 18-country bloc is being further hampered by worryingly low inflation and the on-going crisis in the Ukraine. It begs the question on who came up with the idea of sanctions against Putin’s Russia without realising that this is a double-edged sword and can work both ways.

As expected, Japan’s economy contracted by 6.8% in Q2 – its largest fall since the 2011 tsunami – mainly as the result of the government lifting the sales tax rate from 5% to 8% in April. On a quarterly basis, GDP fell by 1.7% following a 1.5% Q1 rise but this blip is only temporary as the economy will return to growth in Q3 as indicators, such as industrial production and retail sales, head north.

As a result of not achieving their budget deficit target, Fitch has cut Croatia’s rating one notch to BB. The recently admitted EU nation had earlier announced that it would cut its deficit from 4.9% to 3.8% but has failed to do so and has a public debt problem that may blow out – if action is not taken.

Another country not hitting their target is China with a July inflation rate of 2.3% – well down on the estimate. With July returns indicating a 14.5% hike in exports, compared to a year earlier, and a healthy trade surplus of US$ 47.3 billion, the Chinese economy is set to grow at a rate above 7.0% but slightly less than official estimates. The government has been proactive in moving the economy forward by such steps as reducing tax, making finance more available, cutting red tape and improving the country’s infrastructure.

Because of shady operations in its pre-GFC sale of mortgage-backed securities, it seems that the Bank of America will finally receive its full come-uppance. The disgraced financial institution is nearing a record US$ 17 billion settlement with the US Justice Department – 47% of which will be paid to the struggling home-owners who lost homes to foreclosures due to the banks’ rash actions.

This is the third major settlement arising from the same scandal with JP Morgan paying out US$ 13 billion last year and Citigroup US$ 7 billion last month. It was the junk status of these loans, packaged as commercial value by major banks, that was a precursor for the GFC.

It appears that Australian banks are following the example of their European and American brothers with legal proceedings being brought against the Big Five – ANZ, BankSA, Citibank, St George and Westpac. An Australian legal firm has instigated proceedings over late credit card fees that could run into hundreds of millions of dollars. More and more bankers Just Can’t Get Enough!

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