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Déjà Vu                                                                                   05 July 2024

According to Dubai Land Department, over 80% of the new property units launched in Dubai since 2022 have been sold out – a sure sign that the off-plan sector is in rude health, and that demand is still ahead of supply. The DLD notes that, over the past two years, nearly two hundred and fourteen projects have been launched, of which one hundred and forty-eight are active. Dubai’s residential market continues to flourish, post-pandemic, with many developers selling projects within days of launching. The majority are owner-occupiers, many of late that have worked out that buying is currently a better financial option than renting, (mainly because renting is becoming more expensive in a property boom and that buying, even with relatively high mortgage rates, is still a more viable choice). There is also a healthy influx of high-net-worth individuals who are migrating to the emirate. According to CBRE, in May, the total volume of transactions stood at 15.8k, the highest monthly figure on record to date, marking an increase of 44.2% compared to the year prior, with prices also surpassing the previous peaks witnessed in 2014. Property Monitor also confirmed that May 2024 prices at US$ 371 per sq ft were 10.25% higher than seen in September 2014.

Only Dubai can think of mobile or floating villas that will cruise the clear blue waters of the Arabian Gulf. The El Bahrawy Group has launched ‘Neptune’, its first floating and mobile villa project, and part of the Kempinski Floating Palace resort project; it is ready and anchored at Dubai Palm Marina, with a further eight out of a total of forty-eight ‘Neptune’ villas currently in the final stages of completion. The scheme is basically a floating hotel surrounded by forty-eight luxury mobile ‘Neptune’ villas that will have an estimated market value of US$ 436 million upon completion. All villas will be 100% manufactured in the country and are being repurposed by a marine construction group. The two-bedroom, three-bedroom and four-bedroom villas will cost US$ 7.9 million, (5.8k per sq ft), US$ 8.7 million, (6.5k per sq ft), and US$ 12.5 million (10.4k per sq ft); they will feature a two-story layout plus a rooftop.

For example, a three-bedroom villa will weigh around two hundred and twenty tonnes, the ground floor having a living room, an open-concept dining area, a kitchen, a guest restroom, a crew chamber, a service room, a cockpit, an outdoor seating space, and a platform designed for storing and launching jet skis. The first floor will house the three bedrooms, walk-in closets, and two bathrooms, and the rooftop will have its own infinity swimming pool encircled by glass walls, alongside outdoor seating, a designated barbecue area, an external driving control station, and a display screen.

The buyer of a villa has two options – they can allow Kempinski to manage and rent out the villa, or they can choose to keep it for personal use. It is estimated that off-peak rent would be US$ 13.6k per night but would come with a total crew of six — one captain, who will sail the boat, along with three deckhands and two stewards – plus à la carte Kempinski services.

Despite relatively high mortgage rates, May Dubai mortgage transactions jumped by 57.9% to 3.4k – a fourteen-month high – as demand for residential property continues unabated. Whilst not yet a shoo-in, it is all but inevitable that the US Federal Reserve will start nudging rates lower in H1, which in turn will see Dubai rates fall in tandem. Allsopp & Allsopp’s May report indicates that finance buyers outpaced cash buyers by 55.8%, doubling figures from April, as well as noting that mortgage buyers were typically younger individuals who preferred being around popular lifestyles and social hotspots such as Downtown Dubai, Jumeirah Village Circle, Dubai Marina, Jumeirah Lake Towers, and Jumeirah Beach Residence for apartments and in The Springs, Arabian Ranches, Town Square, Al Furjan and Reem for villas/townhouses. Property Monitor said loans taken for new purchase money mortgages accounted for 53% of borrowing activity, with the average amount borrowed being US$ 504k, at a loan-to-value ratio of 76.6%. Loans for refinancing and equity release saw their market share decrease by 9.5% to 29.0%, with the balancing 18.0% taken by bulk mortgages.

To be developed on a 113.5k sq ft plot, DIFC has broken ground on DIFC Square which will comprise three interconnected buildings, (with eight, ten and thirteen floors, sharing one basement and three podia), and encompass nearly one million sq ft of built-up area. This landmark development and commercial project will feature offices, (covering 600k sq ft), and retail units, (17.2k sq ft), including a curated mix of shops and F&B outlets. Completion is expected by H1 2026.

Because of ongoing delivery delays, Emirates, has been forced to delay the deployment of its new fleet of Airbus A350 aircraft. Its first flight was scheduled for 15 September, (to Bahrain) but now it has been rescheduled for 04 November to Edinburgh; it has sixty-five Airbus A350-900 aircraft on order. The carrier confirmed “once we begin receiving our A350s, we will expedite their entry into service as quickly as possible and will work hard to minimise the impact of the delays.” In May, the airline had announced that the new A350 would service nine destinations, including Kuwait, Muscat, Mumbai, Ahmedabad, Lyon and Bologna and has posted that “there are no changes to flight frequencies to these destinations, only a change in the type of aircraft operating on the route.” Following the initial launch of the wide-body jets, on mainly regional routes, they will be utilised on ultra-long-haul destinations in the US, Latin America, Australia and New Zealand. The aircraft, which will replace the bigger Boeing 777s and Airbus A380s that will be then used on destinations that require larger passenger capacity, can accommodate up to three hundred and fifty passengers and flies efficiently on every distance from short-range segments to ultra-long-range routes of up to 18k km non-stop. Before the latest delays, Emirates had received assurances from Airbus that it will deliver its A350 aircraft on time in August.

It has been a rewarding Q2 for Emirates staff – April witnessed a twenty-week bonus for them and, at the end of June, it was reported that employees will receive a 4.0% pay hike in transport allowance and UAE national retention allowance, and for flight deck and cabin crew, there will also be a 4.0% increase in flying and productivity pay. Additionally, all employees will receive a 10-15% increase in housing allowance, depending on their grade within the company. These pay-related pay rises will not apply for employees who are on a final warning, those who are subject to disciplinary proceedings that may result in dismissal, those who have not completed probation as of 01 July 2024, and those who are serving notice. Furthermore, additional benefits will also be given to employees, such as an increase in paid maternity leave from sixty days to ninety days, a doubling in paternity leave to ten days, whilst new mothers will also see a doubling in nursing break hours to two hours. EK will pay the life insurance premium for all employees, who previously contributed to the scheme, who hold Grade 1 to Grade 5. In addition to this, employees of certain grades will receive an enhancement of long-term sick leave, as of 01 September 2024, along with education support allowance also being increased by 10% starting September.

An agreement between Dubai Municipality and DP World Dubai has unveiled plans to build the world’s largest car market, encompassing an area of twenty million sq ft, that will be involved in all aspects of the automotive sector and will also host major events and specialised conferences. The project is in tandem with the goals of the Dubai Economic Agenda D33, which aims to double the size of the emirate’s economy and transform it into one of the world’s top three cities by 2033. The market will be connected to seventy-seven ports and will offer comprehensive commercial, logistical and financial solutions.

7X, previously known as Emirates Post Group, announced on Wednesday key expansion plans as part of the brand’s new strategy introduced earlier this year. It aims to strengthen its portfolio and enhance its domestic and global reach of all its seven subsidiaries – Emirates Post, EMX, EDC, and FINTX, which includes Wall Street Exchange and Instant Cash. Emirates Post plans to optimise its retail network with new strategically located centres, that are no more than a five-minute drive away from customers, and will add new service centres to its eighty-five branches and two mall kiosks; its membership in the Universal Postal Union facilitates access to a global postal network spanning one hundred and ninety-two countries.

7X’s Courier, Express and Parcel’s arm, EMX, the Courier, currently uses six hundred vehicles and has six hundred couriers, operating from one primary airport hub at Dubai Airport and handles shipments from Abu Dhabi and Sharjah airports, along with ten delivery centres, ensuring reliable delivery and logistics solutions. aims to expand both to new destinations and its customer base, including consulates, government service centres, banks and eCommerce providers across the country. On the international stage, it plans to expand its current portfolio of two hundred destinations by augmenting new global strategic alliances. FINTX is the financial arm of 7X that includes Wall Street Exchange and Instant Cash, both providing financial services to more than one hundred destinations. WSE currently operates thirty-three branches across the UAE, whilst Instant Cash has become one of the fastest-growing global money transfer entities in the GCC region, with a global network of more than one hundred and forty-five agent partners, spanning over ninety countries. EDC, with more than ninety clients across ten countries and eleven industries, is a leading integrator and solutions provider under 7X. Abdulla Mohammed Alashram, Group CEO of 7X, commented, “by adding new service centres and branches, extending operating hours, and strengthening our regional and international partnerships, we aim to provide unparalleled convenience to our customers. Additionally, 7X has rolled out over 700 PUDOs, with the ambitious goal of increasing these pick-up and drop-off locations to 1,000 by the end of 2024, underscoring our commitment to customer accessibility and efficiency.”

In a bid to attract more than US$ 177 billion in foreign direct investment – and make it one of the world’s top three city economies by 2033 – the Dubai Executive Council has approved the FDI Development Programme which will allocate US$ 6.8 billion over the next decade to support the aims of the emirate’s D33 economic agenda. Sheikh Maktoum bin Mohammed, who chaired the meeting, announced that the Dubai Economic Model will use 3k performance indicators to closely measure Dubai’s development against its economic targets. It aims to “attract international companies and support the expansion of existing international companies with bases in Dubai”. The emirate already has certain inherent advantages such as its logistics infrastructure, strategic geographical location, talent pool, and its position as a competitive global commercial hub.

Eight years ago, the federal government liberalised fuel prices so that they could be aligned with market rates until the onset of the pandemic which saw prices frozen by the Fuel Price Committee. In March 2021, prices were amended to reflect the movement of the market once again. After three months of price hikes, they declined in June and in July, all but diesel, headed south again. The breakdown in fuel price per litre for July is as follows:

• Super 98: US$ 0.815, from US$ 0.856 in June (down by 4.8%)        up 6.2% YTD from US$ 0.768

• Special 95: US$ 0.785, from US$ 0.823 in June (down by 4.6%)       up 6.4%  YTD from US$ 0.738

• Diesel: US$ 0.787, from US$ 0.785 in June (by 0.3%)                         down 3.7% YTD from US$ 0.817

• E-plus 91: US$ 0.763, from US$ 0.804 in June (down by 5.1%)        up 6.1% YTD from US$ 0.719

The Dubai Financial Services Authority’s eighth Audit Monitoring Report, provided key findings from inspections of Registered Auditors, conducted in 2022 and 2023, during which time it completed a record number of inspections to ensure that audit quality within the Dubai International Financial Centre remained rigorous and reflective of global best practices. The report analysed financial statement audits, regulatory engagements, and anti-money laundering, and revealed a significant decline in audit quality, mirroring global trends. The body is committed to maintaining the highest standards of audit quality and regulatory oversight, whilst reinforcing the importance of integrity and reliability of financial regulations. Ian Johnston, Chief Executive of the DFSA, said, “Robust audit oversight is crucial for trust in our financial systems. This report outlines both the challenges we face and the proactive measures we are taking to ensure audit quality meets global standards. It is critical that the audit profession responds promptly and meaningfully to improve audit quality.”

Marking its second listing on Nasdaq Dubai, (and its first under their newly developed US$ 1 billion Sukuk programme), Arada’s US$ 400 million five-year fixed-rate Sukuk attracted strong demand and was 3.5 times over-subscribed. This listing brings the total value of Sukuk issuances, on the bourse, to US$ 93 billion, and a total value of US$ 129 billion in listed bonds and Sukuk, further enhancing Dubai’s position as a premier global hub for Sukuk listings. Local issuers contributed 44% of this value, while foreign issuers made up the remaining 56%, with significant participation from institutional investors, fund managers, high-net-worth individuals and banks.

The DFM opened the week on Monday 01 July, 52 points (1.3%) higher the previous four weeks gained 40 points (1.0%) to close the trading week on 4,070 by Friday 05 July 2024. Emaar Properties, US$ 0.17 higher the previous three weeks, gained US$ 0.03, closing on US$ 2.18 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.60, US$ 4.50, US$ 1.56 and US$ 0.35 and closed on US$ 0.63, US$ 4.50, US$ 1.59 and US$ 0.34. On 05 July, trading was at one hundred and forty-one million shares, with a value of US$ 193 million, compared to two hundred and twenty-eight million shares, with a value of US$ 64 million, on 28 June.

By Friday, 05 July 2024, Brent, US$ 6.83 higher (8.6%) the previous three weeks, gained US$ 0.14 (0.2%) to close on US$ 86.54. Gold, US$ 15 (0.5%) higher the previous week, gained US$ 61 (2.6%) to end the week’s trading at US$ 2,398 on 05 July 2024.

Q2 proved a good period for Tesla, with deliveries up 14%, to 444k vehicles, compared to Q1; even though it beat analysts’ expectations, it was still 5.0% lower on the year. The EV-maker has been impacted by increased competition, reduced demand and high borrowing costs. Its strategy of continuous price cuts has had limited success, as sales continued their downward trend in H1; in April, it announced that it was slashing its workforce by 10%. Some experts reckon that it is time for Elon Musk to update the fleet, including its mainstream Model 3 which was first released in 2017. Although the US market is at best flat, it is estimated that 20% of all vehicles manufactured this year will be electric, with 50% and 25% of the total for China and Europe respectively. The market seems to think that better days are ahead, with Tesla shares jumping 6.0% on Tuesday, with news that next month, it will introduce its robotaxis to the world.

Driven by the boom in AI technology, Samsung Electronics, the world’s largest maker of memory chips, smartphones and televisions, expects its Q2 profits, (expected at US$ 7.54 billion), to June 2024 to jump fifteen-fold on the year; Q1 profits were more than ten-fold higher, compared to a year earlier. Next week, the tech company faces a possible three-day strike, with unions demanding a more transparent system for bonuses and time off.

The International Air Transport Association posted a 10.7% hike in global passenger demand, measured in revenue passenger kilometres (RPKs), compared to a year earlier. Capacity, measured in available seat kilometres (ASK), was up 8.5% higher year-on-year with a May load factor of 83.4% (81.7% in May 2023)), a record high for the month. International demand rose 14.6% on the year, with capacity up 14.1% on the year and the load factor 0.3% higher on the year to 82.8%. Domestic demand rose 4.7% compared to May 2023, whilst capacity was up 0.1% YoY and the load factor 3.8% higher at 84.5%. Willie Walsh, IATA’s Director-General, noted that with May ticket sales for early peak-season travel up nearly 6%, the growth trend shows no signs of abating. However, he did warn of the impact of air traffic control delays which have already topped 5.2 million minutes in Europe alone – and the peak season has yet to start.

Following several months of discussions, Boeing has finally entered into a definitive agreement to take over its main supplier, Spirit Aero Systems in an all-stock deal at an equity value of US$ 4.7 billion, equating to US$ 37.25 per share; 0.18 Spirt share equals 0.25 Boeing share. The total transaction value is approximately US$ 8.3 billion, including Spirit’s last reported net debt. Dave Calhoun, Boeing’s president and chief executive, said “by reintegrating Spirit, we can fully align our commercial production systems, including our safety and quality management systems, and our workforce to the same priorities, incentives and outcomes – centred on safety and quality.” Boeing had divested Spirit AeroSystems in 2005 in order to cut costs and outsource some assets, and now it is hoped that this vertical integration will give Boeing more control over its own destiny.

At the same time, Airbus confirmed that it had entered into a binding term sheet agreement with Spirit AeroSystems for a potential acquisition of its major activities related to the European plane maker. These include the production of A350 fuselage sections in Kinston, North Carolina, and St Nazaire in western France, the A220’s wings and mid-fuselage in Belfast and Casablanca, and the A220 pylons in Wichita, Kansas. Airbus will pay a nominal price of US$ 1 for the assets and will be receiving US$ 559 million in compensation from Spirit AeroSystems, subject to an ensuing due diligence process.

It is reported that Reaction Engines, backed by the likes of Boeing, BAE and Rolls Royce Holdings, has appointed advisory firm Silverpeak to raise fresh capital, running into tens of millions of dollars, as it struggles with cash flow problems; the firm has admitted that its financial performance last year had “not been in line with our forecasts”. The Oxford-based company is aiming to pioneer hypersonic flight. The specialist entity in developing advanced propulsion systems, the company is developing a new type of engine aimed at powering aircraft to Mach 25 outside the Earth’s atmosphere.

The British Retail Consortium/ NielsenIQ Shop posted that May prices rose at an annual rate of 0.2%, but down from 0.6% in May 2023. The retail trade body indicated that discounted TVs, (ahead of the Euros football), along with cheaper butter and coffee helped. June prices of non-food goods dropped by 1.0%, compared to May’s 0.8% decline. Many food items and other goods are still more expensive than they were pre-pandemic, despite price rises having slowed to their lowest rate since October 2021. It is expected that price increases during summer will be minimal as retailers compete for market share in a sector where discretionary spending has been tightened. 

At this week’s British Grocer of the Year event, for the first time in twenty years, Sainsbury’s took the top position away from Marks & Spencer’s, followed by Tesco, Lidl, Aldi and social enterprise The Company Shop. It was also commended for being the only “big four” supermarket (Tesco, Asda, Sainsbury’s and Morrisons) to have gained shopper spend from both Aldi and Lidl amid the cost-of-living crisis. The judges noted that “restoring growth while increasing profits is not an easy thing to do at the best of times, but especially with the highest inflation in decades, and the discounters – and other rivals – also opening a significant number of new stores.” The award for being Britain’s favourite supermarket was won by Tesco for the tenth consecutive year who also won employer of the year for its “pioneering” work in supporting diversity and inclusion as well as its support to young people, competitive pay, and step up in maternity and paternity benefits. Waitrose won the award for customer service, with the Grocer Cup going to Greggs recognising the success Greggs has had going from a high-street bakery chain into the UK’s biggest fast-food chain.

A game of two sectors for Sainsbury’s. In Q2, its food sales jumped 4.8%, with Nectar offers and Aldi price matching helping to attract shoppers, whilst its ‘Taste the Difference’ premium own brand range had seen sales jump by 14%. This was offset by sales of its non-food items and Argos both dipping, attributable to the bad weather and shoppers still being cautious about spending on big ticket items. There are concerns that Argos results will continue to negatively impact Sainsbury’s group results, as electronics continue to suffer as customers prioritise essential purchases.

China’s State Post Bureau posted that it had handled more than eighty billion parcels in H1 – fifty-nine days earlier compared to achieving that figure in 2023. Last month, the average daily express delivery volume exceeded five hundred million pieces, while the monthly average topped thirteen billion parcels in the six months to 30 June.

Earlier in the week, Egypt’s sovereign wealth fund signed four green ammonia agreements, worth up to $33 billion, including an US$ 11 billion deal with Frankfurt-based DAI Infrastruktur, aimed at setting up a green ammonia project in East Port Said. Other deals included a US$ 14 billion agreement to team up with BP, UAE’s Masdar, Egyptian infrastructure company Hassan Allam Utilities and Infinity Power to invest in a green ammonia plant in Ain Sukhna Port on the western coast of the Gulf of Suez. The country is expecting to increase power generation from renewables to 42% by 2035, and 58% by 2040, as it steps up projects in alternative energy sources, such as solar, wind and green hydrogen, at a time when its natural gas production is dwindling. In March, the EU and Egypt, signed a deal which included up to US$ 8.0 billion, in support for Cairo’s economic reform programme and business environment, with it agreeing to assist the EU with several key issues, most notably stopping illegal migrants.

The Sri Lankan president, Ranil Wickremesing, estimates that by slashing interest rates, (to an average 2.1%), and introducing longer repayment schedules, (to 2028), Sri Lanka will save up to US$ 5.0 billion following the restructure of its bilateral debt, much of which is owed to China. The island nation reneged on its foreign borrowings in 2022 during an unprecedented economic crisis that precipitated months of food, fuel and medicine shortages. He said bilateral lenders led by China, the government’s largest single creditor, did not agree to take a haircut on their loans, but the terms agreed would nonetheless help Sri Lanka. Some of Sri Lanka’s loans from China are at high interest rates, going up to nearly 8.0%, compared to borrowings from Japan, the second largest lender, at less than 1.0%. Sri Lanka struck separate deals with China and the rest of the bilateral creditors, including Japan, France and India, which account for 28.5% of the country’s US$ 27.0 billion outstanding foreign debt. Wickremesinghe said the nation was bankrupt when he took over and he hoped the US$ 2.9 billion IMF bailout he secured last year would be the island’s last, following sixteen previous requests to the global body.

This week, the Japanese government raised the coupon rate for new ten-year government bonds from 0.8% to 1.1% for the first time since April 2012, reflecting recent rises in long-term interest rates because of the central bank’s slight amendments to its monetary policy. In 2013, the Bank of Japan launched its unorthodox monetary easing programme designed to lift Japan out of a period of chronic deflation.

A biennial report by the Australian Institute of Health and Welfare notes that for the first time in thirty years, the life expectancy of an Australian has fallen – by 0.1 years to 81.2 years for men and 85.3 years for women. (There’s been a greater decline in the United States – from 78.9 to 76.4 years – and the United Kingdom – from 81.3 to 80.4 years). For the first time in fifty years, an infectious disease has been in the top five leading causes of death in the country – Covid 19 in 2022. From the beginning of the pandemic to 29 February 2024, more than 22k people in Australia died from or with Covid-19. Furthermore, chronic conditions have contributed to around 90% of all deaths each year from 2002 to 2022, and about 60% of Australians currently live with chronic illness.  There is no doubt that Australia will need to spend more than its current 2022 figure of US$ 160.4 billion – equating to US$ 6.2k per person – on health, as its ageing population requires more primary care than ever with more people living with a chronic disease and spending more time in ill health. It is estimated that the number of years on average Australians suffer in ill health has risen by an extra year for both men and women. Depression, anxiety, dementia and chronic liver disease are emerging as some of the fastest-growing chronic conditions. Cardiovascular diseases and cancer were common causes of death among people over forty-five years of age, and dementia was the most common cause of death among people over eighty-five years of age. Probably replicated in all developed economies, the Australian report noted that people living in the lowest socio-economic areas had the highest rates of use of public health but had the lowest rates of service. Also in tandem would be the fact that life expectancy has started to drop, and that the days of more people living longer could be over.

June inflation in the twenty-nation eurozone dipped 0.1% to 2.5% on the month – still above the ECB’s 2.0% target with the bank seemingly in no hurry to add more rate cuts after a first tentative reduction in its benchmark rate last month. Then the Governing Council decided to lower the three key ECB interest rates by 25bp, with the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility decreasing to 4.25%, 4.50% and 3.75% respectively. However, key indicators point to the fact that inflation may stay at around the 2.5% mark for some time. Meanwhile, inflation in services prices remained flat at 4.1%. Earlier in the week, ECB President Christine Lagarde commented that the bank needed to first make sure inflation was firmly under control before cutting its key rate again.  Noting, that though growth in the eurozone was uncertain, the jobs market remained strong with low unemployment levels, she said “it will take time for us to gather sufficient data to be certain that the risks of above target inflation have passed,” adding that it was an indicator that the economy was holding up even with rates much higher than before. The ECB’s approach is almost in tandem with that of the Fed which has held off from tinkering with rates because they are unsure of how stubborn inflation actually is, and if cuts did not actually “break” the inflationary cycle, it would make it harder to rectify the “error”. If they proceeded in the other direction, it might well solve the inflation conundrum, but at the expense of the economy falling into recession.

The latest S&P Global purchasing managers’ index indicate that factory activity in the eurozone is contracting, even though there was a modest 0.3% uptick in the European economy after several quarters of near-zero growth, caused by higher energy prices following the Ukrainian crisis. This resulted in much lower consumer confidence and a huge reduction in their purchasing power which is slowly returning helped by new labour agreements and pay increases.

Eurostat posted that the eurozone unemployment rate held steady, still at a record 6.4% low in May, but 0.1% down on the year; there were 11.078 million unemployed people in May. Compared with April, unemployment increased sharply by 38k on the month and by 3k on the year. More worryingly was that the May jobless rate among young persons, aged below 25 years, was unchanged at 14.2%. However, the overall May unemployment rate – at 6.0% – in the EU27 also remained unchanged, while the youth jobless rate dipped 0.1% to 14.4%.

Wall Street took comfort from the words of Federal Reserve Chair, Jerome Powell,  after he acknowledged that some progress had been made in taming inflation but that he wanted more time – and confidence – to ensure that the time was right to flick the switch; he noted that recent data (showing headline and core inflation were down 0.10% and 0.20% to 2.60% and 2.60% respectively) “suggest we are getting back on a disinflationary path”. Following his announcement, the New York indices rallied, with the S&P 500, (closing above 5,500 for the first time), and Nasdaq both touching record-highs whilst the Dow Jones Industrial average nudged up 0.4%. However, he does not foresee US inflation climbing back down to 2.0% until 2026, but “the main thing is we’re making real progress”, but that “we want to be more confident that inflation is moving sustainably down towards 2.0% before we start the process … of loosening policy”, and that “we’re well aware that if we go too soon, that we could undo the good work we’ve done to bring down and if we go too late, we could unnecessarily undermine … the recovery.”

Although slowing in June to 206k new jobs, following May’s figure of 218k, US jobs growth was higher than the 190k expected by market experts. The US unemployment rate nudged up to 4.1%, while wage growth rose at its slowest for three years. However, the figures may make the Fed think of bringing in cuts earlier than expected, with one cut, (and perhaps two), at least happening in H2. Earlier in the week, the Fed’s meeting noted that the economy appeared to be slowing and that “price pressures were diminishing”. There is no doubt that the rate of price rises has been “stickier” than expected, and a strong jobs market, will leave the Fed having to consider in which direction to go – stick or twist

A BBC study indicates that 1.8 million people are currently in student debt of more than US$ 63k (GBP 50k), of which 61k owe more than US$ 127k (GBP 100k), and fifty with more than US$ 254k. The average balance for loan holders in England when they start making repayments is over US$ 61k. In 2023/24, some 2.8 million people in England made a student loan repayment.

Although earnings have risen faster than house prices of late, Nationwide still reckons that higher mortgage rates mean affordability is still “stretched” for many who have been impacted by more expensive mortgages. The building society noted that the average UK price is now US$ 337k (GBP 266k) and that prices were 0.2% higher on the month and 1.5% higher on the year; however, it said that external activity in the housing market had been “broadly flat”, over the past twelve months, with transactions down by about 15% compared with 2019. Across the UK, Northern Ireland saw the biggest price increases, up 4.1% from a year earlier, with Wales and Scotland at 1.4% and in England prices only nudging 0.6% higher. It is easy to see what rates have done to affordability – in late 2021, mortgage rates were at 1.3%, today they are nearer to 4.7%. It is reported that transactions involving a mortgage are down by nearly 25% over the past year, whilst the number of cash transactions for properties is about 5% higher than pre-pandemic levels. Despite some banks cutting rates last month, they are still far higher than pre-pandemic levels.

It was the Cameron/Osborne administration that first introduced ‘austerity’ to the UK public and unfortunately the word was still in use when the Tories were duly hammered in yesterday’s election. There is no doubt that the Conservatives had stayed too long in government and ended fourteen years of rule, bereft of ideas, infighting, ineptitude, arrogance and touched by cronyism, sometimes to the point of apparent fraud.  Furthermore, there is no doubt that all was not well with the UK economy that new Chancellor Rachel Reeves has inherited, and she was quick to point out the fact that she was taking over a depleted economy from the Conservatives that would create a “challenge” for the new Labour government. This is reminiscent of what happened fourteen years ago when the then Labour’s ex-Chief Secretary to the Treasury, Liam Byrne, left a note to his successor to reading “Dear Chief Secretary, I’m afraid there is no money. Kind regards – and good luck! Liam.” Déjà Vu

It’s Time To Go!                                                                             28 June 2024

Omniyat plans to boost investment and more than double the value of its property portfolio to U$27.3 billion, (AED 100 billion), in the next five years, as it seeks to capitalise on the sustained demand in the UAE real estate market; 50% of this base will be its portfolio of ultra-luxury properties, including two set to launch in H2, with a combined value of US$ 2.72 billion, (AED 10 billion). The other 50% will be across the real estate chain and include residential, commercial and hospitality projects in the UAE and the broader GCC region. The luxury and ultra-luxury sectors have bounced back since the pandemic slowdown and has managed to post robust price rises over the past two years. In the first five months of 2024, Dubai registered nine hundred and forty-eight sales of properties worth more than US$ 4.09 million, (AED 15 million), mainly in areas such as Palm Jumeirah, Mohammed bin Rashid City, Dubai Water Canal, Tilal Al Ghaf and Dubai Hills Estate. Undoubtedly, the upward trend will continue, aided and abetted by Dubai’s policies of attracting top global talent, and an expanding number of millionaires.

Ahmadyar Developments’ latest project is The Palatium Residences, featuring G+4P+12 floors, in Jumeirah Village Circle. It offers a diverse range of studio, 1, 2, and 3-bedroom apartments, with breathtaking community views and lush parks. Construction, already started this month, is expected to be completed by Q2 2026.

Some industry players have indicated that, in H1, prices have risen by up to 10%, with more of the same in H2, with more handovers due in the third and fourth quarters. Allsopp & Allsopp noted that average rents across the city have seen a 15.7% annual increase, with apartments and villas/townhouses rising by just under 15.0% and 18.0%. Betterhomes reckoned that the average price of rental contracts increased by 8.0% in H1 2023 and a further 8.0% in H2 2023; the highest returns were seen in Jumeirah Beach Residence, Town Square, Dubai Production City, Dubai Healthcare City 2 and Meydan, which all saw a 21% to 22% jump in rentals. Additionally, Dubai South’s average rents increased by about 38.0%, compared to H1 2023, aligning with the expected increase in demand following the announcement of the new Al Maktoum Airport earlier this year. Jumeirah Island and Al Barari witnessed impressive H1 growths of 43.0% to US$ 136k, and 39.0% to US$ 109k. Furthermore, rents grew by 21%, 14%, 12% and 11% in Tilal Al Ghaf, Dubai Hills Estate, The Villa Project and Dubai Creek Harbour.

An agreement between the Dubai Land Department and Bayut has resulted in the launch of TruEstimate, an AI-powered property valuation tool, which utilises Bayut’s data with DLD’s property databases. It aims to offer accurate property valuations and data-driven insights and is designed to enhance transparency and trust in Dubai’s real estate market. Furthermore, it will benefit stakeholders in making informed decisions and optimising investment strategies. Information, as indicated below, is input into the platform, which then generates a detailed report.

The Asia Pacific Cities Summit, founded in 1996, has grown into an important event promoting economic collaboration and urban innovation across the Asia-Pacific region. Expo City Dubai, which has been selected to host the three day event next year (between 27 -29 October) follows the likes of Brisbane, Seattle, and Incheon which have hosted previous events. The Asia Pacific Cities Summit and Mayors Forum 2025 represents a platform for cities to showcase projects, exchange ideas, and drive positive development, and will bring together mayors, city leaders, entrepreneurs, and experts from Asia-Pacific, the ME, Africa, and South Asia. The event will be held at the Dubai Exhibition Centre, and will be the first time that the exhibition has been held in the ME.

To the surprise of many, Dubai only ranked seventy-eighth globally, up two places from the 2023 index, scoring 80.8, in the Economist Intelligence Unit’s Global Liveability Index 2024. The report noted that sustained investment, in health, infrastructure and education, was a significant factor for the emirate’s strong performance, along with scoring highly on stability. For the third consecutive year, Vienna was named the world’s most liveable city, scoring 98.4 out of 100, among the 173 cities ranked on the index on thirty indicators measuring stability, health care, culture and environment, education and infrastructure. The two other cities in the top three were Copenhagen (98.0) and Zurich (97.1). The top five cities in the Mena region were Abu Dhabi, Dubai, Kuwait City, Doha and Manama at number 76, 78, 93, 101 and 105. Damascus retained its ranking as the least comfortable city in the world, with a score of 30.7, with results for stability and health care “particularly poor”, followed by Tripoli, with a score of 40.1, and Algiers with 42.0.

The Ministry of Finance has successfully closed its final offering of a ten-year US$ 1.50 billion bond, issued with a yield of 4.857%, at a spread of 60 bp over US Treasuries; the bond will be listed on the London Stock Exchange and Nasdaq Dubai. The issue was over four times oversubscribed, with the order book of US$ 6.50 billion – an indicator of the country’s growing attraction to both domestic and international investors. Mohamed Hadi Al Hussaini, Minister of State for Financial Affairs, said, “the successful completion of another sovereign bond by the UAE is a testament to our nation’s enduring attractiveness to investors and our position as one of the world’s premier investment hubs.” Location-wise, the final distribution showed that investors from the ME, US, UK, Europe and Asia accounted for 38%, 34%, 18%, 7% and 35% respectively. By investor-type, the allocation for fund managers, banks, pension funds, central banks/SVW and others received 56%, 40%, 1%, 1% and 2% respectively. The notes will be rated AA- by Fitch and Aa2 – an indicator that the UAE has a fine reputation on the global market, driven by its high GDP per capita, innovative policies, strong international relationships, and resilience to economic and financial challenges.

The Central Bank of the UAE noted that foreign trade performance would continue, this year and next, with GDP growth of 3.9% and 6.2% in 2025; growth of the non-hydrocarbon GDP will be 5.4% and 5.3% and for the hydrocarbon sector 0.3% and 8.4%. The former accounts for about 75% of the country’s GDP, and last year non-oil trade reached US$ 953.68 billion, (AED 3.5 trillion).  It also revised downwards, by 0.2%, its inflation forecast for 2024 to 2.3%. The bank noted that “indicators point towards robust economic activity within the non-oil private sectors.”

The DFM opened the week on Monday 24 June, 34 points (0.8%) higher the previous three week gained 18 points (0.4%) to close the trading week on 4,030 by Friday 28 June 2024. Emaar Properties, US$ 0.13 higher the previous fortnight, gained US$ 0.04, closing on US$ 2.15 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.60, US$ 4.47, US$ 1.57 and US$ 0.35 and closed on US$ 0.60, US$ 4.50, US$ 1.56 and US$ 0.35. On 28 June, trading was at two hundred and twenty-eight million shares, with a value of US$ 193 million, compared to one hundred and eighty-nine million shares, with a value of US$ 104 million, on 21 June.

The bourse had opened the year on 4,063 and, having closed on 28 June at 4030 was 33 points (0.8%) lower. Emaar started the year with a 01 January 2024 opening figure of US$ 2.16, to close YTD at US$ 2.23. Four other bellwether stocks, DEWA, Emirates NBD, DIB and DFM started the year on US$ 0.67, US$ 4.70, US$ 1.56 and US$ 0.38 and closed YTD at US$ 0.60, US$ 4.50, US$ 1.56 and US$ 0.35. 

By Friday, 28 June 2024, Brent, US$ 5.58 higher (5.8%) the previous fortnight, gained US$ 1.25 (1.5%) to close on US$ 86.40. Gold, US$ 27 (1.9%) lighter the previous week, gained US$ 15 (0.5%) to end the week’s trading at US$ 2,337 on 28 June 2024.

Brent started the year on US$ 77.23 and gained US$ 9.17 (11.9%), to close 28 June 2024 on US$ 86.40. Meanwhile, the yellow metal opened 2024 trading at US$ 2,074 and gained US$ 263 (12.7%) to close YTD on US$ 2,337.

Italian regulators have fined DR Automobiles US$ 6.4 million for supposedly branding vehicles that were made in China, as being produced in Italy. In fact, the Italian company assembles low-cost vehicles, using components produced by Chinese car makers Chery, BAIC and JAC. The regulator confirmed that only minor assembly and finishing work was carried out in Italy, and that the vehicles, under the company’s DR and EVO brands, were sold as being Italian made but were largely of Chinese origin. Last week, the EU threatened to hit Chinese EVs with import taxes of up to 38%, (on top of the current rate of 10% levied on all Chinese electric car imports to the EU,) after politicians called them a threat to the region’s motor industry. The announcement came after the US last month raised its tariff on Chinese electric cars from 25% to 100%.

Stellantis has warned the UK government that it would halt all production in the country, in less than a year, if it does not receive more finances to boost EV demand. The carmaker, concerned that the government’s policy of banning diesel and petrol vehicles would damage its UK business, owns several brands including Fiat, Jeep, Alfa Romeo, Chrysler, Dodge, Maserati and Opel, added that “Stellantis UK does not stop, but Sellantis production in the UK could stop”. The Sunak’s government back-pedalled a little by extending the 2030 target by a further five years to 2035. There has been an ongoing war of words, between the government and car manufacturers, over the push towards EVs, the demand of which has fallen recently because of the flooding of cheap, (apparently heavily subsidised by the Xi Jinping government), Chinese imports.

This week, Volkswagen announced it would invest up US$ 5.0 billion in Rivian, a rival to Tesla, with the JV allowing both partners to share technology; an initial US$ 1.0 billion will be put in the electric truck and SUV maker, with the US$ 4.0 balance invested by 2026. Rivian shares booted 50% higher on the news. In Q1, Rivian, founded in 2009 and yet to turn in a quarterly profit, posted a Q1 US$ 1.4 billion deficit. The industry has been beset by intensified competition between EV makers in a market that has seen a flood of cheap Chinese imports, increased government regulations, reduced revenue and falling margins. The agreement will benefit both VW in its shift away from fossil fuel-powered vehicles, as it comes under pressure from rivals, like Tesla and China’s BYD, and Rivian which has struggled to make headway in a highly competitive market.

Nike shares plunged more than 12% in yesterday’s after-hours trading, equating to a market cap loss of some US$ 15 billion, as it faces increasing competition from relatively new competitors, such as On and Hoka, as well as weakening demand in international markets, including China. The world’s largest sportswear company expects a 10% decline in quarterly revenue, posting that its direct-to-consumer business declined 8%, as some customers went for more trendy upstart brands. The company also lowered its outlook for the 2025 fiscal year. However, there is some optimism with it introducing new products and a marketing campaign at the upcoming Olympic Games in Paris will help the company regain momentum with consumers, as will the fact that it sponsors jerseys for nine of the teams in the current UEFA Euro 2024 tournament, including England, France and Portugal. Sales have been negatively impacted by the company’s reluctance to utilise wholesalers and continue to sell its products through its own stores and website.

Shein has finally filed initial paperwork in its bid to be listed on the London Stock Exchange which could value the Chinese fast fashion firm at over US$ 63.30 billion. Based in Singapore, the online retail giant, and with a strong customer base in China, has been facing strong criticism on its modus operandi and its environmental impact. The retailer, which came to the fore during the pandemic, has seen its working practices – including allegations of forced labour in its supply chain, sweat shops and trade tricks – raising concerns. It was widely expected that Shein would list in New York late last year, after it had filed papers but close scrutiny by politicians, (from both sides), and regulatory authorities about its close links with China, soon damped their enthusiasm. There is still some paperwork to close the listing process, but it does seem that it is likely that Shein will become one of the biggest names on the LSE.

Good news for some is that ex-BHS director, Dominic Chappell, has been ordered to pay US$ 63 million, (including US$ 27 million for wrongful trading and US$ 22 million for breach of fiduciary duty and other additional costs, to cover losses the firm incurred before its collapse). Mr Justice Lee, the High Court judge, noted that Mr Chappell tried to “plunder the BHS Group whenever possible” after he bought the company for US$ 1.26 (GBP 1) from Sir Phillip Green in 2015, and that he never had a realistic plan to secure capital for the company when he acquired it; he still faces another fine over a misfeasance or wrongful trading claim. He had also been imprisoned for six years in 2020 over tax evasion. The accused, a former racing driver, with no retail experience, was at the helm of BHS when it fell into administration, with a billion pounds worth of trading liabilities and pension debts, (of some US$ 722 million), in 2016. 11k employees lost their jobs. Earlier this month, two former BHS directors, Lennart Henningson and Dominic Chandler, were ordered to pay at least US$ 23 million to creditors over their role in the collapse of the retailer.

Novo Nordisk is investing US$ 4.1 billion to take advantage of the current craze for its blockbuster weight loss drugs. To meet demand, the Danish pharma firm will double the size of its Raleigh North Carolina facility to 2.8 million sq ft, which will be completed between 2027 – 2029. It is fighting with its main rival Eli Lilly for the lion’s share of a US$ 42.0 billion market in a new class of diabetes and weight loss drugs, known as GLP-1s; sales are expected to top US$ 130 billion by 2030.

This week, the yen fell to its lowest level, at 160.24 to the greenback, in thirty-seven years, and this despite increased market intervention to try and slow down the downward trend. The Japanese authorities had signalled in recent days their intention to respond to excessive volatility in the forex market, indicating that currency movements should reflect fundamentals. The current confidence in the US dollar is based on the distinct possibility that US rates will keep at its elevated rates and that the US economy continues its upward trend; this is in contrast, with Japan’s rate still hovering around the zero mark. There are reports that the Finance Ministry spent about US$ 61 billion, between 26 April to 29 May, to slow the yen’s rapid fall against the dollar. Japanese households continue to struggle with the rising cost of living, due in large part to the weaker yen making imported goods more expensive.

Japan’s industrial output in May grew 2.8% on the month driven by increased car production, with the seasonally adjusted index of production at factories and mines at 103.6 against the 2020 base of 100. The Ministry of Trade retained its basic assessment from the previous month that industrial production “showed weakness while fluctuating indecisively”. Thirteen of the fifteen industrial sectors, covered by the survey, posted higher output, whilst the index of industrial shipments increased 3.5% to 103.5, while that of inventories rose 1.1% to 103.5. Based on a poll of manufacturers, it expects output to decrease 4.8% this month but increase 3.6% in July.

A report on the demise of the Australian budget airline, Bonza, concluded that the company had “significant” solvency and operational concerns as far back as November, and “may have been insolvent from 01 March 2024 and remained so up to and including the date of the administration.” The report noted that the two Australian directors, CEO Tim Jordan and CFO Lidia Valenzuela, had had co-operated with the administrators, while the two American directors from 777 Partners, (who have an 89.87% stake in Bonza), did not; the problem was that the carrier was reliant on its majority owner 777 Partners for funding. From the start, there were problems, as Bonza had planned a June 2022 start, with three planes and scale up to eight jets over the next twelve months. Actually, the airline did not take off until February 2023 due to regulatory delays, and only had four aircraft by the time it collapsed two months ago. Over that period, it never made a profit and made total losses of US$ 87 million, (AUD 130 million) – and owes the tax office over US$ 1 million. Creditors started issuing demands for immediate payment of outstanding invoices from as early as July 2023, whilst the Commonwealth Bank notified Bonza in June 2023 that it was ceasing the banking relationship. The airline should have charged higher airfares, the report found, while noting Bonza was hamstrung by an exclusive arrangement to sell tickets through its app and not via third-party booking engines. The administrators, Hall Chadwick, (who are claiming nearly US$ 3 million in fees so far), will provide its findings to the corporate watchdog, the Australian Securities and Investments Commission. Meanwhile, creditors, including three hundred and twenty-three staff and 71.4k customers, could walk away with nothing, with the majority shareholder claiming US$ 52 million and the two minority shareholders US$ 66k and US$ 71k.

In Australia, as in many other nations’ property markets, demand continues to overwhelm supply, with the March quarter median profit made on a home sale being US$ 176k (AUD 265k) in the March quarter. Generally, the longer a vendor holds a property the higher the returns, with vendors selling after thirty or more years attracting the largest median gain of US$ 519k, (AUD 780k). According to Core Logic, Australian property resales reached their highest rate of profitability, since July 2010. The median hold period of resales across Australia was 8.8 years in Q1, down from 9.0 years in the December quarter of 2023, and 8.9 years in the March quarter of 2023. In August 2023, the portion of properties sold after two years peaked at 8.4% of resales, up from a decade average of 6.7%, whilst three-year held resales in the year to March have hit a high of 15.8%. CoreLogic estimates the combined value of nominal gains from resale was US$ 19.03 billion in the March quarter, down, on the quarter from US$ 20.33 billion, with nominal losses from resales being US$ 185 million in Q1, down from US$ 201 million. The RBA will inevitably continue to watch the number of shorter-term property resales closely for further signs of mortgage stress, but for the time being, it appears that the profitability rate across the Australian housing market helps to shore up financial stability for many property owners, at a time when higher mortgage costs are starting to take their toll on household budgets.

It was a surprise to see that the Australian May headline inflation nudge 0.4% higher, on the month to 4.0%, well above the Reserve Bank of Australia’s 2% – 3% target. The takeout from this is that the chance of a rate hike, in early Augus, has risen, as the RBA struggles to get price growth down. A lot will be decided after the release of the June CPI report on 31 July, with an August rise of 0.25% to 4.6% in the cash rate if there is still inflationary pressure evident. Surprisingly, Australia is the only G10 country where underlying inflation has increased since December. The main contributors to the price increase over the year to May were housing (5.2%), food/non-alcoholic beverages (3.3%), transport (4.9%), and alcohol/tobacco (6.7%).

It seems that corruption is rife in Europe, with the latest example involving the ex-supremo of the European Investment Bank from 2011 to 2023. Werner Hoyer, the former president of the world’s largest multilateral lender is accused of corruption, abuse of influence and misappropriation of EU funds; the seventy-two year old refutes all charges, saying the allegations against him were “absurd and unfounded”. It is thought that the investigation is centred on a compensation payment to a departing EIB staff employee, with the European Public Prosecutor’s Office, having already searched Hoyer’s house, consider him a person with knowledge of the matter. EU officials are granted immunity from legal proceedings unless it is waived by their institution. In this case it was confirmed that the EIB had lifted two former employees’ immunity so they could be investigated for suspected corruption, abuse of influence and misappropriation of EU funds. It appears that these two are Hoyer himself and the employee to whom the payment was made.

Deloitte’s latest annual review of football finance sees the twenty EPL teams set to score record revenues this season, with an annual 7.0% increase to US$ 8.09 billion, attributable to larger stadia, increased international broadcast deals, higher ticket prices, new and enhanced sponsorship deals and format changes to European competitions. Last season, revenue came in flat, at around US$ 7.59 billion, mainly due to English sides’ underperformance in Europe with none making it past the quarter finals in the Champions League. Even at US$ 7.59 billion, it was way higher than second place Germany’s US$ 4.81 billion.

With the Unite union members set to strike on 08 July, at the Tata steelworks in Port Talbot, the conglomerate has decided to bring forward its closure to 07 July; it was due to shut in September. The steelworks had two fossil-fuel-powered blast furnaces – one of which was closed down today and the other due for decommissioning in September. One of the main reasons behind the decision was to reduce carbon emissions at what is the UK’s single largest source of CO2. With these two closures, 2.8k jobs will be lost -2.5k in the next year, and a further 300 in three years – and this despite the government investing US$ 632 million, (GBP 500 million) to support the site’s transition to cheaper, greener steel production to cut emissions. The blast furnaces will be replaced by a single electric arc furnace.

The BoE posted that about three million households are set to see their mortgage payments rise in the next two years, with about 400k mortgage holders facing some “very large” payment increases of up to 50%. However, it does seem that 33% of UK mortgage holders, (about three million), are still paying rates of less than 3%, with many starting to expire and the majority of fixed rate deals will conclude by 2026. For the typical household, monthly mortgage repayments are forecast to increase by 28%, or around US$ 228k. The BoE report comes after HSBC, NatWest and Barclays began reducing mortgage rates, following hints of a summer interest rate cut by the Bank of England; it also noted that renters remain under pressure from the higher cost of living and higher interest rates.

A report by the Resolution Foundation has found that a typical household income has risen by just US$ 177, (GBP 140), a year since 2010; this equates to a total rise of just 7% over the fourteen-year period, or less than 0.5% on an annual basis, in the amount people had left over to spend after paying tax. This compares to disposable incomes rising 38% over the fourteen years up to 2010. Interestingly, it seems that poorer households have seen stronger income growth than richer ones, partly due to the UK’s strong jobs market and one-off cost-of-living payments last year; these were offset by the impact of what the report called “regressive tax and benefits policy decisions”, resulting in a 13% total overall rise in disposable incomes over the period. The richest households meanwhile saw only 2% income growth over the fourteen-year period. It put the disappointing figures down to slow economic growth and three major economic shocks – the 2008 GFC, the Covid pandemic and recent high inflation. It also noted that data from Eurostat, covering a similar but not identical period between 2007 and 2022, suggested the UK had fared worse when it came to disposable income growth than several other leading European countries, including Netherlands, France and Germany. It also found absolute poverty had fallen 3.6% since 2010, but in the thirteen years prior to 2010 it had fallen by 14.0%, and that relative poverty levels remained broadly stable over the last fourteen years, but the number of children in large families living in poverty had risen, while those in small families living in poverty had declined.

May Government borrowing was 5.6% higher on the year, (US$ 18.93 billion), and at the highest since the pandemic, as well as being the third highest return since records began in 1993. In short, this demonstrates that the public sector spent more than it received in taxes and other income, leading the government to borrow billions of pounds. The problems facing the new government – whoever that may be but definitely not the present incumbent – are manifold as it seems likely that interest rates will remain high at least for the rest of the year, thus making borrowing more expensive, public spending will inevitably have to head north and the debt will become even harder to bring down. Current government debt equates to 99.8% of the country’s GDP which is at an extraordinary level – and the highest since the 1960s. Last month, the interest payable on central government debt was US$ 10.13 billion, which was one of the highest amounts on record.  Traditionally government receipts come from an array of sources, including direct tax, VAT and National Insurance. But with the latter seeing May receipts US$ 1.14 billion less than a year earlier, offset somewhat by tax receipts of US$ 1.0 billion, there is very little in the coffers especially for the monies needed by a gamut of public services – and the distinct possibility of public debt sinking to over 100% of GDP.

There is no doubt that lending at this level cannot continue at the same pace, with events such as the GFC, the pandemic, the war in Ukraine, having forced the national debt to grow to current worryingly high levels. On top of that, own goals by the brief tenure of the  Truss/Kwarteng administration and by the then Chancellor Rishi Sunak exacerbated the interest problem. In September 2022, Truss’ US$ 57.0 billion package of unfunded tax cuts — with the promise of more to come – sunk the pound, sent interest rates soaring, caused chaos on the bond markets and forced the Bank of England to prop up failing pension funds. Then there is the think tank, National Institute of Economic and Social Research, blaming the Chancellor Sunak of failing to insure against interest rate rises, when the official rate was still 0.1%, that would have saved the UK taxpayer billions of pounds, as rates shot northwards. In 2021, when the official rate was still 0.1%, NIESR said the government should have insured the cost of servicing this debt against the risk of rising interest rates. It said interest payments have “now become much more expensive” and it estimates that the loss over the previous year was at around US$ 14.0 billion. The end result is that whoever wins the UK general election may be unable to fuel growth by increasing government borrowing. The only options available would be to raise taxes, cut public spending, (including NHS, education and police), or even to start thinking about growing the economy.

A report by the Resolution Foundation has found that a typical household income has risen by just US$ 177, (GBP 140), a year since 2010; this equates to a total rise of just 7% over the fourteen-year period, or less than 0.5% on an annual basis, in the amount people had left over to spend after paying tax. This compares to disposable incomes having risen 38% over the fourteen years up to 2010. Interestingly, it seems that poorer households have seen stronger income growth than richer ones, partly due to the UK’s strong jobs market and one-off cost-of-living payments last year; these were offset by the impact of what the report called “regressive tax and benefits policy decisions”, resulting in a 13% total overall rise in disposable incomes over the period. The richest households meanwhile saw only 2% income growth over the fourteen-year period. It put the disappointing figures down to slow economic growth and three major economic shocks – the 2008 GFC, the Covid pandemic and recent high inflation. It also noted that data from Eurostat, covering a similar but not identical period between 2007 and 2022, suggested the UK had fared worse when it came to disposable income growth than several other leading European countries, including Netherlands, France and Germany. It also found absolute poverty had fallen 3.6% since 2010, but in the thirteen years prior to 2010 it had fallen by 14.0%, and that relative poverty levels remained broadly stable over the last fourteen years, but the number of children in large families living in poverty had risen, while those in small families living in poverty had fallen. With a track record like that, and the general election next Thursday, 04 July, the simple message for Rishi Sunak, his cronies and the Conservative Party is It’s Time To Go!

Broken!                                                                                   21 June 2024

Aqua Properties posted that it has already sold over nine hundred units in The Central Downtown project, within just one hundred days of its launch; this is the firm’s seventh project. The leading real estate brokerage and developer estimates that it has captured an impressive 40.5% of all May transactions in Arjan. Its current project, spreading over a sprawling seven-acre hub, is the largest development in the community. The Central Downtown comprises four towers offering studios, and 1-3-bedroom apartments, featuring a 200k sq ft podium level, with over twenty-five amenities; they include, inter alia, a golf simulator, wave pool, basketball court, outdoor cinema, padel tennis, and organic farm, along with a 150k sq ft shopping mall, located under the four interconnected towers. Ali Tumbi, founder of Aqua Properties said, “this rapid sales success underscores Aqua Properties’ formidable presence in Dubai’s real estate market and highlights the high level of investor confidence in our projects.”

In early 2020, when the pandemic broke out, property prices and rentals witnessed a major slowdown with the country’s GDP shrinking 6.1% and account balance shrinking to 6.0% of GDP that year, as the population was largely ensconced at home, companies cut jobs, and many people leaving Dubai. However, the country recovered a lot quicker than many other nations for a variety of reasons, including progressive government measures, so that within less than a year, Dubai was showing marked signs of recovery. By the end of Q1 2021, the economy saw strong inflow of foreign funds, into the local realty sector, which started to push up property prices, with the other factor being a marked increase in the population – which grew by 295k, (8.71%), to 3.681 million in the four years from 01 April 2020 to 31 March 2024.

A study by Asteco points to the fact that Palm Jumeirah, Dubai Marina, Downtown, Jumeirah Village and Jumeirah Beach have seen the highest rental growth, in the apartment category, in Dubai, following the outbreak of the pandemic, i.e. from Q1 2021 to Q2 2024; the increases over the three years to Q1 2024 were 84%. 69%, 69%, 68% and 65% respectively. In the villa sector the leading five locations, with the highest rent increases, were seen in Jumeirah Islands, (106%), Palm Jumeirah, (100%), Dubai Sports City, (100%), Dubai Hills Estate (99%) and Damac Hills (96%).

On the flip side, the report shows that Meydan/MBR City, Mirdif, Bur Dubai, Dubailand and Deira saw the lowest rental growth in the apartment category in Dubai, following the outbreak of the pandemic, i.e. from Q1 2021 to Q2 2024; the increases over the three years to Q1 2024 were 16%, 23%, 28%, 30% and 35% respectively. In the villa sector the leading five locations, with the lowest rent increases, were seen in Damac Hills (29%), Dubailand (31%), Dubai Silicon Oasis, (37%), Mirdif (37%) and Reem (44%).

Obviously favourable locations, with features such as proximity to key business districts/ leisure attractions/educational facilities/shopping malls/green space etc. come with a premium; such areas include Dubai Marina, Downtown Dubai and Palm Jumeirah. Other locations that may have experienced oversupply – usually more affordable housing in tertiary locations and older properties, with limited amenities – will have seen rent rises but at a much slower pace but still a minimum 16% rent hike.

Asteco noted that “we anticipate that tertiary locations, such as those along Dubai-Al Ain Road, Lehbab Road, Al Qudra Roundabout, the E611 corridor, and areas near Al Maktoum International Airport, are poised for a marked uptick in rental rates”. The main driver being that these locations are benefitting from tenants who have been priced out of more centrally located and established communities. Such communities, considered to be on the outskirts of the city, are growing in popularity because of relatively cheaper, and newly-built accommodation, with most new communities boasting improved infrastructure and accessibility, coupled with attractive amenities. Many have already become MSSS (mini self-sufficient satellite) cities.

There is no doubt that Dubai has proved to be a magnet for wealthy Russians, Indian HNWIs, and a large number of British and European investors. The latter group, most trying to escape high local taxation, have been attracted by UAE’s zero income tax regime, golden visa, luxury lifestyle and strong gains in the emirate’s real estate market; furthermore, high tax rates, a deteriorating political outlook and increased street crime are other factors pushing them to make the move to Dubai, one of the safest global environments. The government is playing their part by providing a secure and safe city, with an unmatched quality of life, a world-class environment, including entertainment/leisure/education/retail facilities, and easy connectivity to all parts of the world. It is estimated that 20% of millionaires, (rising to 60% when it comes to centi-millionaires and billionaires), are entrepreneurs and company founders, are more likely to start new businesses – and create local jobs; they will also bring money with them and spend in Dubai to help grow the economy.

In the first five months to 31 May, there has been a record two hundred and seventy rental transactions, with annual rentals of US$ 272k (AED 1 million) or over, due to unprecedented demand for uber-luxury properties and further proof that the UAE is a magnet for HNWIs from across the world. Betterhomes note the prime locations dominating the high-end market were Palm Jumeirah, Mohammad bin Rashid City, and Dubai Hills Estate. The split sees 61% of the rentals being villas/townhouses, and the remaining 39% for apartments; the average size for luxury apartments was around 4k sq ft, while villas/townhouses average around 6.3k sq ft. Betterhomes data showed that an individual leasing  a luxury property in Dubai has got a cheaper deal than his peers in London, New York, Hong Kong and Singapore; the minimum annual rent for the luxury market is US$ 136.2k in Dubai but US$ 190.7k in London and New York, US$ 318.8k in Hong Kong and US$ 260.2k in Singapore.; the average size of a Dubai unit is much bigger than in the four cities.

On a global scale, the UAE is ranked fourteenth when it comes to homes for millionaires; latest figures indicate that the country is home to 116.5k millionaires, three hundred and eight centimillionaires and twenty billionaires. This year, the country is expected to welcome 6.7k new millionaires, well ahead of the likes of US, Singapore, Canada, Australia and Italy, with figures of 3.8k, 3.5k, 3.2k, 2.5k and 2.2k. On the flip side, China, the UK, India, South Korea, Russia, Brazil, South Africa, Taiwan (Chinese Taipei), Nigeria and Vietnam will have the highest net outflow of millionaires in 2024. Last year, 120k millionaires relocated to different countries worldwide, with numbers forecast to reach 128k this year and 135k in 2025. Dubai now boasts the highest concentration of wealthy individuals in the ME, with a collective net worth exceeding US$ 1 trillion.

The 2024 Cost of Living City Ranking by Mercer ranks Dubai as the fifteenth most expensive global city for international employees – three places higher than last year. To no surprise the main driver was the increase in the emirate’s cost of living, leading to a marked jump in residential property – both for sale and for rental. According to the survey, three-bedroom properties posted a 15% hike in rents, on the year while rents increased by 21% from 2023 to 2024, which is among the highest among the major cities. There is no doubt that inflation has played a large part in eroding the purchasing power of global hires and putting additional strain on their compensation packages. Yvonne Traber, Mercer’s global mobility leader, noted that “high living costs may cause assignees to adjust their lifestyle, cut back on discretionary spending or even struggle to meet their basic needs.”  Using New York City as the base city, and the dollar being used for currency movements, the survey covered two hundred and twenty-six cities, utilising a gamut of over two hundred items – from housing and transportation to food, clothing, household goods, and entertainment. The study showed that the prices of eggs, olive oil, and cup of coffee increased in the emirate while the prices of petrol, haircut, and blue jeans dropped between March 2023 and March this year. Regionally, the next most expensive city in the ME region was Tel Aviv, which has dropped eight places to rank sixteenth, followed by Abu Dhabi (43), Riyadh (90), Jeddah (97), Amman (108), Manama (110), Kuwait City (119), Doha (121) and Muscat (122). The top five expensive cities were Hong Kong, Singapore, Zurich, Geneva and Basel, with Abuja, Lagos and Islamabad at the other end of the scale.

As part of its strategy to increase capacity across Latin America, DP World has finalised a US$ 400 million expansion project at the Peruvian port of Callao; it is expected that container handling capacity at the port’s south terminal will increase by 80% to 2.7 million twenty-foot equivalent units, “solidifying Callao’s position as the key gateway for global trade on the west coast of South America”. The port’s pier has also been extended by 61.5%, to 1.05k mt metres, allowing Callao to accommodate “three ships or two mega-ships at once”, making it one of the few ports in South America with that capability. DP World is also heavily investing in Ecuador and Brazil to boost capacity and operational efficiency, spending US$ 140 million, with plans to extend its berth at the Ecuadoran Port of Posorja to 700 mt. DP World also manages a special economic zone adjacent to the port. The Dubai-based port operator has also teamed up with Brazilian railway operator Rumo to build a terminal at Brazil’s Santos port – one of the largest ports in Latin America – to manage 12.5 million tonnes of cargo annually; the construction cost for the new complex at Santos is estimated to be US$ 500 million.

In the annual IMD World Competitiveness Ranking, the UAE moved up three places to seventh behind first place Singapore, Switzerland, Denmark, Ireland, Hong Kong and Sweden; Qatar nudged one place higher to eleventh, place, Saudi Arabia one notch to sixteenth and Bahrain four spots to twenty-first in the table of sixty-seven global economies evaluated. China and India came in at thirteenth and thirty-ninth. The country was ranked among the top ten globally in more than ninety key sub-indicators, including second spot in terms of economic performance, fourth place for government efficiency and tenth for business efficiency. It was also rated highly for its business-friendly environment, the dynamism of its economy, reliable infrastructure and its competitive tax regime. HH Sheikh Mohammed bin Rashid commented “our thanks and appreciation go to all the teams in the government, economic, and development sectors who work with one spirit to achieve a single goal: the progress of the United Arab Emirates.” The report posted the three most influential trends, having an impact on businesses in 2024, are the adoption of AI, the risk of a global economic slowdown and geopolitical conflicts.

According to the UN Trade and Development’s World Investment Report 2024, the UAE was ranked second to the US in 2023 in the number of greenfield FDI project announcements – at 1,323, 33% higher on the year. In terms of inflows, there was a 35% hike in value to US$ 30.69 billion, whilst outflows came in 10.1% lower at US$ 22.33 billion. FDI outflow stock was 9.3% higher at US$ 262.21 billion. FDI outflow stock grew to US$ 262.208 billion in 2023 from US$ 239.880 billion in 2022. Last year, global FDI decreased by 2.0% to US$ 1.3 trillion. The report noted that there had been another year of double-digit declines in global foreign investments, driven by increasing trade and geopolitical tensions in a slowing global economy. It also added that “modest growth for the full year appears possible”, citing the easing of financial conditions and concerted efforts towards investment facilitation – a prominent feature of national policies and international agreements. FDI flows to developing countries fell by 7.0%, to US$ 867 billion, in 2023 reflecting 8.0%, 3.0% and 1.0%  decreases in developing Asia, Africa and Latin America/Caribbean. On the other hand, flows to developed countries were strongly affected by financial transactions of multinational enterprises, partly due to efforts to implement a global minimum tax rate on the profits of these corporations. Inflows to most parts of Europe and North America were down by 14.0% and 5.0%. With tight financing conditions in 2023, the number of international project finance deals – crucial for funding infrastructure and public services such as power and renewable energy – fell by 25%. This triggered a 10.0% reduction in investment in sectors linked to the Sustainable Development Goals, most notably impacting agri-food systems, and water/sanitation. These sectors registered fewer internationally financed projects in 2023 than in 2015, when the goals were adopted.

Latest figures from the Central Bank of the UAE reconfirm the importance of small and medium-sized enterprises to the national economy, as do figures from the Ministry of Economy, indicating that the SMEs sector represents more than 95% of the total number of companies operating in the country, whilst providing 86% of all jobs in the private sector. It is estimated that the accumulated balance of financial facilities and loans, extended by banks operating in the UAE, to SMEs reached US$ 22.26 billion by the end of Q1, whilst loans to SMEs accounted for 9.7% of the total accumulated balance of financial facilities for the trade and industrial sector which stood at US$ 229.35 billion by the end of March 2024.

The value of gold reserves of the Central Bank of the UAE grew 12.6% on the year to reach US$ 5.34 billion by the end of March 2024, and by 9.8% on a monthly basis from February’s balance of US$ 4.87 billion. Over the past five years, the value of gold reserves has more than quadrupled from 2019’s balance of US$ 1.10 billion.

It is expected that Q3 will see the finalisation of a deal between a consortium led by Brookfield Asset Management and Gems Education. Dubai’s largest education provider, which expects, next term, to have a record 140k student enrolment, and forty-six schools in the UAE and Qatar, already has an impressive array of financial backers including Gulf Islamic Investments, Marathon Asset Management and the State Oil Fund of Azerbaijan. No financial details were made available, but some reports put the investment at the top end of US$ 2.0 billion. Gems’ CE, Dino Varkey, commented that “we are well positioned for future growth, thanks to a supportive operating environment that is driving record enrolments, underpinned by a strong UAE economy and a growing population,” and the investment will help the company prepare for its “next phase of growth”.

The DFM opened the shortened week on Wednesday 19 June, 6 points (0.1%) higher the previous fortnight gained 28 points (0.7%) to close the trading week on 4,012 by Friday 21 June 2024. Emaar Properties, US$ 0.09 higher the previous week, gained US$ 0.04, closing on US$ 2.15 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.62, US$ 4.43, US$ 1.52, and US$ 0.35 and closed on US$ 0.60, US$ 4.47, US$ 1.57 and US$ 0.35. On 21 June, trading was at one hundred and eighty-nine million shares, with a value of US$ 104 million, compared to ninety-seven million shares, with a value of US$ 47 million, on 14 June.

By Friday, 21 June 2024, Brent, US$ 3.09 higher (2.8%) the previous week, gained US$ 2.49 (3.0%) to close on US$ 85.15. Gold, US$ 44 (1.9%) higher the previous week, shed US$ 27 (1.1%) to end the week’s trading at US$ 2,322 on 21 June 2024.

Swifties may wish to know that the singer has reportedly ordered forty-five large kebabs for her team ahead of her Wembley Stadium show, starting tonight; Taylor Swift is set to perform in front of up to 90k fans in the first of eight Eras Tour shows at the London venue. It has also been reported that she had bought hundreds of Greggs sausage rolls, steak bakes and bakery goods for her team when performing in Edinburgh earlier in the week.

Another week and further nails in the coffin for the embattled plane maker Boeing, now being involved in reports of a Southwest Airlines Boeing 737 Max 8 being rocked side to side while in air, a potentially dangerous movement known as a ‘Dutch roll’. The incident took place last month and US regulators, with the FAA, noting the aircraft regained control and no-one on board was injured, but the plane suffered “substantial” damage. A post-flight inspection of the two-year-old plane revealed significant damage to a unit that provides backup power to the rudder.

The other ongoing investigation, which is giving the plane-maker another major headache , is that it was found to have potentially falsified documents used to certify titanium in its planes – Boeing had initially reported the problem. It also noted that the titanium issue was “industry-wide”, involving shipments from a limited set of suppliers, but that tests performed so far indicate that the correct alloy was used, despite the false documentation.

This week also saw the release of another damning report by a whistleblower that included allegations that defective parts may be going into 737 variant aircraft; the quality assurance investigator, at an assembly plant near Seattle, also claimed that Boeing hid evidence after the industry regulator, the Federal Aviation Administration, told the company it planned to inspect the plant in June 2023; it “ordered the majority of the (nonconforming) parts that were being stored outside to be moved to another location”, and that “approximately 80% of the parts were moved to avoid the watchful eyes of the FAA inspectors.”

Following the two fatal 737 MAX crashes, in 2018 and 2019, Boeing signed a deferred prosecution agreement in 2021, agreeing to pay US$ 2.5 billion to resolve the investigation into its conduct, compensate victims’ relatives and overhaul. The terms of that deal were due to expire in January 2024 but, two days beforehand, the Alaskan Airline 737 MAX 9 mid-air panel blowout occurred. Now some relatives, of the three hundred and forty-six persons who perished in the two crashes, say that Boeing should be fined almost US$ 25.0 billion and face criminal prosecution, being guilty of the “deadliest corporate crime in US history”. The plane maker has breached its obligations in the 2021 agreement that shielded Boeing from criminal prosecution. Boeing denied last week that it had violated the terms of the deferred prosecution agreement through its production practices ahead of the Alaska Airlines incident.The Department of Justice will make a final decision on the case by 07 July. Despite its market cap falling by a third YTD, its CEO’s 2023 pay package of almost US$ 33 million was signed off by shareholders last month.

Ferrari’s first foray into the EV sector will see the Italian automaker opening a new plant, manufacturing a vehicle that will cost at least US$ 535k to put on the road. Ferrari has faith in the success of this new venture, bearing in mind that the price tag does not include features and personal touches that typically add 15% – 20% to the base price. It expects that overall production will be up 33%, even in a period that there is declining demand for such mass-market vehicles. The 2022 launch of its Purosangue SUV indicated that Ferrari could survive in a sector of the market, other than its traditional two-seat sports cars and grand tourers. Its new factory, to be completed by Q4, will give Ferrari an additional vehicle assembly line and will make petrol and hybrid cars as well as the new EV, plus components for hybrids and EVs. It is reported that a second EV model is also under development, but at that time, the company might not want to increase overall production to 20k vehicles per year, at least in the short term.

Having only recently supplanted Apple as the world’s most valuable company, Microsoft has now been dethroned by Nvidia on Tuesday when its market cap topped US$ 3.326 trillion – a huge leap bearing in mind that in February, it had hit US$ 2.0 trillion for the first time; YTD its share value has jumped 170%, compared to Microsoft seeing its value only 19.0% over the same period. The stock has risen more than 170% this year given the chipmaker’s leading position in the AI race with 80% of the processor market. By today, 21 June, Apple had returned to pole position.

Despite posting a Q1 “strong performance”, including a 1.0% increase in revenue to US$ 938 million, Premier Inn owner Whitbread still aims to go ahead with earlier announced job cuts of 1.5k. The brewer had said the cuts were part of plans to build more hotel rooms and slash its chain of branded restaurants by more than two hundred; it owns restaurant chains including Brewers Fayre, Beefeater and Bar + Block. In a trading update on Tuesday, the company said it was “confident” in its outlook for the year “underpinned by our strong commercial programme and good progress on cost efficiencies”. However, the Unite union is not so content and has organised the protest outside the Dunstable headquarters of the hospitality company. The union, which is not formally recognised by Whitbread, claims that it has failed to answer, “basic questions” about the redundancy process and also claimed it has not properly consulted staff, some of whom live in accommodation tied to their workplaces, and noted that “generating runaway profits while trampling workers is business as usual for Whitbread”.

With Sainsbury’s moving out of banking, to focus on its core business, an agreement has been reached with NatWest for it to buy the supermarket’s banking  sector which will see the high street bank gaining about one million customer accounts, whilst taking on US$ 1.78 billion of unsecured personal loans and US$ 1.40 billion of credit card balances, along with US$ 3.30 billion of customer deposits. The deal will result in Sainsbury’s Bank paying out US$ 159 million to NatWest and US$ 317 million to Sainsbury’s, with NatWest taking on the credit cards, loans and savings accounts of Sainsbury’s Bank. The buyer is not acquiring the Sainsbury’s Bank brand, or its cash machines, insurance or travel money businesses.

Movie history has been made this week with Pixar’s Inside Out 2 becoming the highest-grossing animated film opening of all time, grossing an estimated US$ 295 million at the box office. Ticket sales topped US$ 155 million in North America, the film’s largest market, well clear of the US$ 90 million made by the original movie in 2015, going on to US$ 858 million worldwide while in theatres. However, the number of cinema tickets sold in North America this year is down by 25%, compared to the same period in 2023.

US Attorney General Merrick Garland has accused Done’s CEO of running a US$ 100 million scheme to fraudulently distribute over forty million pills of Adderall and other controlled substances. It is alleged that the telehealth company’s clinical president, David Brody, and CEO Ruthia, conspired “to provide easy access to Adderall and other stimulants for no legitimate medical purpose”. These charges are the Justice Department’s first criminal drug distribution prosecutions related to telemedicine prescribing through a digital health company,” after regulations were loosened during the pandemic. The San Franciscan start-up benefitted from Covid as an online way to obtain Adderall, (a medication that helps manage symptoms of ADHD – which can include an inability to focus on a single task), by paying a monthly subscription fee. Part of the alleged scheme included increasing the subscription fee, thus increasing the value of the company to “unlawfully enrich themselves”. They are also accused of defrauding government healthcare assistance programmes Medicare and Medicaid, as well as pharmacies, out of at least US$ 14 million and of conspiring to obstruct justice by deleting documents and emails.

The Department of Justice has charged twenty-four people with offences, that also include distributing narcotics, and has accused a Chinese “underground banking” network, of helping Mexico’s powerful Sinaloa drugs cartel with money laundering and other crimes. It also blames the cartel of assisting to fuel a deadly epidemic by flooding the country with fentanyl, a synthetic opioid up to fifty times stronger than heroin! It also claimed that more than US$ 50 million in drug proceeds were illegally ‘transferred’ between the Mexican cartel and the Chinese “money exchanges”. Law enforcement officers have seized about US$ 5 million  in proceeds, as well as guns and hundreds of pounds of cocaine, methamphetamine and ecstasy pills. In 2022, over 70k Americans died from fentanyl overdoses of the drug, and Washington says Chinese-made opioids are fuelling the worst drug crisis in the country’s history.

Apart from May retail sales beating forecasts, (up 3.7% on the year, compared to 2.3% in April – due to a five day public holiday boost), much of the latest economic data from China paints a largely downbeat picture for the economy, with the slowdown in the property sector still in the doldrums and industrial output still behind official forecasts, growing at 5.6% on the year, compared to the previous month’s return of 6.7%. There are concerns that Chinese solar and electric vehicle producers may see increased global tariffs eating into their revenue streams which in turn will impact their margins and production lines. Property investment fell 10.1%, year-on-year, in January-May, compared to a 9.8% decline in January-April. For the eleventh consecutive month, new home prices slipped 0.7% on the month in May – its steepest drop since October 2014. The property sector, which accounted for nearly 30% of economic output before the downturn, has been hit by a regulatory crackdown as well as demographic and broad economic pressures. China’s property market slump, high local government debt and deflationary pressure remain heavy drags on economic activity.

However, there was some good news. The government has launched a raft of measures to help homebuyers, such as easing mortgage rules. Exports did help bolster the economy, with steel and aluminium output posting sharp jumps in May, whilst January – May manufacturing investment showed strong growth of 9.6%, underpinned by China’s emphasis for “quality growth” through technological breakthroughs and innovation this year. Fixed asset investment rose 4.0% in the first five months of 2024 from the same period a year earlier. Consumption has remained fairly stable. China’s economy grew a faster-than-expected 5.3% in Q1, in line with the government’s 5.0% target but the ‘canary in the coal mine’ remains the sorry state of the property sector.

The 2021/22 annual Taxation Statistics showed that one hundred and two Australians, who earned more than US$ 660k (AUD 1 million) in total income, paid no tax in 2021–22: the previous year the number had been sixty-six. It was estimated that their average income that year was US$ 2.51 million and that they managed to squeeze out US$ 184.67 million worth of tax deductions, (of which US$ 158.77 million was in donations to tax-deductible charities), which reduced their tax bills to zero. Interestingly, 2.3 million Australians declared rental income, with 1.6 million owning only one investment property with 428.0k (19%), 132.3k (6%) and 47.6k (4%) owning two, three and four and over properties; 19.5k and 20.0k own five and over six properties. There was an 87.3% increase in overall rental net income at US$ 3.97 billion. In the year, more landlords made profits than losses, as interest rates were at historic lows for much of that financial year, as the net rental gain median was US$ 708, and the average was US$ 1,725. 950k landlords who made a loss (were negatively geared), the median loss was US$ 2,362 and the average was US$ 4,173.

Doctors continue to dominate in terms of earning the highest average incomes by occupation, with surgeons and anaesthetists earning on average US$ 305k and US$ 285k. Financial dealers came in next, earning US$ 247k. The lowest-paid occupations were classed as “drivers” with an average taxable income of US$ 6.7k and “care workers” with an average taxable income of US$ 8.9k. At the other end of the scale were “boxers” (US$ 10.7k), “leaflet deliverers” (US$ 12.2k) and “cooks” (US$ 13.9k). More than 15.5 million Australians lodged tax returns in 2021–22, with an average taxable income of US$ 47.8k, but when the very high and the very low earnings were omitted, the figure was US$ 35.1k. Total tax revenue collected by the ATO was US$ 350.69 billion, of which 50.3% came from individual income tax US$ 176.43 billion, followed by companies, GST, super funds, excise, Fringe Benefits Tax and Petroleum Resource Rent Tax/Luxury Car Tax/Wine Equalisation Tax accounting for US$ 84.74 billion -24.2%, US$ 50.28 billion – 14.3%,  US$ 19.25 billion – 5.5%, US$ 14.95 billion  – 4.3% and US$ 4.96 billion – 1.5% respectively.

Recently issued Eurostat data showed that, in April, the EU trade balance with the rest of the world showed a US$ 16.08 billion surplus – a major improvement from the previous year’s US$ 11.85 billion deficit – because of an increase in the deficit of the energy sector and a decrease of surplus for ‘chemicals. Exports to the rest of the world were 14.0% higher at US$ 265.02 billion (2023 – US$ 232.48 million), with imports 1.8% higher at US$ 248.86 billion, (2023 – US$ 244.36 billion). In the four-month period to April, the euro area posted a US$ 77.92 billion surplus, compared to a deficit of US$ 21.94 billion a year earlier. Exports and imports to the rest of the world rose 0.8% to US$ 1.02 trillion and lost 8.9% to US$ 943.35 billion respectively. Intra-euro area trade fell 5.1% to US$ 937.67 billion. There was a US$ 14.90 billion surplus in trade in goods with the rest of the world, compared to a deficit of US$ 15.22 billion in April 2023. Both the extra-EU exports and imports were both higher in April 2024, on the year, were 14.9% higher at US$ 238.04 billion and 0.3% at US$ 222.28 billion respectively.

After two years on the sidelines, the London Stock Exchange has regained its position as the most lucrative bourse in Europe, with the total value of companies listed at US$ 3.18 trillion on Monday, overtaking the Euronext Paris total of US$ 3.13 trillion. After several years of underperformance, the UK market is recovering, whilst the French market has recently been impacted by political uncertainty. London had been Europe’s leading bourse for many years but lost that position in November 2022 for a variety of reasons such as the fallout from former Prime Minister Liz Truss’s mini-Budget, a weak pound, recession fears and Brexit. As noted in previous blogs, the LSE has seen several big firms, including ones based in the UK, choosing to list in the US rather than the UK. One of the biggest challenges facing the LSE over the last decade has been pitching to investors and companies tempted by American exchanges. The S&P All-Share index, which tracks the value of every listed company in the US, has soared over 85% over the last five years, whereas over the same time span, the equivalent FTSE All-Share index has increased by less than 10%. However, it must be noted that returns are skewed somewhat by a handful of highly valued tech stocks, including Google, Apple, and Amazon, are taken into consideration.

In 2012, under pressure from MPs, the Post Office commissioned a report from Second Sight to look into claims from sub-postmasters that Horizon had been to blame for shortfalls in their accounts, rather than criminality. At the ongoing Post Office enquiry, a forensic accountant, working for Second Sight, claimed that the Post Office was “constantly sabotaging” the work of independent investigators probing issues and that it had unjustifiably withheld documents. He said protecting the Post Office brand was the priority, rather than supporting sub-postmasters, and added that former Post Office boss Paula Vennells tried to steer investigators away from looking into potential miscarriages of justice. He added that rather than being interested in getting to the truth of what happened, the Post Office had tried to obstruct Second Sight’s efforts, and that “requests for documents were either ignored or responses were excessively delayed,” and that “unjustified claims of legal professional privilege were used to justify withholding documents from us.” The forensic accountants were sacked by the Post Office in March 2015.

UK retail sales in May surprised the market by posting a higher than expected 2.9% hike, driven by increased footfall, better weather and deals; the previous month had seen so much heavy rain that had kept shoppers away from the high street, with sales falling by 1.8%.   The Office for National Statistics reported a strong monthly growth in non-food shops including the likes of footwear, sports equipment, games and toys outlets posting an improvement in their quantity of sales, with a marked rebound in clothes and furniture sales.

Apart from an improvement in May retails sales, the only other good news that Rishi Sunak has had all year was that, this week, the UK’s inflation rate finally declined to the BoE’s 2.0% target last month, for the first time in almost three years; in October 2022, inflation topped 11.1% – its highest level in over forty years. As expected, the central bank has maintained rates at 5.25% – still the highest rate seen since 2006. The monthly 0.3% dip was down to a slowdown in price rises for food/soft drinks, recreation/culture and furniture/household goods, offset by a sharp jump in petrol prices. The fall in inflation only indicates that prices are still moving higher, albeit at a slower rate, and does not necessarily mean that the prices of goods and services overall are coming down. Indeed, food prices are still  up to 20% higher than at the beginning of 2022. UK inflation is now rising at its slowest pace since July 2021, and it is also lower than in the eurozone and the US, where rates in May were 2.6% and 3.3% respectively. However, it is highly unlikely that the BoE will tinker with rates until August, at the earliest, despite the headline rate being finally reined in at 2.0% because inflation for all services remains at 5.7%. Real prices for food, energy, clothing and rents are all around 20% higher than they were three years ago and for some mortgage repayments have doubled. For the first time UK households are poorer in real terms at the end of a 2024 Parliament than they were at the start in 2019.

Only a fortnight away from the General Election, the people of Birmingham are fully aware that whoever gets the keys for Number 10, conditions in the UK’s second city will remain in a diabolical state. The city, which is heavy in debt and needs to claw back US$ 600 million over the next two years, has child poverty hovering around the 50% level, and the once industrial powerhouse in the eighteenth and nineteenth centuries, cannot now afford to keep its lights on at night and has had to resort to fortnightly garbage collection. Nine months ago, the City Council issued a 114 notice, effectively declaring it was bankrupt. Other cuts to public service will see twenty-five of the city’s libraries close, money for children’s services slashed and a 100% funding cut to the arts and culture sector by 2026. 40% of the city’s population is under twenty-five and it is felt that this sector will be hardest hit from the budget cuts, as frontline and preventative services bear the brunt of the cuts. Birmingham has the highest unemployment rate of all the UK’s major cities.  There are various reason put forward for the sorry state of the city’s finances. The austerity measures – including a marked reduction in government spending on local authorities, welfare, local authorities, police, courts and prisons as well as the cancellation of school building programs – unnecessarily brought in under the Cameron/Osborne administration have seen public services being paralysed across the UK. The largest local authority in Europe, which has a revenue stream of over US$ 4.3 billion, has also been wounded by self-inflicted injuries, including a bill of up to US$ 954 million to settle equal pay claims in a gender-pay dispute settlement and the flawed implementation of a new Oracle IT system; the Oracle project’s cost rose from an initial US$ 24 million to US$ 48 million, and following ongoing issues BCC announced in June 2023 that it would have to spend an additional US$ 59 million to rectify the problems that were being experienced.

The current government’s current Secretary of State for Levelling Up, Michael Gove, who lives in cuckoo land, has a real job when it comes to levelling. To be fair to the man, who sems to have a reputation of stabbing other politicians in the back if circumstances so direct, has an impossible task. Of the UK’s core cities, Birmingham has the highest number of people claiming unemployment support, with 12.0% of residents, relying on government benefits, compared to just 5.0% in London, whilst just under 50% of all children in Birmingham are classed as living in poverty, compared to 32% in the capital. London offers more job opportunities – 76.0% to 69.2% – whilst the crime rate, at 14.0%, is higher in Birmingham compared to London’s 8.7%. To make matters worse, it is estimated that ‘Brummies’ will die three years younger than a Londoner. Welcome to the UK where the NHS, immigration policy, Rishi Sunak’s promises, England’s Euro hopes and the ruling Conservative Party are all Broken!

Don’t Believe Everything You Hear!                                                   07 June 2024

Records were broken last month, with Dubai’s real estate sector posted the highest ever volume and value of transactions at 17.7k, (53.3% higher compared to May 2023) and  up 38.0% on the year to US$ 12.67 billion. According to Property Finder, the previous peaks for volumes were in March 2024, and for value in December 2023, with May 2024 returns 10.0% and 30% higher. Further analysis indicated that in the:

Rental Market

• 78% were seeking apartments; 58% of those seeking apartments preferred furnished; 19%, 35% and 33% were looking for studios, 1 B/R and 2 B/R respectively; top search areas were Dubai Marina, Jumeirah Village Circle, Downtown Dubai, Business Bay and Jumeirah Lake Towers
• 22% were seeking villas/townhouses; 57% of those in the villa/townhouse market were looking for furnished units; 38% and 43% were searching for 3 B/R and 4 B/R, (or larger); top search areas were Dubai Hills Estate, Dubai South (Dubai World Central), Al Furjan, Arabian Ranches, and Palm Jumeirah

Buying Market

• 59% were seeking apartments; 14%, 32% and 36% were looking for studios, 1 B/R and 2 B/R respectively; top search areas were Dubai Marina, Downtown Dubai, Jumeirah Village Circle, Business Bay and Palm Jumeirah
• 41% were seeking villas/townhouses; 57% of those in the villa/townhouse market were looking for furnished units; 40% and 46% were searching for 3 B/R and 4 B/R, (or larger); top search areas were Dubai Hills Estate, Dubai South (Dubai World Central), Al Furjan, Arabian Ranches, and Palm Jumeirah

May also witnessed the highest ever monthly volume and value of off plan transactions, with the former posting over 11.1k transactions, (surpassing the previous peak of 9.8k registered as far back as April 2009), valued at US$ 6.19 billion.

The existing market continued to support Dubai’s real estate market with an annual increase of approximately 8.8% in volume and 6.6k transactions recorded. The value of these transactions experienced a notable annual increase of 21%, touching approximately US$ 6.49 billion.

There are claims that a Jumeirah Bay home, being rented out for US$ 1.0 million a year, is not only one of the ‘most valuable’ rental deals in Dubai’s property history but also the highest ever for a townhouse. The five-bedroom Villa Amalfi home, encompassing 5.2k sq ft, came fully furnished, including Christofle cutlery, Hermès furnishings and a selection of contemporary art. It also boasts a private gym, sauna, and a rooftop terrace with skyline and sea views.

Since its rebranding in November 2023, Tabeer Developments, has rapidly drawn up expansion plans, allocating US$ 272 million in inventory to be launched this year. The nine-year old developer has a real estate portfolio that spans across community areas like International City, (Dragon Views and Tabeer 1), Dubai Sports City, (V2), Arjan, (48 Parkside), and JVC, (99 Park Place); the last two mentioned projects will be handed over this year. Last week, the developer launched its new residential project, Parkside Boulevard, with six retail spaces and one hundred and sixty-five apartments, including studios (441 sq ft and prices starting from US$ 174k), one-bedroom (starting from 779 sq ft and US$ 286k), and two-bedroom apartments (starting from 1,267 sq ft and US$ 409k). Some of its many facilities include glass elevators, concierge services, wellbeing havens, kids’ areas and recreational zones.

This week, Dubai South Properties unveiled South Living, a luxury apartment project, comprising two hundred and nine spacious units, with options of studio to three-bedroom apartments; there will also be special-terraced units, offering a mix of indoor and outdoor living experiences. Located in Dubai South’s Residential District, it will also have the usual accoutrements such as a swimming pool/deck area, gymnasium, sauna, a multi-purpose room, a kids’ library, a yoga deck, BBQ area, gazebo seating area, and artistically landscaped elevated gardens. The Residential District is home to over 25k residents, and has amenities such as public parks, sports courts, retail shops, a 50k sq ft hypermarket, a mosque and a petrol station; currently, a premium British curriculum school is being built in the location. The community is also serviced by the RTA public bus network, with easy connectivity to the Expo Metro station.

Another property unveiling this week was Swank Development’s US$ 87 million Lua Residences project, located in the Mohammed bin Rashid City in Meydan. The gated community will be home to a limited collection of forty-two four- to six-bedroom villas, each with their own private pool, interior elevator, landscaped gardens, and innovative solutions such as smart home technology. It will have a raft of external amenities such as vast open spaces, a crystal lagoon, sports facilities, a mosque, retail shops, supermarkets, schools, and medical clinics.

The Dubai Land Department has announced that three unnamed developers have each been fined US$ 136k for promoting and marketing real estate projects, without completing the mandatory registration procedures for off-plan projects. It was said that they had violated a law on real estate development escrow accounts. Ali Abdullah Al Ali, director of the Real Estate Control Department, urged investors to verify that off-plan projects are licensed and registered with an escrow account. He also advised that investors must not “make any payments outside the project’s escrow account”.

At the IATA annual meeting, Emirates’ president, Tim Clark, announced that the historic storm, that hit the country on 16 April, cost the airline US$ 110 million, adding that “it was a very, very difficult situation to manage.” He also noted that “it got so bad that access to the airport was underwater, so nobody could get to the airport,” and that Emirates’ protocols were “under huge stress and challenges” and were overwhelmed by the situation. Now the airline is undertaking a major review of its procedures.

Emaar has revealed a US$ 409 million expansion plan for Dubai Mall, which will result in the addition of two hundred and forty retail and dining options, with preliminary work having already started. Last year, with a 19% hike in numbers to a record one hundred and five million visitors, it became the most visited place on Earth. Emaar’s chairman commented that “this expansion reflects Dubai’s ambitious vision to remain at the forefront of global innovation and culture, further solidifying our city’s position as a top global destination”.

A busy week for the Emaar chairman, as he also announced the launch of a multimedia fountain plaza, ‘Water, Colour and Fire Plaza’ in Dubai Square in Dubai Creek Harbour, which will feature a mesmerising display of fire, vibrant colours, and synchronised music. The design ensures the area remains functional and accessible even when the music feature is deactivated, so it becomes a lively public space inviting visitors to walk and engage with their surroundings. The developer is in discussions with a Chinese technology company, known for its expertise in creating iconic music and fire features. The plaza will surround the upcoming Dubai Creek Tower, part of Dubai Creek Harbour, which encompasses 7.4 million sq mt of residential space and 500k sq mt of gardens and open areas.

Following a directive from HH Sheikh Mohammed bin Rashid Al Maktoum, Dubai’s government has been tasked to develop two public beaches – Al Mamzar Beach and Jumeirah (1). The renovations, lasting some eighteen months, will see the two public beaches reach world-class standards, with the provision of health and public service facilities including restrooms, shower areas, and changing rooms. Contracts totalling US$ 97 million for the two beaches’ development have already been awarded spanning a total of 5.7 km (4.3 km at Al Mamzar and 1.4km at Jumeirah 1). Scheduled for completion in 18 months, these projects signify a significant advancement in beach design. According to the social media account of the Dubai Urban Master Plan 2040, there will be numerous upgrades and additions for recreational activities, as well as the two beaches using advanced technology—with advance safety deposit boxes, Wi-Fi internet services, electronic screens, and beach rescue services that uses AI technology. The two beaches will remain partially open during the upgrades, but beachgoers can always use the likes of Kite Beach, Sunset Beach, Jebel Ali Public Beach, and the Beach at JBR.

Emirates Islamic’s maiden US$ 750 million Sustainability Sukuk, (part of the US$ 2.5 billion Certificate Issuance Programme) was launched on Nasdaq Dubai, bringing the total value of EI’s Sukuk listings on the bourse to US$ 2.02 billion, through four listings. The issuance was oversubscribed 2.8 times with investors across different regions, 44% of which came from outside of MENA region. The robust demand and strong order book allowed the bank to tighten the expected profit rate to 5.431% at a spread of 100 basis points over five-year US Treasuries. Now known as a leading global centre for Sukuk listings, Dubai manages US$ 93 billion in Sukuk issuances, of which 44% by value are from UAE issuers. Nasdaq Dubai continues to consolidate its status as the premier platform regionally and globally for both fixed income, (with a total value of US$ 129 billion) and ESG-related listings, (at US$ 29 billion).

Parkin, the largest provider of paid public parking facilities and services across Dubai, has posted that it has signed an exclusive four-year agreement, with a private developer, to manage parking services at six locations in Dubai. The locations, at Al Sufouh Gardens, Arjan, Dubailand Residence Complex, Jaddaf Waterfront, Liwan 1&2, and Majan, will add 7.5k spaces to Parkin’s current 10.0k portfolio. Operations will be from 8.00am to 10.00pm, for all days except for Sunday, with the listed company responsible for issuing fines for non-compliance, with parking laws and regulations.

Tecom Group on Wednesday announced a record US$ 599 million in 2023 revenue, representing a 10%, on the year, increase and a 49% hike in annual net profit to US$ 300 million, driven by elevated occupancy rates, (up 3% to 89%), on the back of high customer retention rates and an almost 15% increase in the number of new customers. Ebitda rose 23% to US$ 463 million, as the margin climbed 8% to 76%, attributable to enhanced revenue quality, which is down to improving macro conditions. Funds from operations came in 21% higher on the year at US$ 381 million. Growth was underpinned by Dubai’s resilient economic performance, pro-growth and diversification government initiatives, and bullish consumer and business confidence. The Board recommended a US$ 109 million H2 2023 dividend payout.

The DFM opened the week on Monday 03 June, 183 points (4.4%) lower the previous three weeks gained 4 points (0.1%) to close the trading week on 3,982 by Friday 07 June 2024. Emaar Properties, US$ 0.04 lower the previous week, shed US$ 0.07, closing on US$ 2.02 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.62, US$ 4.24, US$ 1.50, and US$ 0.35 and closed on US$ 0.62, US$ 4.39, US$ 1.51 and US$ 0.36. On 07 June, trading was at two hundred and thirteen million shares, with a value of US$ 91 million, compared to two hundred and thirty-four million shares, with a value of US$ 175 million, on 31 May 2024.  

By Friday, 07 June 2024, Brent, US$ 0.27 lower (0.1%) the previous week, shed US$ 2.02  (2.5%) to close on US$ 79.57. Gold, US$ 12 (0.5%) higher the previous week, shed US$ 41 (1.7%) to end the week’s trading at US$ 2,305 on 07 June 2024.

Despite Sunday’s, Opec+ agreement, to extend output cuts of 3.66 million bpd another year until the end of 2025, oil prices dipped on Monday to US$ 80.77. At the same time, the eight Opec+ member states agreed to extend their 2.2 million bpd voluntary production cuts for a further three months until the end of Q3, as well as posting plans of unwinding the voluntary curbs on a monthly basis from October 2024 until September 2025. These combined cuts of some 5.86 million bpd equate to about 5.7% of global crude demand. Opec expects strong economic growth, of some 2.25 million bpd, from emerging economies, particularly China and India, to drive crude demand this year, in contrast to the US Energy Information Administration and the International Energy Agency forecasting a lower growth rate of 1.1 million bpd.

Last Sunday, Aramco started a secondary share sale in a deal that could raise US$ 13.1 billion, with the main beneficiary being the Public Investment Fund, the kingdom’s SWF. The banks involved in the deal took institutional orders until yesterday and today announced the share price of US$ 7.27; trading will start this Sunday, 09 June. There were 1.545 billion shares on offer, at a range between US$ 7.12 and US$ 7.73, with the banks able to increase the offering by a further US$ 1.0 billion. About 10% of the new offering was reserved for retail investors, subject to demand. This deal will see the Saudi government, with its 82.0% stake in the oil giant cut by 0.7%; the other shareholders are PIF (16%) and the remainder held by public investors. Currently, Saudi Arabia is producing about nine million bpd of crude – equating to some 75% of its maximum capacity.

A day after its chairman, Akio Toyoda, apologised for being guilty of providing incorrect or manipulated data for safety certification tests, Japan’s transport ministry raided Toyota’s headquarters. It was another bleak day for the country’s car industry as Toyota is not the only guilty party, with its peers, Honda, Mazda and Suzuki, all guilty of similar offences. Toyota, which sold over eleven million vehicles last year, noted the findings did not impact the safety of vehicles already on the road and has suspended production of its Corolla Fielder, Corolla Axio and Yaris Cross models.

The eightieth IATA AGM and World Air Transport Summit was held in Dubai, (for the first time), from 02 June – 04 June and hosted by Emirates Airline. Over 1.5k industry leaders and government officials were in attendance. One of the topics discussed was that of airline funds being blocked from repatriation by governments, with a call for governments to remove all barriers to airlines repatriating their revenues from ticket sales and other activities in accordance with international agreements and treaty obligations. The meeting did note that there had been a 28% decrease in the amount of airline funds blocked from repatriation by governments – reduced by US$ 708 million over the year to US$ 1.80 billion. Eight countries accounted for 87% of the total blocked funds, amounting to US$ 1.6 billion, including Pakistan and Bangladesh unable to repatriate revenues earned, totalling US$ 411 million and US$ 320 million. For the past few years, Nigeria had headed the list, and at June 2023 it had held back some US$ 850 million, most of which has now been cleared, whilst Egypt was one of the main culprits, it too has cleared a significant accumulation of blocked funds. However, in both cases, airlines were adversely affected by the devaluation of the Egyptian Pound and the Nigerian Naira.

At the meeting, it was announced that global airlines are expected to see an 11.3% increase in profits to US$ 30.5 billion, (well up on their last estimate of US$ 27.5 billion, made in December), whilst carrying over a record five billion passengers; revenue will rise 9.7% to US$ 996 billion with a 9.4% hike in expenses to US$ 936 billion.  Cargo revenue is expected to fall 13.0% to US$ 120 billion in 2024, as cargo yields are expected to fall by 17.5%, remaining slightly above 2019 levels. IATA expects ME carriers to show a 22.6% rise in profits to US$ 3.8 billion, equating to a US$ 15.20 return per passenger, compared to the global US$ 6.00. The 2024 average passenger load factor is expected to be 82.5%, compared to the 82.6% level in pre-pandemic 2019.

It noted that the UAE continues to benefit from its appeal to both leisure and business travellers, with the world body’s chief economist, Marie Owens Thomsen saying “to make more profit, you need efficient operations, high load factors and a population keen to travel and that’s not too price sensitive, if all those conditions are fulfilled than those airlines will make more money,” However, geopolitical risks are the main threat, especially to the Levant carriers, whilst “the Gulf carriers are relatively less impacted unless tensions between Iran and Israel escalate”.

By the end of last week, Bitcoin had entered uncharted territory, surging above US$ 72.1k, after the UK’s Financial Conduct Authority announced that it would welcome applications for crypto asset-backed exchange-traded notes to trade on the London Stock Exchange. The FCA added that it would not object to requests from recognised investment exchanges to create a UK-listed market segment for cETNs, including Bitcoin and Ethereum, and that “these products would be available for professional investors, such as investment firms and credit institutions authorised or regulated to operate in financial markets only.” However, the FCA said that the cETNs would not be available to retail investors as crypto assets are “high risk and largely unregulated”, and that it “continues to believe cETNs and crypto derivatives are ill-suited for retail consumers due to the harm they pose.”  This comes four months after the US Securities and Exchange Commission approved spot Bitcoin exchange-traded funds. At the time, the SEC approved eleven spot Bitcoin ETFs offered by major asset management companies including BlackRock, VanEck, Fidelity, Franklin Templeton and Cathie Wood’s ARC. Many believe that Bitcoin, 55% higher YTD, could soon push the US$ 80k boundary, at which time all bets are off, and it could top US$ 120k by year end.

On Wednesday, shares in Nvidia scaled new heights, helped by a 5.2% hike on the day topping the US$ 3.0 trillion mark, and overtaking Apple, to become the world’s second most valuable company. It is also fast approaching the current valuation of the most expensive company, Microsoft with a current market cap of US$ 3.15 billion. By the end of trading on Wednesday, the stock had risen a phenomenal 140% since the beginning of 2024; the main driver behind this is demand for its top-of-the-line processors far outstripping supply as Microsoft, Meta Platforms and Alphabet race to build their AI computing capabilities and dominate the emerging technology

In the UK, the Competition Appeal Tribunal Google has confirmed that Google (Alphabet) must face a US$ 17.40 billion lawsuit alleging it has too much power over the online advertising market. Ad Tech Collective Action LLP brought the case, (involving adtech, which decides which online adverts people see, as well as how much they cost to publishers), alleging that Google behaved in an anti-competitive manner which caused online publishers in the UK to lose money. Some estimates indicate that the digital advertising spend turned over US$ 490 billion in 2021 and proves to be a lucrative revenue stream for all stake holders, including many websites and especially Google which dominates web search; the basis of this massive claim is that Google is abusing that dominance, reducing the income websites get. Ad Tech Collective claims it is missing out on income in two ways – one is “very high” fees and the other is that Google utilises “self-preferencing”, where it pushes its own products and services more prominently than that of its rivals where publishers end up getting less money for the ads they host. The case is what is known as opt-out, meaning all relevant UK publishers are included unless they indicate otherwise. UK is not the only jurisdiction taking Google to task, with the tech giant facing probes into its adtech business in the EU and the US.

The founder of software company Autonomy, Mike Lynch, has finally found justice in a US court some thirteen years after selling the company to Hewlett-Packard for US$ 10.62 billion. He had long been accused by HP of deliberately overstating the value of Autonomy, with the US tech giant writing down US$ 7.04 billion from Autonomy’s value within a year of completion, claiming revenue streams had been inflated. The acquisition was initially investigated by the UK’s Serious Fraud Office but it dropped the probe in 2015, while US prosecutors continued their own inquiry. He was extradited to the US to face trial just over a year ago, and this week  was acquitted of all charges by a US jury, alongside a former finance executive Stephen Chamberlain who had faced the same charges. He had taken to the witness stand at the trial to argue that the US firm rushed the deal, did not understand what it was buying and had not completed its due diligence sufficiently. Fortunately, the jury agreed.

Probably the UK’s largest fancy dress manufacturer is in financial distress and, having failed to find a buyer, is on the brink of insolvency, having filed a notice of intention to appoint administrators late last week. The company posted that “following four extremely challenging years, as a result of the pandemic, the subsequent supply chain crisis, and the ongoing inflationary burden on both businesses and consumers, Smiffys was required to take the difficult decision yesterday to file a notice of intention to appoint administrators.” Family-owned Smiffys, founded in 1894, reportedly ships more than twenty-six million items of fancy dress annually and distributes 7.5k products to thousands of stockists around the world, and some reports indicate that it has been beset by overstocking problems in recent months.

This week, Live Nation confirmed “unauthorised activity” on its database, after a group of hackers said they had stolen the personal details of five hundred and sixty million customers; this after ShinyHunters posted that it was responsible for theft of  data including names, addresses, phone numbers and partial credit card details from Ticketmaster users worldwide, with the hacking group demanding a US$ 500k ransom payment to prevent the data from being sold to other parties. Live Nation notified shareholders on 31 May that on 27 May “a criminal threat actor offered what it alleged to be company user data for sale via the dark web”, and that it was investigating, even though the breach was first revealed by hackers who posted an advert for the data on 29 May.

There is every chance that this breach is part of a larger ongoing hack involving a cloud service provider called Snowflake which is used by many large firms to store data in the cloud. Last Friday, Santander confirmed it had data from an estimated thirty million customers stolen which was being sold by the same hacking group as the Ticketmaster hackers. Ticketmaster has form – in 2020, it admitted it hacked into one of its competitors and agreed to pay a US$ 10 million fine, and last November, it was allegedly hit by a cyber-attack which led to problems selling tickets for Taylor Swift’s Era’s tour. It will be no surprise to see other companies posting in the coming weeks that they have been hacked.

Shein is considering to IPO on the London Stock Exchange, which could value the Chinese fast fashion giant at an impressive US$ 66 billion. It relies on thousands of third-party suppliers, as well as contract manufacturers, near its headquarters in Guangzhou, China. Although it has fast become one of the biggest global fashion retailers, it has courted controversy over its environmental practices, as well as allegations around the use of forced labour in its supply chain. There are claims that Uyghur forced labour is used to make some of the clothes it sells, and a report last month indicated that some of its suppliers are still working seventy-five hours a week. The UK seems to be a better option for Shein, as it faces mounting pressure, and increased scrutiny, from US lawmakers at a time when there are rising tensions between the Biden and Xi Jinping administrations. If their UK bid is successful, it would be a huge boost for the LSE that has seen too many clients exiting to overseas bourses.

In April, Zambian authorities broke a sophisticated crime ring that was involved in specialised  cyber-related crime in a “sophisticated internet fraud syndicate”, with seventy-seven arrests including twenty-two Chinese nationals. This followed an alarming rise in internet fraud cases in the country, targeting people in countries around the world, along with increasing cases of Zambians losing money from their mobile and bank accounts through money-laundering schemes which extend to other foreign countries. Dozens of young Zambians were also arrested after allegedly being recruited to be call-centre agents in the fraudulent activities, including internet fraud and online scams. All the Chinese accused, along with one Cameroonian national, were charged with manipulating people’s identities online with intent to scam them and all pleaded guilty of computer-related misrepresentation, identity-related crimes, and illegally operating a network or service. The Zambian nationals were charged in April and released on bail so they could help the authorities with their investigations. Among equipment seized were devices allowing callers to disguise their location, 13k Sim cards, and eleven Sim boxes which are devices that can route calls across genuine phone networks.

Only last month, the ‘Tears Of A Clown’ blog highlighted that Live Nation was being sued by the DoJ:

“Live Nation, the owner of Ticketmaster, is being sued by the US Justice Department over claims it is running an illegal live event “monopoly” which is driving prices up for fans and pushing out smaller competition. It claims that they are squeezing out smaller promoters by using tactics such as threats and retaliation The accused countered that it will defend itself against “baseless allegations” and claims the lawsuit would not solve ticket price or availability issues. Filed yesterday in a Manhattan federal court, the sweeping antitrust lawsuit was brought with thirty state and district attorneys-general. The US Attorney-General Merrick Garland commented that “it’s time for fans and artists to stop paying the price for Live Nation’s monopoly,” and “it is time to restore competition and innovation in the entertainment industry. It is time to break up Live Nation-Ticketmaster. The American people are ready for it.” Ticketmaster, which merged with Live Nation in 2010, is the world’s largest ticket seller across live music, sports, theatre and more. The company said it distributed more than six hundred and twenty million tickets in 2023”.

This week, Live Nation confirmed “unauthorised activity” on its database, after a group of hackers said they had stolen the personal details of five hundred and sixty million customers; this after ShinyHunters posted that it was responsible for theft of  data including names, addresses, phone numbers and partial credit card details from Ticketmaster users worldwide, with the hacking group demanding a US$ 500k ransom payment to prevent the data from being sold to other parties. Live Nation notified shareholders on 31 May that on 27 May “a criminal threat actor offered what it alleged to be company user data for sale via the dark web”, and that it was investigating, even though the breach was first revealed by hackers who posted an advert for the data on 29 May.

‘Tears Of A Clown’ blog of 24 May also outlined the problems with the various water companies in the UK including:

“A study of ten water and sewage firms in England and Wales bythe University of Greenwich has concluded that shareholders in some of the UK’s largest water companies, including Thames Water, United Utilities and Severn Trent, have taken out US$ 108.3 billion in dividends but failed to invest. It said that between privatisation in 1989 and 2023, money invested by shareholders in the largest firms shrunk by US$ 7.0 billion, when adjusted for inflation. Over the same period, the amount of “retained earnings” – profits left over once things like dividends have been paid out, that can be used to invest in a business – had dropped by US$ 8.52 billion in real terms. Ofwat, the industry regulator, said it “strongly refuted” the figures.  “While we agree wholeheartedly with demands for companies to change, the facts are there has been huge investment in the sector of over US$ 254.0 billion.” Water UK, which represents the industry, said investment in the sector was “double the annual levels seen before privatisation”. Water and sewage firms want to spend around US$ 127.10 billion over the next five years”.

This week, the embattled Thames Water, UK’s biggest water company has been told by Ofwat it faces a fine of more than US$ 51 million over the payment of a US$ 47 million shareholder dividend late last year, in spite of its poor performance. This is another nail in the utility’s coffin, as it moves towards a potential temporary nationalisation under a debt mountain of more than US$ 19.1 billion.

According to Zoopla, UK rents for new lets stand at US$ 1,569 having increased by 6.6%, US$ 102, over the year to April – its slowest annual rise since October 2021. Even with demand slowing, the property portal noted that there were still fifteen people on average chasing every home for rent – pre pandemic, this figure was six. There are various reasons for sharp rises in new let rentals including demand rising from students, but primarily because supply has not matched demand. It forecasts that the slowdown will continue for the rest of the year, with increases hovering around the 5% level.

Thanks to the secret intervention by the then Cameron/Osborne government in 2012, Standard Chartered, one of the UK’s largest banks, avoided prosecution by the US Department of Justice but now new documents filed to a New York court claim the bank processed thousands of transactions, worth more than US$ 100 billion, from 2008 to 2013, in breach of sanctions against Iran. It appears that an independent expert has identified US$ 9.6 billion of foreign exchange transactions, with individuals and companies designated by the US government as funding “terror groups”, including Hezbollah, Hamas, al-Qaeda and the Taliban. The bank has twice, (in 2012 and 2019), admitted breaching sanctions against Iran and other countries, paying fines totalling more than US$ 1.7 billion but not for conducting transactions for “terrorist” organisations.

Latest data for May, from the Society of Motor Manufacturers and Traders, indicates a 2.0% decline on the year in UK sales of new EVs – and this despite “very attractive offers” to lure buyers. The decline in sales has been put down to various factors including the cost-of-living pressures on household budgets, as well as a lack of affordable vehicles and charging infrastructure. The body’s supremo, Mike Hawes, warned that manufacturers could not sustain the level of discounting indefinitely and argued that a fairer transition was needed with “carrots, not just sticks” required from ministers to help improve future uptake. The SMMT were also disappointed with the recent Sunak Government’s U-turn on the sale of new cars powered by petrol and diesel – it had been policy that this would happen from 2030 but in March it was changed to 2035, and this has had a negative knock-on impact on EV sales, and investment in the sector. Another factor in play is affordability as indicated by the fact that the share of new models for sale below US$ 25.6k, (GBP 20k), in the past five years has dropped from 17% to just 4%; this may change with many new low-cost options expected on the market this year which may tempt consumers to make the transition to electric.

Following Canada’s decision, a day earlier to cut rates, the ECB followed suit yesterday, 06 June, knocking 0.25% off its main interest rate from an all-time high of 4% to 3.75%, whilst noting that the EU had made progress in tackling inflation, even though the monthly rate nudged 0.2% higher to 2.6% in May. Having posted that the outlook for inflation had improved “markedly”, Christine Lagarde, president of the ECB, warned that inflation was likely to remain above the bank’s 2% target “well into next year”, averaging 2.5% in 2024 and 2.2% in 2025 and that the bank would keep interest rate policy “sufficiently restrictive for as long as necessary” to bring inflation down to the Bank’s 2% target. This marginal cut in rates should be enough to start the ‘economic activity ball’ rolling by making it cheaper for consumers and businesses to borrow. The world waits for similar moves from the Fed and the BoE

Consulting firm Capgemini estimates that the number of ‘high net worth individuals’, (people with liquid assets of at least US$ 1 million), rose by 5.1% last year to 22.8 million. Much of the increase was the result of soaring global stock markets which has helped their cumulative wealth  rise by 4.7% to US$ 86.8 trillion. In 2022, the number of HNWIs and their wealth had each fallen by more than 3.0%, attributable to macroeconomic uncertainty and geopolitical tensions – the steepest fall recorded in a decade. With the gap between the rich and poor widening by the year, the inequality debate continues on whether the rich should pay their fair share of taxes, with countries like France and Belgium pressing developed countries  to set a global minimum tax on the world’s wealthiest people.

There is no doubt that both Prime Minister Narendra Modi and the benchmark NSE Nifty 509 share index received a shock this week, when his Bharatiya Janata Party failed to secure a majority in the five hundred and forty-three-member lower house of parliament. Indian stocks fell sharply, with the benchmark NSE Nifty 50 share index closing down nearly 6%, its steepest fall since India’s first Covid lockdowns in March 2020. The rupee slid 0.5% against the US dollar, its biggest fall in sixteen months. According to one commentator, there is every possibility that the new Indian coalition government may have to shift its focus to put more emphasis on welfare rather than concentrating on reforms during next month’s budget.

Two lessons could be learnt from this episode of Indian politics. One is that it seems that after two terms of government, whether it be for eight years or ten, something happens. Two examples from both the UK and France and one from Australia will illustrate the point. Margaret Thatcher was in power from 1979 – 1990 and Tony Blair from 1997 – 2007 and both were disposed of when in office; both parties lost the next general election.  Whether it was egotism, familiarity, sleaze, loss of ideas, over confidence, corruption, cronyism, low approval ratings, internal wranglings, not doing their homework, relying on partial advice and so on, both had stayed in office for too long and paid the price. Likewise, French presidents, Francois Mitterrand (1981 – 1995) and Jacques Chirac (1995 – 2007) and Australian prime minister, John Howard (1995 – 2007) all leaving office with their reputations tarnished. It seems that the US and France (since 2002) may have the right idea by restricting the position to two terms only. (Ironically, the current president of France, Emmanual Macron is highly critical of this and would like the opportunity of a third term in office – I wonder why?) Maybe the same for Modi and his government?

Markets had soared on Monday after exit polls over the weekend had suggested Mr Modi and the BJP would gain a significant victory. The second lesson to be learnt (again) is that in recent times as polls become more sophisticated it does seem to many observers that, on too many occasions, they are hopelessly wrong. Two 2016 cases in point are the Trump/Clinton 2016 US presidential election and the Brexit referendum in the UK. The pollsters had long concluded that Hilary Clinton would become the country’s first woman leader, even calling it on the morning after the election, whilst if you followed the pollsters, Brexit was a near certainty. Both results went the other way. In the recent Indian election, the “experts’ were still calling for a majority vote for the current incumbent on the day after the polls closed – and were wrong again. The lesson to be learnt is Don’t Believe Everything You Hear!

We Will Rock You!                                                                             31 May 2024

Data from the Dubai Land Department indicates that, in the twelve months to 31 March, there was a 5.8% rise in the number of rental registrations to over 159.9k, split between a 12.3% growth in renewed rental registrations, compared to a 4.1% decline in new contracts. A CBRE report noted many residents are not prepared, or are able, to pay higher rates on new leases, with one of the main factors being the lack of available stock, particularly in prime and core residential areas. In March, average residential rents reported an annual increase of 21.2%, 0.8% higher than a month earlier; over the period, average apartment and villa rents grew by 22.1% and 14.5%, with median rents of US$ 33.6k and US$ 93.9k. In line with other analysts, CBRE expects “residential rents will continue to increase; however, not at the same rate that we have been seeing to date, and we expect that the rate of change will diminish in the second half of the year.” Cushman & Wakefield reported that 2023 and 2022 rents had risen by 19% and 27% – an indicator that they were slowing. The RERA rent calculator was recalibrated on 01 March to become more representative of open-market pricing; it uses criteria such as location, property type, current rent and number of rooms and works by comparing properties with similar ones nearby. Previously, many tenants opted to stay because rental increases during renewals tended to be much lower, compared to signing new leases, but several renewing this year will face higher rent due to the adjustment in RERA’s calculator. Q1 price increases were up 20.7% – villas and apartments by 22.1% and 20.4%. As of March, mean apartment prices stood at US$ 405 per sq ft, and average villa prices reached US$ 484 per sq ft, with standard villa sales rates currently 22.9% above their 2014 baseline. In Q1, of the 6.5k residential units delivered, 59.7% were located in Meydan One, Jumeirah Village Circle and Al Furjan, with a further 46.1k expected by the end of 2024, of which 31.4% will be delivered in three areas – District Seven, Damac Lagoons and Business Bay. CBRE estimated that only a limited portion of this upcoming stock will come online as planned.

This week, Danube Properties announced the handover of its Pearlz project some six months ahead of schedule. Located in Al Furjan, with a built-up area of 480.2k sq ft, the project has three hundred units — studios, one-, two-, and three-bedroom apartments — and retail outlets. The Dubai-based developer has already delivered numerous projects in the emirate, including Jewelz, Wavez, Elz, Lawnz, Bayz, Miraclz, Glamz, Starz, Glitz 1, Glitz 2, Glitz 3, and Dreamz. Danube Properties also offers homeowners a ten-year Golden Visa – especially those who qualify as per the investment criteria – subject to government approval. Founder and Chairman, Rizwan Sajan, noted that “the Dubai property market has a long way to go. It is highly affordable and, at the same, it offers one of the best returns on investment also both in terms of rentals and capital appreciation. With population outpacing supply in the market, the property outlook for Dubai is highly optimistic and promising.” It is difficult to disagree with him.

Local property brand Binghatti has launched its latest project, One by Binghatti, located in Dubai’s Business Bay district. The latest mega waterfront development, with views of Burj Khalifa and the Dubai Water Canal, is located in Business Bay near other Binghatti branded residences including Binghatti, Mercedes Benz Places, as well as Binghatti, and Burj Binghatti Jacob & Co Residences. The project features adult and children swimming pools and a variety of athletic facilities including basketball, paddle, tennis and street football. Amongst the project’s rejuvenation facilities are a jacuzzi, sauna, steam room and a state-of-the-art health club. The project amenities also extend to outdoor facilities, including sunken seating, a running lane, and viewing deck.

This week, Acube Developments launched its second project Electra, a thirty-eight-storey residential tower in Jumeirah Village Circle, including two hundred and seventy-eight studio, 1 B/R, 2 B/R and 3 B/R apartments, all equipped with Bosch appliances and Roca sanitary items. All units are installed with the latest smart home solutions and come with the option of three fully furnished options. Anyone buying 2 B/R apartments will also be offered large terrace pools, (4.6 mt by 1.8 mt). Studio apartment prices start at US$ 205k, with construction starting in June and handover slated within three years. The facilities include a beach themed pool, private pools, a mini-water park with slides, a mini golf area, a bowling alley, an indoor and outdoor play area, an indoor and outdoor Jacuzzi, an indoor children’s cinema, and picnic areas. The 37th and 38th floors cater to adults and include a gym, yoga and aerobics rooms, cinema, sauna, and steam rooms, while the 38th floor hosts a large, 18 mt long sky pool. It will also have commercial spaces for shops and other services.

According to Knight Frank, The Islands registered more than 10% of all the deals valued at over US$ 2.72 million, (AED 10 million), over the past three years. Last December witnessed the sale of the most expensive home, at US$ 7.63 million, to sell in the man-made island cluster; the four-bedroom 5.5k sq ft home equates to a value of US$ 1.39k per sq ft. Over the past twelve months, ninety-seven homes were sold with a cumulative value of over US$ 272 million. The consultancy’s regional partner commented that “the growing list of prime residential neighbourhoods is yet another sign of maturity bedding in and it is only a matter of time before other areas such as Tilal Al Ghaf, Jumeirah Golf Estates, Al Barari and/or Blue Waters also make the transition to prime status.”  Because of the current high demand for residential units on Jumeirah Islands, the number of homes available for sale has declined by 28%, over the last twelve months, to 279 homes, adding to the 44% decline in prime home listings in the emirate to around 4.9k properties.

According to reports from the UN Tourism 50th Regional Commission Meeting for the Middle East in Muscat, the UAE expects that by 2031 to attract US$ 27.25 billion in new investment to the tourism sector, accounting for 12.0% of UAE’s GDP, and welcome forty million guests to the country’s hotels. Last year, the tourism sector contributed US$ 60.0 billion, equating to 11.7%, to the country’s GDP, expected to rise to US$ 64.30 billion.  This year, the sector expects employment to reach 833k, (equating to one in nine of all jobs in the country), operating in 1,235 hotels in the UAE, with a total of 210k rooms. With domestic visitor spending fully recovered in 2022, 2023 witnessed further growth in 2023 to reach more than US$ 15.12 billon – almost 40% higher than 2019. International visitor spending surged by almost 40% last year to top US$ 47.68 billion – 12% above 2019 levels. This year and 2025 will see thirty-one and sixteen new hotels opening in the emirate, bringing the number of establishments, by 31 December 2025, to eight hundred and sixty-seven. Currently, Dubai has 150.3k rooms.

In Q1, Dubai attracted 5.18 million international visitors, after welcoming 17.15 million overnight visitors in 2023, compared to 14.36 million a year earlier and the previous record year of 16.73 million in pre-pandemic 2019. The World Economic Forum’s Travel & Tourism Development Index ranked the UAE first in Mena and eighteenth globally in 2024 – seven places higher than the previous 2021 report. The report ranks one hundred and nineteen economies based on a set of factors, and the index consists of five sub-indices, including the enabling environment, travel/tourism policy and infrastructure, infrastructure/services, travel/tourism resources such as nature and culture, and the sustainability of the travel and tourism sector. Industry experts said the upcoming unified GCC visa would allow member nations to present the region as a connected destination, boosting accessibility and driving KPIs such as length of stay, average spend and employment. Accessibility, within and between the Gulf nations, will also benefit from huge capex in the region’s infrastructure in roads, airports, cruise terminals and ‘the new kid on the block’ – the upcoming GCC Railway.

Latest figures from the Ministry of Economy noted that last year, the country’s GDP rose by 3.6%, on the year, to US$ 457.8 billion at constant prices, with the non-oil GDP 6.2% higher at US$ 340.6 billion. The Minister, Abdullah bin Touq Al Marri, commented that “these figures solidify the UAE’s position as the fifth-largest economy globally in terms of real GDP growth index. Moreover, the UAE ranks among the top ten economies globally across various competitiveness indicators tied to GDP.” He added that “the accomplished indicators and notable outcomes underscore UAE’s progress in achieving the objectives outlined by the ‘We the UAE 2031’ vision, which aims to elevate the country’s GDP to AED3 trillion, (US$ 817.4 billion) within the next decade and foster a shift towards a new economic model centred around diversity and innovation.” Interestingly, the UAE’s contribution of non-oil sectors came in 2.5% higher on the year to reach a record 74.3% Last year, various economic sectors registered double digit growth on the year including financial activities/insurance, up 14.3%, and transport/storage activities at 11.5% higher, (attributable to a significant increase in airport passengers, with the total number of international visitors surging 25.0% on the year to 31.5 million), and hotel guests rising 11.0% to twenty-eight million.  Meanwhile, construction/building and real estate activities grew by 8.9% and 5.9%, whilst the residency/food services sector witnessed a 5.5% hike. At current prices, the GDP was up 2.3% to US$ 512 billion last year, with non-oil GDP, 9.9% higher, reaching US$ 390 billion. The country also performed well in various GDP-related global competitiveness indicators, being ranked fifth worldwide in the Real Economic Growth Rate Index, sixth in GDP (PPP) per capita in the IMD World Competitiveness Yearbook 2023, and sixth in the GNI Index, in the UNDP Human Development Index Report 2024.

With the UAE intensifying its efforts to expand its domestic manufacturing capabilities and boost self-sufficiency, Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, speaking at the third Make it in the Emirates forum, advised that the country’s industrial sector will receive an additional US$ 6.27 billion in funding, backed by two of its major companies. Adnoc announced that it will contribute US$ 5.45 billion, with Pure Health, the country’s largest healthcare group, chipping in with US$ 820 million. This latest development sees the total funding, for the sector, to date, now totals US$ 38.96 billion, being utilised to support the domestic manufacturing of more than 2k products. In co-ordination with Emirates Development Bank, and other commercial banks, a new lending programme, worth US$ 300 million to support SMEs, was introduced. EDB will also provide financing worth US$ 100 million to support AI start-ups, in a boost to the fast-growing technology. The Minister commented that “AI has become the backbone of next-gen industrial innovation. AI doesn’t just automate tasks; it redefines them, paving the way for smarter, safer and more sustainable operations.”

At the 121st meeting of the GCC Financial and Economic Cooperation Committee in Doha, the UAE and Qatar signed an agreement to avoid double taxation and prevent fiscal evasion of income taxes. According to Mohamed Hadi Al Hussaini, Minister of State for Financial Affairs, the deal will not only enhance financial, economic and investment partnerships, between the UAE and Qatar, but also bolster coordination and cooperation in tax matters, open up new investment opportunities, and stimulate trade. He also pointed out that the agreement contributes to strengthening economic and trade relations between the two countries and provides full protection for companies and individuals from direct and indirect double taxation. To date, the UAE has signed one hundred and forty-six double taxation avoidance agreements to date, as well as having signed one hundred and fourteen pacts to protect and promote investments.

Seven months after talks had started last October, the UAE and South Korea, (Asia’s fourth biggest economy), formally signed a Comprehensive Economic Partnership Agreement (CEPA) on Wednesday, aiming to expand trade and enhance cooperation in a wide array of areas from energy to supply chains. The event came in line with UAE President Mohamed bin Zayed Al Nahyan’s two-day visit to South Korea, which started the previous day, for a summit with President Yoon Suk Yeol. Under the agreement, the two countries will lift tariffs on more than 90% of goods traded over the next ten years. The CEPA will gradually eliminate the 3% tariffs on crude imports from the UAE, which currently accounts for 11% of South Korea’s total crude imports, over the next decade. The two countries are anticipated to bolster exchanges in energy, supply chain, digital and biotechnology sectors to seek future-oriented economic cooperation through the CEPA. It marks the first time South Korea has clinched a free trade agreement with a ME nation; the UAE is South Korea’s fourteenth-largest trade partner – and second in the ME, after Saudi Arabia. South Korea becomes the latest nation to sign a ‘UAE CEPA’, following Cambodia, Colombia, Congo-Brazzaville, Costa Rica, Georgia, India, Indonesia, Israel, Kenya, Mauritius, Turkey and Ukraine.

The Federal Tax Authority (FTA) has issued a guide outlining the application of Corporate Tax to Free Zone Persons, in line with the Free Zone Corporate Tax regime, which enables Qualifying Free Zone Persons to benefit from a 0% Corporate Tax rate on Qualifying Income. It provides an overview of the conditions required to be met for a Free Zone Person to be a Qualifying Free Zone Person and benefit from the 0% Corporate Tax rate, and the activities that are considered Qualifying Activities and Excluded Activities for a Qualifying Free Zone Person. The guide also includes an explanation of the calculation of Corporate Tax for Free Zone Persons, determination of Qualifying Income, and determination of taxable income that is subject to the 9% rate of Corporate Tax. In addition, the guide outlines the conditions for maintaining adequate substance for Qualifying Free Zone Persons and the criteria for determining a Foreign Permanent Establishment or a Domestic Permanent Establishment. Furthermore, the guide clarifies the treatment of income derived from immovable property, as well as the treatment of income derived from Qualifying Intellectual Property. The Guide also included a detailed explanation of Qualifying Activities, Excluded Activities and compliance requirements. The FTA added that where a Qualifying Free Zone Person operates through a Permanent Establishment in the UAE (outside the Free Zones), or in a foreign country, the profits attributable to such Permanent Establishment will be subject to the 9% Corporate Tax rate.

DP World and Saudi Ports Authority (Mawani) have commenced construction of a new US$ 250 million logistics park, encompassing 415k sq mt, at the two-year old Jeddah Islamic Port, set to provide state-of-the-art storage and distribution facilities, as well as boost trade in the Kingdom of Saudi Arabia and the wider region. The greenfield facility, set to become the country’s largest integrated logistics park, will feature 185k sq mt of warehousing space and a multipurpose storage yard, with a capacity for more than 390k pallet positions. Development will be in two phases. Established in 2022, as part of a 30-year concession, Jeddah Logistics Park will be developed in two phases, with a planned opening in Q2 2025. Another collaboration between the two parties includes the management of South Container Terminal, through a separate thirty-year concession signed in 2020; the final phase of a comprehensive modernisation project is scheduled for completion by year-end, at which time the handling capacity will have been ramped up to five million twenty-foot equivalent units. These two DP World projects represent a combined investment of almost US$ 1.0 billion. The groundbreaking follows on the heels of the opening of freight forwarding offices in Dammam, Jeddah and Riyadh, expanding the logistics footprint of DP World and strengthening end-to-end supply chains in the Kingdom of Saudi Arabia and beyond.

Eight years ago, the federal government liberalised fuel prices so that they could be aligned with market rates until the onset of the pandemic which saw prices frozen by the Fuel Price Committee. In March 2021, prices were amended to reflect the movement of the market once again. With prices having risen for the previous four months to 31 May, June finally sees a decline across the board. The breakdown in fuel price per litre for June is as follows:

• Super 98: US$ 0.856, from US$ 0.910 in June (down by 6.0%)         YTD from US$ 0.768 – 11.5%

• Special 95: US$ 0.823, from US$ 0.877 in June (down by 6.2%)       YTD from US$ 0.738 – 11.5%

• Diesel: US$ 0.785, from US$ 0.842 in June (down by 6.2%)               YTD from US$ 0.817 – 4.1%

• E-plus 91: US$ 0.804, from US$ 0.858 in June (down by 6.3%)            YTD from US$ 0.719 – 11.8%

Drake & Scull fell on hard times during the three-year oil price slump from 2014, which heavily affected the property and construction sector in the region, resulting in its shares being suspended in November 2018 after the company reported heavy financial losses. In 2022, it finally completed its restructuring plan, after the company achieved the required voting percentage from its six hundred-plus creditors for a consensual agreement. It posted losses of US$ 61 million and US$ 96 million in 2022 and 2023; at the end of 2023, it posted a 16.0% rise in revenue to US$ 26 million and had assets totalling US$ 97 million. In a filing this week, the company said accumulated losses stood at US$ 1.50 billion, as of 31 March. It expects the benefits of restructuring to materialise in Q2, leading to an overall equity improvement of about US$ 1.25 billion, and posted a capital gain of US$ 926 million by writing off 90% of creditor claims. Accrued interest expenses and provisions for legal cases, totalling about US$ 113 million, were reversed, and mandatory convertible securities amounting to US$ 100 million were issued.

The DFM opened the week on Monday 27 May, 148 points (3.9%) lower the previous fortnight shed 35 points (0.9%) to close the trading week on 3,978 by Friday 31 May 2024. Emaar Properties, US$ 0.07 higher the previous four weeks, shed US$ 0.04, closing on US$ 2.09 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.63, US$ 4.28, US$ 1.50, and US$ 0.35 and closed on US$ 0.62, US$ 4.24, US$ 1.50 and US$ 0.35. On 31 May, trading was at two hundred and thirty-four million shares, with a value of US$ 175 million, compared to two hundred and forty-five million shares, with a value of US$ 101 million, on 24 May 2024.  The bourse had opened the year on 4,063 and, having closed on 31 May at 3,978 was 93 points (2.1%) lower. Emaar started the year with a 01 January 2024 opening figure of US$ 2.16, to close YTD at US$ 2.09. Four other bellwether stocks, DEWA, Emirates NBD, DIB and DFM started the year on US$ 0.67, US$ 4.70, US$ 1.56 and US$ 0.38 and closed YTD at US$ 0.62, US$ 4.28, US$ 1.50 and US$ 0.35. 

By Friday, 31 May 2024, Brent, US$ 3.08 higher (0.1%) the previous week, shed US$ 0.27 (0.3%) to close on US$ 81.59. Gold, US$ 80 (3.3%) lower the previous week, gained US$ 12 (0.5%) to end the week’s trading at US$ 2,346 on 31 May 2024.

Brent started the year on US$ 77.23 and gained US$ 4.36 (5.6%), to close 31 May 2024 on US$ 81.59. Meanwhile, the yellow metal opened 2024 trading at US$ 2,074 and gained US$ 272 (13.1%) to close YTD on US$ 2,346.

April data from the International Air Transport Association (IATA) indicated that global Q2 air cargo markets demonstrated strong 11.1% annual growth in demand, measured in cargo tonne-kilometres – the fifth consecutive month of double-digit year-on-year growth. Capacity, measured in available cargo tonne-kilometres, rose by 7.1% on the year, (10.2% for international operations). IATA’s Director-General, Willie Walsh, noted that “while many economic uncertainties remain, it appears that the roots of air cargo’s strong performance are deepening. In recent months, air cargo demand grew even when the Purchasing Managers Index (PMI) was indicating the potential for contraction. With the PMI now indicating growth, the prospects for continued strong demand are even more robust.”

Mining giant BHP has pulled out of its planned takeover of rival Anglo-American, having been attracted by Anglo’s copper assets, with the metal rising in value because of its role in the green energy transition; discussions had been going on for about six weeks before the deal finally collapsed on Wednesday , as Anglo rejected BHP’s calls to extend talks as it was “unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost”; it seems that Anglo American rejected the extension plea, arguing that the deal terms were still not good enough – the initial offer made by BHP, at the end of April was US$ 39.58 billon, then US$ 43.28 billion and finally US$ 49.13 billion. Anglo American rejected the extension plea, arguing that the deal terms were still not good enough. LSE will be breathing a sigh of relief as it was in danger of losing one of its finest assets at a time when several listed companies have left for foreign shores.

The Federal Aviation Administration has extended a ban, initially initiated in February, for the “next few months”, restricting Boeing on the number of 737 Max planes.  This came after the US watchdog met with outgoing chief executive Dave Calhoun and other senior figures at the company where the plane maker continues to be subject to “enhanced oversight” by regulators, after part of An Alaskan Airlines’ fuselage blew out in January, followed by a series of other incidents. It also noted that the regulator did not expect Boeing to win approval to increase production “in the next few months” and said it faced a “long road” to address safety issues. The FAA said it would continue with weekly meetings and other scrutiny of the company, adding that “regardless of how many planes Boeing builds, we need to see a strong and unwavering commitment to safety and quality that endures over time. This is about systemic change, and there’s a lot of work to be done.” It is reported that the plane maker is currently producing significantly fewer than the thirty-eight 737 MAXs per month it is permitted to by the FAA.

After a rather chequered recent history, Abercrombie & Fitch, founded in 1892, is once again making headlines for the right reasons. One century after the retailer’s founding, Mike Jeffries took over as CEO in 1992 and, within a decade, he had transformed A&F from a “fashion backwater”, losing US$ 25 million yearly, to a lifestyle brand grossing over US$ 2 billion by the early 2000s. Known in the 90s for appealing to teens, and infamous for its shirtless models,  and since Jeffries left in 2014, the company is now going after grown-ups with wedding-wear, work appropriate offerings and wide leg, baggy jeans. Last year, Abercrombie & Fitch saw revenue surging over 16.0%, with another double-digit jump expected this year. This complete turnaround has seen its shares rocket from US$ 25 per share at the start of 2023 to its current level of US$ 189, with the firm posting a 22%, year on year, jump in Q1 revenue to a record US$ 1.0 billion.

There is no doubt that the iconic boot-maker, Dr Martens, is struggling, as it posted a 43% slump, to US$ 123 million, in annual profits, for the twelve months to 31 March,  following a “challenging year” for the business; revenue came in 12.0% lower at US$ 1.12 billion. The main driver behind these disappointing figures appears to be a 17% fall in sales of its boots in the US, with its chief executive, Kenny Wilson, noting “We are clear that we need to drive demand in the USA to return to growth”. In contrast it notes that its performance in Europe, the ME, Africa and the Asia-Pacific region as “robust”. The company said it aimed to make savings of up to US$ 32 million via “organisational efficiency and design, better procurement and operational streamlining” to help revive its fortunes. Founded in 1960, it made its FTSE 250 index listing in January 2021 but since then its market cap has slumped by a worryingly high 80%.

The board of the company that owns Royal Mail, founded in 1516, has agreed to a formal US$ 6.36 billion takeover offer by Czech billionaire Daniel Kretinsky, which will include retaining the name, brand and UK headquarters, assuming debts, respecting the unions’ demands for no compulsory redundancies (until 2025), negotiating with the Communication Workers Union to extend that commitment and protecting employee benefits and pensions, for its 150k payroll. Although the initial news is positive, there is every chance that Business Secretary Kemi Badenoch, may decide to scrutinise and potentially block the deal; Chancellor Jeremy Hunt has weighed in by noting that any takeover bid for Britain’s Royal Mail would be subject to “normal” national security scrutiny, but it would not be opposed in principle. Parent company, International Distribution Services, made a small profit last year which was entirely generated by its German and Canadian logistics and parcels business, off-setting losses in the UK. Royal Mail, which is legally obliged to deliver a one-price-goes-anywhere “universal service”, (meaning it has to deliver letters six days per week, Monday to Saturday, and parcels Monday to Friday), has seen volume of letters halving since 2011, whilst parcel deliveries have become more popular – and more profitable. The next stage is for the September AGM to vote on the deal before it undergoes further government approval. The Czech entrepreneur, who owns 10% of Sainsbury’s and 27% of West Ham FC, made his fortune in the energy industry but has since diversified his interests into retail and logistics.

One of Britain’s biggest housebuilders is exploring a US$ 1.26 billion takeover bid for Cala Group, a rival player in the sector, which has been put up for sale. The potential buyer, Persimmon, with a market cap of US$ 6.04 billion, and the UK’s third-largest housebuilder behind Taylor Wimpey and Barratt Developments, is seen as an early favourite to acquire Cala, whose homes have a significantly higher average sale price; over the past twelve months, the company’s share price has gained over 20.0%. Cala is being auctioned by Legal & General next week, with other interested parties being Persimmon’s larger rival, Taylor Wimpey, and Avant Homes, which is owned by Elliott Advisors and Berkeley DeVeer. Both Persimmon and Taylor Wimpey were among eight housebuilders named by the Competition and Markets Authority in February over suspicions they had exchanged commercially sensitive information.

Not one to take half measures, the El Sisi government has announced sharp tax increases for the current 2024-25 tax year, with tax revenue projected to rise by 32% to US$ 42 billion, after growing 38 % a year earlier. There were marked increases of 32.4% in VAT, (112% higher over the past four years), and 31.6% in income taxes, (including a 26.4% hike in taxes and government workers’ salaries). This comes after the IMF, and other creditors, stipulated the introduction of austerity measures in return for more than US$ 50 billion in financial assistance.  With the Egyptian pound almost halving against the greenback, tax revenue from the Suez Canal will surge because of toll collections being made in US$. The fund had requested that the Egyptian state reduce public spending while maintaining a tight monetary policy to curb inflation and make room in the state-dominated economy for the private sector. To say that the Egyptian economy is in trouble is beyond doubt and the steep rise in tax coming on the back of food, fuel and education subsidies, along with other austerity measures will inevitably stir civil unrest.

It was a well-known fact that when Australian capital city rents started to peak, there was always some reprieve with lower, more affordable rents found in its regional areas. But times are changing as real estate analysts CoreLogic indicated that rents in 75% of Australia’s biggest regional areas were now higher than ever, and there not a single major regional centre that recorded a significant fall in rental prices. The biggest increases were noted in Batemans Bay, in New South Wales, (with Q1 rents 6.0% higher, equating to US$ 21.30 a week), WA’s Bunbury and Queensland’s Sunshine Coast, both registering 4.0% quarterly rises. The consultancy noted that rental prices rarely went backwards unless forced down by an economic slowdown, but the current increases were still unusual, “rising at a pace much faster than the sort of typical pace, pre-pandemic.”

Nationwide posted that May UK house prices were up 0.4% on the month to US$ 337.1k, and 1.3% higher on the year – an indicator that the housing market is showing signs of “resilience”, despite ongoing affordability pressures as a result of historic high interest rates and surging inflation. However, it seems that consumer confidence has headed north over the past few months with wages moving higher and inflation lowering – last month it had fallen to 2.3%, its lowest level in nearly three years.

The Institute for Fiscal Studies warns more tax rises and/or cuts to public services could lie ahead if whatever government is elected next month does not keep a cap on public spending. Both Labour and the Conservatives have committed to get debt falling as a share of national income. The think tank claims that high interest payments on existing debt, allied with low expected economic growth, could make reducing future debt more difficult to achieve. To meet existing rules, the current chancellor, Jeremy Hunt, had already pencilled in what could amount to potential cuts in funding for some public services – such as justice or higher education – of more than 10% in coming years, once population growth and inflation is taken into account. The IFS says that barring a dramatic improvement in growth, the next government could face three broad choices – to go forward with the spending squeeze for services, raise taxes further or increase annual borrowing – which could risk preventing total debt from falling.

The IMF, not known for its forecasting, has recommended that the UK should cut interest rates by 1.75% to 3.50% by the end of 2025, including dipping to between 4.50% – 4.75% before year-end; that would normally mean seven rate cuts over a period of eighteen months. The global body also upgraded this year’s growth forecast, by 0.2% to 0.7%, whilst advising against any further cuts, as well as commenting that the UK will grow faster than any other large European country; 2025 growth is expected to touch 1.5% next year. In line with many other observers, the IMF sees the BoE’s 2.0% target almost being met in the short-term before rising a little over the course of the rest of the year, before “durably” settling at the target rate in early 2025. It also warned of the dangers to the UK economy, advising that the Bank had to balance the risk of not cutting too quickly before inflation is under control, against that of keeping rates too high, which could hit growth. IMF MD, Kristalina Georgieva said that the UK needed to bolster its public finances, which were hit by heavy spending during the Covid pandemic, and that given the state of the public finances, the IMF said it would “advise against additional tax cuts”.

One worrying note from the IMF report was its long-term concern of a lack of workers, arising from long-term illness and fewer foreign workers, and cited that if there was a new global financial crisis, “a shock to UK sovereign risk premia cannot be ruled out” which would push up interest rates. It also suggested that extra tax revenue from road usage, VAT, inheritance and property should be required, and advised the government to abandon its much-talked about triple lock on the state pension – and instead just to peg increases to inflation alone. After Rishi Sunak had back-tracked on some of his previous environmental pledges, for example on electric cars, the global body managed a sideswipe, advising the government to “stay the course on climate policy”. But economic forecasters are not always right with their predictions, and this could be another case when the IMF and UK government agree to differ.

There are reports that Sony Music is in discussions to buy the music catalogue of the rock band Queen, and is working with Universal Music on the transaction, which “could potentially total US$ 1 billion”. If it goes ahead, the deal would cover Queen’s songs and all related intellectual property – including the rights to logos, music videos, merchandise, publishing and other business opportunities. In 1972, the band signed with the British label EMI and remained with that company after it was bought by Universal in 2011. If this were to materialise, it would dwarf similar deals involving the likes of Bruce Springsteen, (with Sony paying US$ 500 million for his catalogue in 2021) and Michael Jackson.  Over the last eight years, the likes of David Bowie, Bob Dylan, Justin Bieber, Shakira, Neil Young, Blondie and Fleetwood Mac have been involved in multi-million deals for their musical catalogues.

There is no doubt of the band’s popularity, even though its front man died in November 1991. Spotify estimates that Queen has fifty-two million listeners every month compared to The Boss’s twenty million and the King of Pop’s forty-one million. In the UK, the first volume of Queen’s Greatest Hits is the most popular album of all time, with sales in excess of seven million copies. It was even the twentieth-biggest seller of 2023, beating new releases by Ed Sheeran and the Rolling Stones. According to its most recent financial statements, Queen Productions Ltd made $52 million in the year ending September 2022. If the sale were to go ahead, the proceeds would be shared equally between guitarist Brian May, drummer Roger Taylor, bass player John Deacon and the estate of late singer, Freddie Mercury. The band own the rights for the rest of the world, and also retain the global publishing rights – the copyright for the music and lyrics. The fact that Queen is in this position proves that, with hits such as  Bohemian Rhapsody, Radio Ga Ga,  A Kind of Magic and Another One Bites The Dust, they can still honestly say We Will Rock You!

Tears Of A Clown!                                                                             24 May 2024

Knight Frank has indicated that global high net worth individuals are expected to spend 76% more, on the year, to US$ 4.4 billion buying in the burgeoning Dubai property market in 2024. There seems to be no respite in the demand for luxury homes in the emirate, despite ongoing double-digit growth. The consultancy projects that GCC-based resident HNWIs are projected to spend US$ 3.1 million to buy a house in Dubai while the global ultra-rich will allocate US$ 36.5 million on average on property deals. Faisal Durrani, head of  the firm’s ME research commented that, “the level of interest to invest in Dubai rises with the level of personal wealth growing, from 28% for those with US$ 2 to US$ 5 million, topping out at 70% among those worth more than $15 million”. Top purchase locations include Dubai Marina, Downtown Dubai, Business Bay, Dubai South/Expo City, Dubai Canal, Dubai Hills Estate, Palm Jumeirah and Jumeirah Bay Island. Q1 prices of Dubai prime residential properties, valued at US$ 10 million plus, rose 18.2% on the year, with overall prices increasing by 20%. Its 2024 forecast, which to this observer is too conservative, is for overall residential prices to rise by 3.5% and prime properties by 5.0%.

Omniyat announced that it had sold a four-bedroom penthouse at the newly opened The Lana Residences, Dorchester Collection for US$ 38 million, making it the most expensive property in the Burj Khalifa district. It spans nearly 16.6k sq ft, overlooking the Marasi Marina between the Burj Khalifa District and the Dubai Design District. The latest Knight Frank report shows that fifty-six properties, with a value of over US$ 25 million, were sold in Dubai last year, with a further twelve sold in Q1.

Latest data from the Dubai Land Department indicates that occupier activity remained robust in Q1, with the total number of rental registrations reaching almost 46.9k, registering an increase of 35.8% on the year. CBRE noted that “this headline growth has been largely underpinned by a 51.1% increase in new rental registrations, which totalled 34.5k. Renewed contracts posted a total of 12.4k, marking a 6.1% growth from the previous year.” Despite the lack of supply, free zone locations are still capturing a substantial share of market activity. To cater for this rising demand, developers are fast-tracking future developments across a range of free zone and non-free zone locations. The robust levels of demand continued to be seen in the UAE’s occupier market in Q1, largely driven by the strong levels of economic growth that continue to attract occupiers to the country. The average Q1 occupancy rate, within this market segment, nudged 1.2% higher on the year to 91.3%. In the period, the average Prime, Grade A, Grade B, and Grade C rents registered year-on-year increases of 7.6%, 17.9%, 21.6%, and 16.8%. Average Prime Grade A, Grade B and Grade C rental rates reached US$ 69.48, US$ 52.32, US$ 44.14 and US$ 35.69 per sq ft, respectively, as at Q1 2024.

2023 was a very successful year for Dubai World Trade Centre that saw it generating a total economic output of US$ 4.98 billion from seventy-six large-scale exhibitions, international association conventions and industry conferences (of the overall total of three hundred and one exhibitions and events). It is estimated that these events added US$ 2.87 billion to the GDP, equating to 58% of the total economic output being retained within the local economy, whilst fostering 69.3k jobs and generating US$ 916 million in disposable income. The notable 53% annual increase in international participants yielded significant contribution to Dubai’s GDP, with an average participant spend of US$ 2,810 per event, which is 6.2 times higher than that of local participants. The large-scale business events attracted 1.54 million attendees, with 46% being international attendees – 53% higher on the year. Helal Saeed Almarri, Director General – DWTC Authority, said “the increase in international participation, along with the significant economic impact generated across diverse sectors such as travel, accommodation and retail, highlights the city’s steadfast commitment to propelling business tourism.” Direct revenue generated through expenditure, in adjacent sectors, reached over US$ 2.95 billion. The key sectors in the domestic economy that benefited were hotel accommodation (US$ 807 million, up 54%), air travel/local transport (US$ 719 million, up 20%), retail (US$ 537 million, up 71%), restaurants (US$ 466 million, up 51%), and business entertainment (US$ 357 million, up 27%). The success of DWTC’s own events and exhibitions, such as GITEX Global and Gulfood, generated US$ 1.97 billion in economic output and US$ 1.13 billion in GVA – a 53% increase over 2022.

Q1 saw Dubai International Airport handle over twenty-three million passengers, becoming its “busiest quarter in history”, and 8.4% higher on the year. In 2023, handling almost eighty-seven million passengers, the airport surpassed its pre-coronavirus annual total, with a 31.7% hike in numbers and is well on its way to top ninety-one million this year. The main drivers behind these impressive returns are the global rebound in air travel and that both Emirates and flydubai have boosted their network operations – and this despite geopolitical tensions, a shortage of Boeing planes and inflationary pressures. Last year, EK carried 51.9 million passengers, 19% higher on the previous financial year, while its seat capacity increased by 21%; flydubai carried nearly five million passengers between January and April 2024 – up 13% on the year.

The DFM opened the week on Monday 20 May, 105 points (2.5%) lower the previous week shed 43 points (1.4%) to close the trading week on 4,013 by Friday 24 May 2024. Emaar Properties, US$ 0.19 lower the previous four weeks, gained US$ 0.07, closing on US$ 2.13 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.63, US$ 4.54, US$ 1.51, and US$ 0.36 and closed on US$ 0.63, US$ 4.28, US$ 1.50 and US$ 0.35. On 24 May, trading was at two hundred and forty-five million shares, with a value of US$ 101 million, compared to two hundred and twenty-one million shares, with a value of US$ 111 million, on 17 May 2024.

By Friday, 24 May 2024, Brent, US$ 3.08 higher (0.1%) the previous week, lost US$ 4.00 (4.7%) to close on US$ 81.86. Gold, US$ 111 (4.8%) higher the previous fortnight, shed US$ 80 (3.3%) to end the week’s trading at US$ 2,334 on 24 May 2024.

As Boeing flies from one crisis to another, seemingly on a regular basis, it does seem odd that not only have shareholders signed off a 2023 US$ 33 million pay-out to outgoing boss Dave Calhoun, but also to keep him as a Board member, as he leaves his day job this October; in 2022, he was paid almost US$ 23 million. When the board chairman Steve Mollenkopf was asked how the compensation for Mr Calhoun and others were “justified”, given the severe challenges now facing the company, he commented that some 2024 executive awards had been reduced after the Alaskan Airlines incident and that in future product safety has been given the primary weight in determining performance, instead of financial factors – such as cash flow and share price – as had been the case previously. He also mentioned that “the months and years ahead are critically important for our company as we take the necessary steps to regain the trust lost in recent times.” Last week, this blog noted that the US Department of Justice said it was considering whether to prosecute Boeing over deadly crashes involving its 737 Max aircraft in 2018 and 2019. There are some who consider that both the chairman and the chief executive are very lucky to still have a job with Boeing – and picking up handsome bonuses in the process.

No doubt helped by raising its fares by 21%, to an average US$ 54.11, in most cases, Ryanair has reported a 34.0% rise in full-year profits, to US$ 1.92 billion, but the budget airline indicated that peak summer prices will only be “flat to modestly ahead” of last year. It also confirmed that there would be a shortage of about twenty-three Boeing 737s, that were due to be delivered by the end of July, because of the supply problems at Boeing; supremo Michael O’Leary estimated that if it had a complete fleet, it could have carried two hundred million passengers, (last year it carried 183.7 million passengers). The carrier said it was continuing to work closely with the aerospace giant to improve quality and increase the pace of deliveries. Whilst acknowledging that the carrier would receive compensation for these delays, O’Leary said it would be “modest” and did not reflect the cost to the airline of having to cut back its growth plans.

What the aviation world needs is an extra plane maker to challenge the current duopoly of Airbus and the embattled Boeing to add more planes to the global portfolio. Shanghai-based plane maker Comac is positioning the C919 as a viable alternative to the Airbus A320neo and Boeing’s 737 Max as the two plane makers struggle to meet demand for new aircraft, and Boeing battles a series of crises. It is reported that Saudia Group has offered the plane maker the chance to establish an assembly line in Jeddah, with the national airline also in discussions with the Chinese company to understand the specifications of the C919 narrow-body jet. The maintenance, repair and overhaul complex, covering about one million sq mt, is set to be completed next year and expected to house the manufacturing operations of global aerospace companies. It seems to be a win-win for both Saudia and Comac – the former to expand its domestic manufacturing sector to diversify its economy away from hydrocarbons, whilst the latter would benefit from expanding its manufacturing base and to establish a presence in the ME’s fast-growing aviation sector.

Once valued at over US$ 9.60 billion, Cazoo, the British online car retailer, has gone into administration this week, with the appointment of insolvency practitioners from Teneo to proceed with the process. To date, more than seven hundred employees have been made redundant but some at the New York-listed firm have been retained to operate the remaining marketplace model while they explore a sale. At the beginning of the week, the group’s wholesale arm was sold to G3, another industry player, with Constellation Automotive, the owner of Cazoo’s rival, Cinch, also having acquired a number of assets. There seems to be interest from a number of players, including BMW, Motorpoint, Motors.co.uk and Car Gurus.

One casualty from Getir’s decision to exit the UK market is Tottenham Hotspur Football Club, being owed over US$ 6.0 million. The Turkish grocery delivery app had a three-year training kit sponsorship deal with Spurs, expiring last Sunday which was the end of the EPL season. News of the outstanding debt comes as Getir tries to access a tranche of agreed funding from its major investors, Mubadala and G Squared, to help facilitate its withdrawal from the UK, Germany and the Netherlands. It leaving the UK would leave 1.5k unemployed and it is yet unknown whether it will be able to pay any of its current liabilities. The firm was once valued at over US$ 12.7 billion.

Mondelez is the latest food supplier accused of “shrinkflation”, where prices are kept the same but content reduced; in this case, the number of Ritz crackers per box has been reduced by up to 30%, but the price has remain unchanged. The size difference was first highlighted by The Grocer and confirmed by Mondelez, which owns the Ritz brand. The 200 gm packs of Original and Cheese crackers have now been replaced by packs, weighing 150g and 140 gm, whilst the prices remain at their historic price. The manufacturer, in confirming the size change, added that “we understand the economic pressures that consumers continue to face and any changes to our product sizes is a last resort for our business,” they said, adding that the food producer is experiencing “significantly higher input costs” across its supply chain as ingredients cost far more than they had previously, with other overheads – such as energy, packaging and transport – also higher. A blog earlier in the year, (‘Fool Me Once, Shame On You’ – 26 January) noted:

“One of the UK’s well-known food suppliers, Premier Foods, is planning to cut prices on more of its products, including Mr Kipling, Bisto and Angel Delight. Latest figures indicate that food prices are rising less quickly, with Premier planning to increase prices of own-brand products – this sector had seen marked growth attributable to surging food prices, as food inflation figures topped 19% only ten months ago in March 2023; last month, it had dropped to 8.0%. The company started lowering prices in Q4 and noted that discounts had helped it to report strong trading over Christmas, with group sales up 14.4% on the year”.

According to Which?, other products facing shrinkflation included:

• Listerine Fresh Burst mouthwash shrank from 600ml to 500ml. At Tesco it also went up in price by 52p
• PG Tips Tasty Decaf Pyramid tea bags went from containing 180 bags to 140 at a number of supermarkets
• Kettle Chips Sea Salt and Crushed Black Peppercorns Crisps shrank from 150g to 130g at Tesco
• Yeo Valley Organic Salted Spreadable went from 500g to 400g at Sainsbury’s and Tesco

Having concluded an alternative restructuring, FPR Advisory, Body Shop’s administrators, found it not viable and will launch an auction of the iconic high street retailer. Following a recent shop closure and redundancy programme, Body Shop, founded in 1977 by Anita Roddick, currently trades from about one hundred stores and did have interest from Next before Aurelius, the investment firm, took control of it only weeks before administrators were called in; it had acquired the chain from Natura & Co, a Brazilian company, which was reported to have paid more than US$ 1 billion to buy it in 2017. It was reported that the new owner was confronted with an immediate short-term cash flow position, which was adverse to what had been forecast, driven by poor results in the 2023 financial year and the unwinding of the company’s working capital. Aurelius is understood to have continued financing the business during the administration process. The Body Shop’s businesses, across most of Europe and parts of Asia, had already been offloaded to a family office prior to the insolvency of the UK arm.

A US Congressional report points to BMW, (including 8k Mini Coopers), Jaguar Land Rover and Volkswagen having used parts made by Sichuan Jingweida Technology Group, a supplier on a list of firms banned over alleged links to Chinese forced labour. Senate Finance Committee Chairman, Ron Wyden, noted that “automakers’ self-policing is clearly not doing the job,” and also urged the US Customs and Border Protection agency to “supercharge enforcement and crack down on companies that fuel the shameful use of forced labour in China.” JLR has now identified the banned imported spare parts and is destroying any such stock it holds around the world, whilst VW had voluntarily informed customs officials about the issue, noting that thousands of its vehicles, including Porsches and Bentleys, had been held by authorities because they had a component in them that breached America’s anti-forced labour laws. Congress had passed the Uyghur Forced Labor Prevention Act law in 2021 that was intended to prevent the import of goods from China’s north-western Xinjiang region that are believed to have been made by people from the Uyghur minority group in forced labour conditions.

Live Nation, the owner of Ticketmaster, is being sued by the US Justice Department over claims it is running an illegal live event “monopoly” which is driving prices up for fans and pushing out smaller competition. It claims that they are squeezing out smaller promoters by using tactics such as threats and retaliation The accused countered that it will defend itself against “baseless allegations” and claims the lawsuit would not solve ticket price or availability issues. Filed yesterday in a Manhattan federal court, the sweeping antitrust lawsuit was brought with thirty state and district attorneys-general. The US Attorney-General Merrick Garland commented that “it’s time for fans and artists to stop paying the price for Live Nation’s monopoly,” and “it is time to restore competition and innovation in the entertainment industry. It is time to break up Live Nation-Ticketmaster. The American people are ready for it.” Ticketmaster, which merged with Live Nation in 2010, is the world’s largest ticket seller across live music, sports, theatre and more. The company said it distributed more than six hundred and twenty million tickets in 2023.

Diplomats owe more than US$ 182 million to Transport for London for unpaid congestion charges, led by the US and Japan owing a reported US$ 18 million and US$ 13 million respectively; at the other end of the scale, Togo owes just US$ 51. The TfL commented that “we and the UK government are clear that the congestion charge is a charge for a service and not a tax – this means that diplomats are not exempt from paying it”. A spokesperson for the US Embassy in London said, “in accordance with international law, as reflected in the 1961 Vienna Convention on Diplomatic Relations, our position is that the congestion charge is a tax from which diplomatic missions are exempt. It appears that “the majority of embassies in London do pay the charge, but there remains a stubborn minority who refuse to do so, despite our representations through diplomatic channels”. The scheme involves a US$ 19 daily fee for driving within an area of central London between 07:00 and 18:00 on weekdays, and between noon and 18:00 on weekends and bank holidays.

A World Bank report, published this week, noted that the percentage of the Lebanese population living below the poverty line had more than tripled from 12% in 2012 to 44% in 2022, as overall prices jumped fifteen times higher over the decade. The World Bank found the spread of poverty was uneven throughout Lebanon and is increasing quickly in the northern regions. For example, the poverty rate in Beirut is 2%, but it rises to 62% in Akkar which has a significant agricultural workforce who are among the poorest in the country, followed by those who work in construction. The situation is made worse by a plummeting currency that lost 98% of its pre-crisis value by last December, having remained in triple digit territory since 2021.

A study of ten water and sewage firms in England and Wales bythe University of Greenwich has concluded that shareholders in some of the UK’s largest water companies, including Thames Water, United Utilities and Severn Trent, have taken out US$ 108.3 billion in dividends but failed to invest. It said that between privatisation in 1989 and 2023, money invested by shareholders in the largest firms shrunk by US$ 7.0 billion, when adjusted for inflation. Over the same period, the amount of “retained earnings” – profits left over once things like dividends have been paid out, that can be used to invest in a business – had dropped by US$ 8.52 billion in real terms. Ofwat, the industry regulator, said it “strongly refuted” the figures.  “While we agree wholeheartedly with demands for companies to change, the facts are there has been huge investment in the sector of over US$ 254.0 billion.” Water UK, which represents the industry, said investment in the sector was “double the annual levels seen before privatisation”. Water and sewage firms want to spend around US$ 127.10 billion over the next five years.

As can be seen from the table below, Southern Water is asking for the biggest jump of 91%, according to the Consumer Council for Water. It is owned by Australian firm Macquarie which has faced fierce criticism for the period when it was Thames Water’s biggest shareholder. In five of the ten years, it owned Thames, the company paid out more in dividends than it made in profits, while debt rose from US$ 3.18 billion to over US$ 12.71 billion in the same period.

The following table lists the details of water firms’ requirements, with increases between 29% to 91%.

• Southern Water – 91% increase to £915 a year by 2030
• Thames Water – 59% to £749
• Hafren Dyfredwy – 56% to £676
• Severn Trent – 50% to £657
• Wessex Water – 50% to £822
• Yorkshire Water – 46% to £682
• Dŵr Cymru – 43% to £702
• United Utilities – 38% to £666
• South East Water – 35% £330
• Pennon – 33% to £644
• Portsmouth Water – 31% to £157
• SES – 30% to £315
• Anglian Water – 29% to £682
• Northumbrian Water and Essex & Suffolk Water – 26% to £530
• Affinity Water 25% to £294
• South Staffs & Cambridge Water – 24% to £221

Source: Consumer Council for Water

Even though UK food prices are slowly returning to “more normal” rates, currently down to 2.4%, it seems that many shoppers are still seeking out cheaper own-brand goods. Research firm Kantar noted that price inflation – the rate at which prices increase – was at its lowest rate since October 2021. Under normal circumstances, it would be expected that 3% inflation is a threshold which over that figure shoppers would start to trade down to cheaper items to save money and vice versa when the level heads below the 3% mark.  Because the market has seen over thirty months of high prices, it appears that it is taking a little longer for shoppers to adjust back to their previous shopping habits. It must be remembered that although overall inflation peaked at 11.1%, in late 2022, food inflation was at a rate of almost 20% last year – the highest since the 1970s. Meanwhile, Kantar reckons that “own-label lines are proving resilient, for example, and they are still growing faster than brands, making up over half (52%) of total spending,” whilst sales of premium own-label ranges remained popular, up by 9.9% from a year earlier.

The Office for National Statistics posted that April retail sales fell a marked 2.3%, as official figures show that wet weather once again put shoppers off. Sales volumes fell across most sectors, with the biggest impact being felt in clothes shops, sports equipment, games/toys stores, and furniture shops doing badly as poor weather reduced footfall. A greater proportion of sales happened online, though the volume of orders declined. Retail sales is the largest expenditure across the UK economy.

Falling gas and electricity prices have driven UK inflation to its lowest level in almost three years. Prices rose at 2.3% in the year to April, down from 3.2% the month before – a figure that is fast approaching the BoE’s 2.0% target. Falling inflation does not mean the prices of goods and services overall are coming down, it is just that they are rising at a slower pace. The major factors pushing prices lower included energy prices, (27% lower on the year – including gas which fell 38%), declining tobacco, food, (milk, butter, poultry and fish), which were partially offset by rising costs of mobile phone bills, rents, olive oil, cocoa and crisps. Prices for all goods – ranging from food to household appliances – decreased marginally by 0.8% in April but services inflation, which measures price rises for things such as haircuts or train tickets, remained elevated at 5.9%.

It has been a bad week for the trustworthiness of UK politics, starting, on Monday, (with the Sunak administration having to admit that successive governments, from the 1980s had shown lack of openness  and elements of “downright deception”, including the destruction of documents), relating to more than 30k people in the UK being infected with HIV and hepatitis C, after being given contaminated blood products in the 1970s and 1980s. The inquiry chairman Sir Brian Langstaff also added half-truths were also told, so people did not know about the risk of their treatment, the availability of alternatives, or even whether they were infected adding that “the disaster was not an accident, “and that those in authority — doctors, the blood services, and governments — committed the ultimate folly in healthcare and healing: they “did not put patient safety first”. The six-year-long inquiry uncovered a coverup that was “more subtle, more pervasive, and more chilling in its implications” than an orchestrated conspiracy. It was undertaken “to save face and to save expense”. The calamity was made more catastrophic by the “defensiveness of government…and its refusal over decades to hold a public inquiry.” A public inquiry has described the scale of the scandal as “horrifying” and accused doctors, the government and NHS of repeatedly failing patients. The government says a final compensation scheme is being set up, and that some victims will receive interim payments of US$ 268k from the summer onwards.

Then there is the ongoing Post Office enquiry which could eventually cost the taxpayer upward of US$ 125 billion. This week saw the ex-chief executive, Paula Vennells, spending three days in the witness stand for the first time in nine years. Not the most popular person in the country, her presence was full of self-justifications and continually insisting that she had not put the Post Office above the cases of sub-postmasters was a recurrent theme. When she told the enquiry “my only motivation was for the best for the Post Office and for the hundreds of postmasters that I met, and I regret deeply that I let these people down,” Sam Stein KC told her she was talking “absolute rubbish”. She has been accused of being in “la la land” and told an answer was “humbug”, watched on by some of the hundreds of sub-postmasters wrongly prosecuted by the Post Office. She was acutely aware of the PR risk to the organisation, and that she listened to advice from her communications staff, concluding that brand was of prime importance. What was evident from her presence this week was to show her complete ignorance of many factors impacting the Post office and her obsession with spin, public relations, media management, and the Post Office’s reputation being placed over and above concern for sub-postmasters.

During her seven year tenure as chief executive, hundreds of sub-postmasters were sent to jail based on flawed evidence thrown up by the Post Office’s Horizon IT system. Her defence that despite her experience, she just did not know; likewise, she did not know that there were bugs in the Horizon system, (before she became CEO), that branch accounts could be accessed remotely, and that the Post Office carried out its own prosecutions. An indicator that the good lady may have been lying on several occasions concerned her 2013 suggestion that the Post Office conduct a review of all false accounting cases over the previous five to ten years. Her PR guru, Mark Davies responded, “if we say publicly that we will look at last cases… whether from recent history or going further back, we will open this up very significantly into front page news. In media terms it becomes very mainstream, very high-profile.” “To what extent did what Mr Davies advice here affect your decision-making?” she was asked. “I would never – it was simply not the way I worked,” she said. Mr Beer then produced her reply to Mr Davies: “You were right to call this out. And I will take your steer, no issue,” she wrote. What maybe her swansong was when asked about a 2013 board meeting: “My recollection,” she said, “is that I don’t recall.” On many occasions over these three days, Paula Vennels broke down in tears but many of her “victims” think that were only crocodile tears, in a futile attempt to show herself as a considerate and caring person. To others, they were Tears Of A Clown!

 Livin’ On A Prayer                                                                             17 May 2024

Mainly attributable to marked growth in affordable and mid-market communities, Q1 property prices in Dubai rose for the fifteenth consecutive quarter. Cushman & Wakefield Core noted that “there are no signs of capital values slowing down yet”, and “city-wide sales prices are up by 20% year-on-year and 66% higher than Q1 2020 (pre-Covid19).” The consultancy also noted that apartment prices, particularly in the prime sub-markets including Palm Jumeirah, City Walk, Downtown Dubai and Dubai Marina, are still increasing but at a more subdued level than earlier annual 20% plus growth. It also stated that “affordable and mid-market apartment communities, owing to a lower base, have seen a sharper increase of 30% and above in Discovery Gardens (37%), Dubai Sports City (34%) and Dubailand (32%).” Further data showed that the majority of villa districts experienced an annual increase in sale prices of above 20%, with units in Jumeirah Village Circle, The Lakes and Jumeirah Park seeing the highest increments.

A new branded residential project, incorporating Italian brand Tonino Lamborghini Group’s designs, (including materials, interior design, fittings, and kitchens from his design studios), has been launched in Dubai by Gulf Land Property Developers. Located in Meydan, the four-tower project, encompassing some 750k sq ft, will incorporate five hundred and forty-one units, ranging from studio to 4 B/R apartments. Two of the buildings will have six floors and the other two, twelve – and all four will have two basement parking levels. It is estimated that Dubai, already among the top global cities for branded residences, numbering around fifty, will see a further seventy added to its portfolio in the coming years.

With some sectors reporting up to 30% rental increases, (in locations such as Jumeirah Lake Towers, Business Bay, Dubai Marina, One Central, and DIFC), there has been an average 14% rate increase for Grade A offices. Savills noted that the emirate’s office market sector has been boosted by a resilient regional economic rebound and strong demand from overseas investors and businesses. The international real estate advisor also added that other factors such as the government’s business-friendly initiatives, including full foreign ownership, changes in residency visa rules, and support for tech firms through platforms like FinTech Hive, Dubai Technology Entrepreneur Campus, and C3 Social Impact Accelerator. Savills also noted a change in work models, with a marked increase in demand for flexible office spaces, including serviced and co-working spaces, reflecting changing work models. Not only has there been an increasing number of new businesses entering the Dubai market, that would prefer serviced office spaces as they bed down in a new location, but also there has been an upward trend in existing occupiers in Dubai transitioning to serviced office spaces to adopt more flexible work models and to save on capex.

Driven by route expansion and robust global travel demand, Emirates turned in a record profit, up 62.3% on the year, to US$ 4.70 billion, with revenue 13.0% higher at US$ 33.02 billion; despite EK carrying more passengers, up 19.0% to 51.9 million, (with seat capacity increasing 21%), it was negatively impacted by currency fluctuations – mainly in Egypt India and Pakistan – to the tune of US$ 545 million. The Emirates Group also announced a US$ 1.09 billion dividend for its owner, the Investment Corporation of Dubai, with staff the beneficiaries of a massive twenty-week bonus. During 2023, it added capacity to twenty-nine destinations and also signed new codeshare and interline agreements, with eleven airlines, further extending its network’s reach. By its fiscal year end, 31 March, EK’s network spanned one hundred and fifty-one destinations, including ten cities served by its freighter fleet only. Notwithstanding passenger yield dipping 2.0%, to US$ 0.10 per revenue passenger kilometre, due to a change in cabin and route mix, fares and currency, it closed year end with a record US$ 11.69 billion of cash assets. During the year, it paid off all its regular aircraft-related payment obligations and repaid an additional US$ 600 million from the US$ 4.77 billion borrowed during the Covid-19 pandemic.

Both revenue and net profit returned record returns for the Emirates Group, (which includes global airport services company Dnata), posting a 15% rise to US$ 37.41 billion and a massive 71% profit surge to US$ 5.10 billion. It ended the year with its highest ever cash balance of US$ 12.83 billion. Driven by robust growth across its business divisions, Dnata’s profit quadrupled to US$ 381 million, while its revenue rose by 29.0% to a record US$ 5.23 billion.

Following an agreement with DP World, Sweden’s Einride is to be the catalyst to assist with the electrification of inter-terminal container flows at Jebel Ali Port. With the electric freight mobility company’s collaboration, it will assist with the electrification of inter-terminal container flows at Jebel Ali Port, which, in turn, will improve efficiency and sustainability. DP World’s chief executive, Abdulla bin Damithan, commented that “our partnership will drive greater operational efficiencies, further decarbonise terminal operations and pioneer greener practices for the logistics sector.” Founded in 2016, Einride makes driverless electric freight lorries, charging ports and sustainable freight technology to improve efficiency of transporting goods. By the end of the year, it is hoped that this partnership will be scaled up to support 1.6k container movements daily, with the assistance of one hundred connected electric lorries.

This week, DP World opened three major Romanian sites – two in Constanta, and the other in Aiud – which will enhance the country’s growing status as a key hub for European trade The global port operator has invested US$ 71 million in a five-hectares ‘project’ terminal for heavy, large and complex cargo, and a new ‘roll-on, roll-off’ (RO-RO) terminal that will handle up to 80k vehicles per year at its peak; a further US$ 50 million will see a new multi-transport platform in Constanta that will open next year A further US$ 23 million will be spent in Aiud to build a new eight-hectares ‘intermodal’ logistics hub, connecting rail and road. The latest investments will improve the connectivity between DP World’s existing sea, rail, barge and truck services across Romania and will enhance the movement of goods between mainland Europe through to the Black, North and Adriatic Seas.  It will increase the cargo flows by around two million tonnes per annum through the country. DP World also plans to open a centre of excellence for services in the Balkans, to facilitate trade for the countries around Romania.

In its latest report, the FTTH Council confirmed that, for the eighth consecutive year, the UAE has once again been recognised as the global leader in Fibre to the Home penetration, with a 99.3% rate. The survey encompasses twenty countries, that have exceeded 50% FTTH availability, and compared global statistics on fibre optic network penetration. It placed the UAE above Singapore (97.1%), Hong Kong (95.3%), China (92.9%), and South Korea (91.5%).

The definition of a greenfield investment is when a parent company creates a subsidiary in a different country, building its operations from the ground up. The latest Financial Times fDi Markets report places Dubai the world’s top destination for greenfield foreign direct investment projects for the third consecutive year. Last year, it managed to secure 1.07k FDI projects, well ahead of Singapore and London, with totals of 442 and 431 respectively. Over the past five years, the emirate’s share on the global stage has more than tripled from 2019’s 1.7% to 6.0%, which is in line with the emirate’s strategy to become a top global city under its D33 economic agenda. It also secured the top global ranking for headquarter FDI projects, for the second consecutive year, attracting sixty projects, followed by Singapore (forty) and London (thirty-one). Nearly 44.8k estimated jobs, up 15.5%, were created through FDI in Dubai, as the emirate attracted nearly US$ 10.71 billion in total FDI capital last year. Crown Prince, Sheikh Hamdan bin Mohammed noted that “in 2024, as we work to accelerate the D33 Agenda, we will continue to intensify our initiatives to nurture a competitive economic ecosystem that fosters value creation. We are committed to making Dubai a place where the world’s leading companies, entrepreneurs and innovators come to build the future.” It is forecast that by 2033, under its D33 strategy, Dubai’s economy would have doubled to US$ 8.71 billion and that it would be counted as one of the world’s top three cities. GlobalData posted that the UAE attracted US$ 23 billion of FDI in 1,277 projects spanning business and professional services, software and IT services and financial services inter alia.

At a meeting in Abu Dhabi, Zhang Yiming, China’s ambassador to the UAE, announced economic ties between the two countries were strengthening, as indicated by Chinese investments in the UAE rising by more than 16% annually in 2023 to $1.3 billion; this amount accounted for 60% of China’s total investment in Arab countries. On the flip side, UAE investments in China rose by 120% on the year and accounted for “90% of Arab countries’ investments in China”. The ambassador continued by adding that the Emirates “remains China’s second-largest trading partner, the largest export market and the third largest engineering market among Arab countries”.

The fourth edition of theE-commerce in the Middle East and North Africa 2023 report, published by EZDubai – in partnership with Euromonitor – indicated that, last year, the total size of the UAE e-commerce market reached US$ 7.49 billion, with expectations that it could grow 77.5% to US$ 13.30 billion by 2028. This improvement and positive forecast are down to many factors such as a tech-savvy youth demographic, strong government support in terms of legislation/regulations, and substantial investments in digital infrastructure. In 2023, the leading sectors by value were clothing and footwear, consumer electronics, and media products. The survey concluded that smartphones are highly popular as a means for online shopping, and that credit and debit cards are the most common payment methods for online purchases, favoured by 93.2% of respondents. The sector in MENA grew 11.8% in 2023 to US$ 29.02 billion, with a 72.40% expansion forecast by 2028. Mobile commerce in the country has more than quadrupled in the five years to 2023 to US$ 3.90 billion.

Tecom Group is to invest US$ 463 million in an acquisition and development plan that will see it support further growth as it will invest US$ 278 million in acquiring commercial and industrial assets from Dubai Holding Asset Management (DHAM) and has earmarked US$ 184 million to develop grade A offices in Dubai Design District (d3). Combined they have a gross leasable area of 334k sq ft and have high occupancy levels with “a loyal and quality customer base” that includes regional and international tech companies. It will also spend US$ 112 million to acquire 13.9 million sq ft of land for industrial use in Dubai Industrial City from DHAM.

The market cap of Arab stock exchanges exceeded US$ 4.361 trillion at the end of April 2024. According to the Arab Monetary Fund (AMF), the top six local exchanges were Saudi Stock Exchange, (US$ 2.87 trillion), Abu Dhabi Securities Exchange, (US$ 754.7 billion), Dubai Financial Market, (US$ 193.4 billion), Qatar Stock Exchange, (US$ 155.4 billion), Kuwait Stock Exchange, (US$ 135.6 billion), Casablanca Stock Exchange, (US$ 68.9 billion), Muscat Stock Exchange, (US$ 63.2 billion), and Egyptian Stock Exchange, (US$ 34.9 billion). The remaining six exchanges – Amman, Bahrain, Beirut, Tunis, Damascus and Palestine – had market values of US$ 23.4 billion, US$ 21.2 billion, US$ 17.2 billion, US$ 8.1 billion, US$ 5.9 billion and US$ 4.3 billion respectively.

In January 2017, excise tax was introduced to the UAE economy and a year later, the country saw the appearance of VAT. This week, Younis Haji Al Khouri, Under-Secretary of the Ministry of Finance announced from their initiation dates through to 31 December 2023, total revenues were at US$ 47.30 billion. He added that VAT revenues at the state level reached US$ 43.48 billion, while the federal government collected approximately US$ 13.04 billion over the same timeframe. In the Excise Tax sector, collections at the state level totalled US$ 3.83 billion, with the federal government having collected approximately US$ 1.42 billion. He also noted that this year, the estimated total expenditures of the federal general budget are US$ 17.44 billion, with expected revenues of US$ 17.90 billion; this results in an expected surplus of US$ 0.463 billion.

The recently DFM-listed Spinneys posted positive Q1 financial results, with revenue up 10.9% to US$ 222 million, (driven by an increase in retail revenue, with transactions 9.5% higher on the year), and gross profit posting a 15.0% gain to US$ 92 million, as gross margins rose 1.5% to 41.2%; this was down to its successful private label strategy, as well as its efficient sourcing and supply chain capabilities. Profit for the period increased, on the year, 12.8% to US$ 20 million, with net profit margin 0.20% higher at 9.2%. Adjusted EBITDA1 came in 8.7% higher, at US$ 41 million, whilst an Adjusted EBITDA margin2 of 18.5%, impacted by the one-off IPO-related costs of US$ 3 million and pre-store opening expenses in Saudi Arabia.

Last Friday, Drake & Scull International closed its subscription for new capital, with proceeds exceeding US$ 123 million. The subscription process, for the period of 25 April to 10 May, at a discounted rate of US$ 0.068 per share, exceeded one and a half times the minimum required to complete the restructuring process; the new capital of 2,887 million shares is valued at US$ 787 million. Its shares will resume trading on the DFM next Monday, 20 May, after completing the procedures required by the regulatory and supervisory authorities.

Two factors have had a negative impact not only for Ansari Financial Services but also for other firms in the same sector; they were the uncertainty of the prevailing macroeconomic conditions and pressure from the parallel market, within major remittance corridors. Q1 saw a 4.3% decline in operating income, and a 26.0% fall in net profit after tax to US$ 27 million, (attributable to the introduction of 9% Corporation Tax and increased capex in expanding the branch network). On the year, total transactions increased by 5.1%. There was a 24% increase in Wage Protection System (WPS) volumes, with digital channels reporting an increase of 25%, accounting for 21% of the overall outward remittances. By the end of March, Al Ansari had two hundred and fifty-nine outlets.  Al Ansari Exchange in Kuwait integration with Oman Exchange will be consolidated in Q3, with Al Ansari Digital Wallet set to be launched before the end of year.

In Q1, Emaar Properties posted its highest ever quarterly group property sales, 47% higher at US$ 3.68 billion, compared to Q1 2023, with revenues of US$ 1.83 billion and net profit before tax at US$ 1.17 billion – 16% higher on the year. Emaar’s revenue backlog from property sales, growing at 9%, reached US$ 21.34 billion as of March 2024. Driven by incremental property sales, the developer’s backlog from property sales was US$ 19.3 billion, which represents future revenue from property sales to be recognised over the next four to five years.

Emaar Development PJSC, majority-owned by Emaar Properties, announced a 50.0% annual increase in property sales in Q1 2024, reaching US$ 3.51 billion, and a 48.0% annual hike in EBITDA of US$ 463 million. Emaar now has a sales backlog of US$ 17.90 billion, which will be recognised as revenue in the coming years due to the sector’s robust performance. The country’s largest build-to-sell property development company successfully launched ten projects across various master plans during the quarter, and also made a significant acquisition of a land plot measuring sixty million sq ft near The Oasis masterplan, with a development value of US$ 11.17 billion. In Q4, it had acquired eighty-one million sq ft of land in the same location and used the plots to announce two major developments – The Heights Country Club & Wellness and Grand Polo Club & Resort – spanning over a total one hundred and forty-one million sq ft, with a total development value of US$ 26.16 billion.

DFM-listed Deyaar Development posted a 37.4% increase in Q1 net profit before corporate tax, to US$21 million, on the back of a 4.9% revenue jump to US$ 85 million. Total assets increased 7.4% to US$ 1,826 million as of 31 March 2024. Liquidity increased by US$ 124 million due to robust receivables and increased advances from customers, whilst earnings per share increased by 29.4% to US$ 0.0045. In March, the developer, majority-owned by Dubai Islamic Bank, announced its first ever dividend of US$ 0.0109, equating to 4% of its share capital of US$ 47.68 million.

Dubai Investments announced a 61.9% dip, on the year, in Q1 net profit attributable to shareholders after tax, to US$ 33; excluding the one-off gain on the fair valuation of investment properties last year, the group’s profit for the same period in 2024 has surged by 90%. Total income over the period was US$ 216 million – 21.7% lower compared to the same period in 2023 – with total assets remaining stable at US$ 58.47 billion. The company commented that “the Danah Bay project on Al Marjan Island in Ras Al Khaimah continues to witness robust demand, with steady construction progress”. It also recently launched its Violet Tower project in Jumeirah Village Circle, comprising studio, 1 B/R and 2 B/R apartments; prices start at US$ 158k, with completion slated for Q2 2026.

Salik Company PJSC posted an 8.1% hike in Q1 revenue to US$ 153 million, attributable to an 8.1% jump in toll usage fees to US$ 134 million, revenue from fines, 6.4% higher at US$ 16 million, (from 683k violations), and tag activation fees coming in 13.6% higher at US$ 3 million. In Q1, Dubai’s exclusive toll gate operator, saw 122.8 million cars pass through its eight gates. Net profit before taxes came in 10.9% higher to US$ 83 million during Q1. Mainly driven by the closure of the ongoing Floating Bridge, Al Maktoum Bridge gate posted a 49.0% Q1 increase in the number of revenue-generating trips, and Al Garhoud Bridge with numbers 9.1% higher. Excluding these two, the other six gates saw trip numbers up 5.3%, including Jebel Ali growing 12.0%. Two new toll gates will open in Q4 – Business Bay Crossing and Al Safa South. The company is also initiating new revenue streams, with the use of barrier-free paid parking system at Dubai Mall starting Q3. Ibrahim Sultan Al Haddad, CEO of Salik, said: “We continue to thrive in our core tolling business and remain focused on diversifying our portfolio through the expansion of ancillary revenue streams”.

The DFM opened the week on Monday 13 May, 30 points (0.7%) higher the previous week shed 105 points (2.5%) to close the trading week on 4,068 by Friday 17 May 2024. Emaar Properties, US$ 0.06 lower the previous three weeks, lost US$ 0.13, closing on US$ 2.06 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.64, US$ 4.56, US$ 1.54, and US$ 0.37 and closed on US$ 0.63, US$ 4.54, US$ 1.51 and US$ 0.36. On 17 May, trading was at two hundred and twenty-one million shares, with a value of US$ 111 million, compared to one hundred and sixty-nine million shares, with a value of US$ 83 million, on 10 May 2024.

By Friday, 17 May 2024, Brent, US$ 0.09 lower (0.1%) the previous week, gained US$ 3.08 (3.7%) to close on US$ 85.86. Gold, US$ 65 (2.8%) higher the previous week, gained US$ 46 (1.9%) to end the week’s trading at US$ 2,414 on 17 May 2024.

In the middle of a take-over battle, with BHP attempting to acquire it, (mainly for its copper operations), with a US$ 42.65 billion bid, Anglo American has announced plans to break up the business, announcing that it will sell or demerge major parts of the firm, including its De Beers diamond operation, Anglo American Platinum and its steelmaking coal businesses. This divestment would then leave the one hundred and seven-year-old UK mining giant focussing only on its copper, iron ore and crop nutrients businesses, with its chief executive, Duncan Wanblad, commenting that “we expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction.” Anglo American also said it expected the reshaping of the firm would lower its costs by US$ 1.69 billion. It seems that BHP only wanted to buy Anglo American for its two copper mines in Chile and Peru.

Another week and yet another problem for Boeing management. In 2017 and 2018, two fatal aircraft crashes, both involving Boeing 737 Max aircraft, killed three hundred and forty-six people. Six years later, the US Department of Justice is considering whether to prosecute Boeing for breaching the terms of a 2021 agreement that shielded the firm from criminal charges linked to the incidents. The government body claimed that the plane maker failed to “design, implement, and enforce a compliance and ethics program to prevent and detect violations of the US fraud laws throughout its operations.” Under the deal, Boeing paid a US$ 2.5 billion settlement, while prosecutors agreed to ask the court to drop a criminal charge after a period of three years. Relatives of the victims have called for criminal action against the company.

No need to feel sorry for Tesco’s chief executive who has been told that his basic pay will increase by only 3% this year which is lower than the raise given to his UK hourly-paid colleagues; it had recently raised pay for hourly earners by 9.1% to between US$ 15.14 to US$ 16.57. In the year ending 28 February, Ken Murphy was paid US$ 5.92 million in salary and bonuses, but this doubled to US$ 12.6 million following a bumper share award. The shares were awarded to him when he joined and paid out this year after he surpassed a number of performance targets. Pre-tax profits jumped 160.8% to hit US$ 2.90 billion, as sales rose by 4.4% to US$ 85.92 billion. To some observers, it seems incongruous that customers, having to pay higher prices, and staff, having to live on minimum wages, when the fat cats seem to be reaping all the benefits.

Latest data from the China Association of Automobile Manufacturers posted an annual 12.8% rise in automobile manufacturing to 2.406 million, as sales also headed higher, climbing by 9.3%, to reach 2.359 million units. New energy vehicle production surged 35.9% to 870k units, with sales up 33.5% to 850k units; they now account for 36.5% of all vehicles manufactured in April. Furthermore, the sales of Chinese-brand passenger vehicles, accounting for 63.5% of sales volume, posted an annual 8.4% rise to reach 1.272 million units.

In 2022, Mine One Partners, which it is claimed to be majority-owned by Chinese citizens, acquired land adjacent to Francis E. Warren Air Force Base in Wyoming, home to Minuteman III nuclear intercontinental ballistic missiles; subsequently, it installed cryptocurrency mining equipment. This week, citing spying concerns, a directive from President Joe Biden ordered that the company sells the land, within one hundred and twenty days. The White House commented that “the proximity of the foreign-owned Real Estate to a strategic missile base… and the presence of specialised and foreign-sourced equipment potentially capable of facilitating surveillance and espionage activities, presents a national security risk”. It is reported that the Committee on Foreign Investment in the US (CFIUS), a powerful body that scrutinises deals for national security threats, was not notified about the purchase by the company. When notified, it determined that the purchase had national security implications.

The US Department of Justice has charged the two Peraire-Bueno brothers with stealing US$ 25 million in cryptocurrency, in just twelve seconds, last year. Accusing the pair of wire fraud and money laundering, it noted that the alleged heist was the first time that such a “novel” form of fraud had ever been subject to criminal charges. Deputy Attorney General Lisa Monaco stated that they “stole US$ 25 million in Ethereum cryptocurrency through a technologically sophisticated, cutting-edge scheme they plotted for months and executed in seconds.” Prosecutors allege the two used highly specialised skills that they learned at “one of the most prestigious universities in the world” to exploit Ethereum’s process for validating transactions. When confronted by a representative for Ethereum, the brothers declined to return the funds and took steps to launder and hide their stolen gains. If found guilty, the brothers, who studied mathematics and computer science at MIT, could face up to twenty years in prison.

This week, the People’s Bank of China (PBOC) said it would set up a US$ 41.5 billion facility to support affordable housing, at a time when the sector has been in crisis mode for the past three years. It has effectively scrapped the minimum mortgage rate and cut the minimum down payment for first-home buyers from 20% to 15% and from 30% to 25% for second homes. The money would be aimed to support local state-owned enterprises to buy unsold homes, as well as encouraging local governments to buy properties at “reasonable prices” and sell them as affordable housing.  It has also instigated several measures to help the embattled sector which include cutting the amount home buyers need for a deposit and encouraging local authorities to purchase unsold properties. In April, new home prices fell for a tenth month in a row by 0.6% on the month – the sharpest monthly decline since November 2014.

With only six months until the US presidential election, current incumbent, Joe Biden is seemingly getting tough on anything Chinese – this time ramping up tariffs on Chinese-made electric cars, (up to 100% from 25%), solar panels, (doubling to 50%), steel, (up from 7.5% to 25%) and other goods – to bank votes in what promises to be a divided and turbulent November for US politics. The measures include a 100% border tax, on electric cars from China, with the twin aims of protecting US jobs and responding to their unfair policies. The tariffs announced would hit an estimated US$ 18 billion worth of imports. There are many business owners that would prefer such tariffs being removed altogether, arguing that they were driving up prices for everyday Americans.

After several months of higher-than-expected inflation in the US, the pace of price increases indicated signs of slowing in April, down 0.1% to 3.4%, and this has bemused the Fed even further on whether it should adjust rates – either to twist, higher or lower, or ‘stick’. In the hope that it could tame inflation, the central bank, having had pushed rates to a heady 5.3% last July, had thought that the highest borrowing costs in two decades would help ease pressures pushing up prices. However, inflation is still someway off its 2.0% target and attempts to cool the economy have been thwarted by disappointingly high inflation data, leaving the Fed to decide its next step knowing that lower rates, in the present economic climate, could lead to a slowdown – and possibly major economic problems.

Still believing that interest rates will go lower this year, and following April labour market data, (that showed headline and core inflation declining 0.2% to 3.4%), the Dow Jones Industrial Average on Thursday broke through the 40,000-point level for the first time ever. This milestone is a sign that the US economy is in better shape than many had thought and is one of the best performing in the G20. Earlier in the week, the S&P 500 topped the 5,300 mark for the first time, whilst the Nasdaq Composite also reached an all-time high of 16,797.

Citing that it was in response to customer demand for cheaper prices, Morrisons has faced a customer backlash when it announced that it would be trialling the sale of New Zealand lamb, instead of 100% British lamb, in thirty-nine of its four hundred and ninety-eight stores. The supermarkets commented that “the blunt commercial reality is that New Zealand lamb is cheaper to source”, whilst adding that its butchers’ counters will also still sell British lamb. The National Farmers Union (NFU) said it was “disappointing” at a time the British livestock industry was under pressure and that New Zealand lamb is “produced to potentially lower standards”. NFU livestock board chair David Barton noted that the unprecedented wet weather” was an “enormous challenge” for British farmers, urging Morrisons to stick to its 100% British lamb commitment, whilst hoping the supermarket’s change was temporary and that the trial would soon come to an end. Morrisons announced in March that it had made a loss of more than US$ 1.25 billion last year, driven by soaring financing costs as the firm’s debt also grew. Many of its customers, struggling with overall higher costs, are changing their shopping habits and looking for cheaper products.

Consumer prices rose 3.4% in the year to April, down 0.1% on the month, driven by higher rents and petrol costs. A report on Wednesday indicated that spending was flat last month – a sign that the economy may be weakening – with multiple updates from big retailers warning that shoppers, especially those with lower incomes, are cutting back. Although there were price declines, in egg, milk, cheese and other dairy products, they were offset by rises in other sectors which pushed grocery prices 1.1% on the year. With rents 5.5% higher on the year, housing costs moved higher, as did car insurance and medical costs. Stripping out food and energy, prices rose 3.6% over the last twelve months – its slowest pace since 2021.

Although the Q1 UK jobless rate increased 0.1% to 4.3%, (outstripping inflation’s 3.2% rate), in the quarter ending 31 March, wage growth remained robust whilst the number of vacancies also slowed, indicating that more unemployed people were competing for the same jobs. The Office for National Statistics noted that pay, excluding bonuses, remained at 6.0%, that had been expected to slow to 5.9% over the period. Still higher than pre-pandemic levels, jobs on offer in the UK dipped 26k (2.8%) to 898k vacancies in the quarter ending 30 April. However, with unemployment also increasing, the number of unemployed people per vacancy has continued to rise. When taking inflation into account, wages grew by 2.4%. The wage figures will be closely watched by the BoE to decide if and when interest rates can be cut, but these latest wage growth figures, which came in higher than expected, may make it wary about cutting the 5.25% interest rate as early as next month.

A recent post-pandemic phenomenon, driven by historically high mortgage rates, has seen hundreds of thousands of homeowners, noticeably in the under-thirty age category take out new home loans that many of them will still be paying off into retirement. The number of such homeowners taking out such mortgages more than doubled over the two-year period, while for those aged under forty the number was up 30%. BoE figures show how the share of new mortgages, with a later end date, has increased, because many have no other option but to select an extended repayment period to control costs. Data shows that in Q4 2021, some 31% of new mortgages had an end date beyond state pension age, that two years later saw that rise to 42%. It must be noted that not only will many be paying off their mortgage for longer, but they will also be paying more interest, making the cumulative cost higher. How long such a trend might last will also depend significantly on whether mortgage rates drop and settle. Short-term, there appears to be no end to high mortgage rates so an increasing number are currently Livin’ On A Prayer!

Island In The Sun!                                                                         10 May 2024

Latest data from Knight Frank indicates that in Q1, Dubai’s ultra-luxury developments, (those residences valued at US$ 10 million plus), showed a 19% jump on the year to hit a new record high, with one hundred and five deals registered, driven by ongoing overseas demand. The total value of luxury homes sold in Dubai rose 6.0% to US$ 1.73 billion. The highest number of sales was recorded in the traditionally sought-after Palm Jumeirah and Palm Jebel Ali districts. Last year, the emirate recorded four hundred and thirty-one home sales above US$ 10 million – 79.6% higher than London’s sale numbers, (two hundred and forty), and 104.3% better than New York (two hundred and eleven). More of the same is expected for the rest of the year, with foreign investor confidence in the emirate remaining high.

One consequence of the April storms is that property service charges could move higher, with Cushman & Wakefield Core noting that “we would see this impact be reflected in higher service charges and insurance premiums over the near term.” Short-term, the government has mandated all developers and community managers to conduct the cleaning and repairs for flood-damaged residences, free of cost. On top of that, top developers, Emaar Properties, MAG, Damac Properties, Nakheel, Dubai Holding, Union Properties, Dubai Investment Park inter alia, offered free services to tenants, impacted by the more than inclement weather that hit last month.

The consultancy also noted that nearly 8.4k units were handed over in Q1, with an additional 29.7k units expected to be handed over before the end of the year, bringing the total annual figure to 38.1k. Over the quarter, Dubai Statistics Centre posted that the population grew by 25.8k which would take up 6.0k of these new Q1 units. By this blog’s workings, if the 2024 supply chain came in at 38.1k, it will just be enough to meet an annual 165k population growth. (It must also be remembered that YTD, the population has already increased by 1.0% to 3.692 million and the percentage of a more affluent influx, compared to pre-pandemic, is a lot higher and would be more likely to buy property). However, this does not include the needs of domestic/international investors, (which grow every year), increased Airbnb owners and second-home buyers – all of which will stress the supply chain. According to Cushman & Wakefield Core, city-wide rents increased for the thirteenth consecutive quarter, rising by 20%, year-on-year, and by 72% higher than Q1 2020. An unfortunate side-line is that household income is lagging rising rents, but if mortgage rates eventually head south, then it could lead to increased property purchases, as end users will be better off, paying off a mortgage than forking out for extra rent.

Off-plan sales continue to dominate, accounting for around 75% of the total sales, with waterfront properties and branded residences attracting most attention. One of the main factors for higher prices in this segment is a marked limited supply of readily available units, particularly completed properties. Some of the factors that continue to see an increasing number of HNWI looking to Dubai for a home base include accessibility, (with Dubai’s direct links with most places in the world), modern infrastructure, lifestyle, safety, security, proactive government policies, ten-year visas, growing economy, friendly tax environment, high real estate returns and relatively low property prices, compared to most major global cities.

Q1 saw demand from Russian investors softening, offset by increased interest from European, American and Central/South American buyers – this trend is expected to continue for the rest of 2024. Apart from the ultra-luxury sector, there was strong interest noted in both the premium, (properties over US$ 2.72 million – AED 10 million) and luxury, (properties over US$ 1.36 million – AED 5 million) segments. The former saw a 76% surge in transactions in this price bracket, whilst the latter constituted 7.6% of total completed sales, surpassing last year’s average by 2.2%. Q1 witnessed nearly 1.7k sales of both ready and off-plan homes valued at over US$ 1.36 million, including one hundred property transactions exceeding US$ 8.17 million, (AED 30 million). There is no doubt that growth in the luxury market will continue into the year but there is some debate whether 2024 growth rate will be higher or lower than seen in the previous three years. 

New analysis by Desert Safari Dubai Tours looked at Google search data over the past twelve months to find which holiday destinations were most popular in the UK. The most in-demand holiday destinations in 2024 were:

Amsterdam 57.5k Dubai 52.5k New York                               51.2k Paris 43.3k Tenerife 43.3k Barcelona 41.7k Dublin 38.8k Gran Canaria 33.9k Milan 28.5k Istanbul 28.1k

Latest figures from the Dubai Department of Economy and Tourism, ahead of the thirty-first edition of Arabian Travel Market, starting last Monday 06 May, the emirate welcomed 5.18 million international overnight visitors in Q1 – an 11.0% annual rise over the 4.67 million tourist arrivals during the same period in 2023. Last year, Dubai registered a record 17.15 million international overnight visitors, with the growth in line with the ambitious goals of the Dubai Economic Agenda, D33, to further consolidate Dubai’s position as a leading global city for business and leisure. Dubai’s Crown Prince, Sheikh Hamdan bin Mohammed, noted that Dubai “had also invested for years in developing world-class infrastructure that serves citizens, residents, and visitors alike. The performance of various sectors has been enhanced in line with the highest international standards and best practices with the ultimate goal of becoming the smartest, most advanced and agile city, serving everyone who resides on its land or visits it as an honourable guest.” He also emphasised the importance of strengthening cooperation between the public and private sectors to ensure that the emirate continued to retain its lead on the global tourism map in coming years as well. Sheikh Hamdan stated, “ensuring the highest levels of tourist satisfaction translates into each visitor becoming an ambassador for Dubai, carrying to the world the image of a city that spares no effort for the happiness and comfort of its guests”.

Dubai’s exceptional performance reinforced global recognition for the destination, having begun 2024 by being named the leading global destination for an unprecedented third successive year in the Tripadvisor Travellers’ Choice Awards, the first city to achieve this unique accolade. Tourism has also been boosted by several major industry events, such as ATM, Arab Health, Gulfood and the Dubai International Boat Show, and new hotel openings including The Lana, (Dorchester Collection’s first property in the ME), SIRO One Za’abeel, Dubai’s first fitness hotel Marriott Marquis Dubai, and Hilton Dubai Creek Hotel & Residences.

In Q1, the following were the main contributors to Dubai’s tourism were: 

• Western Europe region            1.138 million arrivals                                  22% overall share,
• South Asia                                    869k                                                        17%
• CIS and Eastern Europe              817k                                                        16%
• GCC                                             664k                                                        13%
• MENA                                          605k                                                         12%
• NE Asia/SE Asia                          470k                                                            9%
• the Americas                                344k                                                             7%
• Africa                                           202k                                                             4%
• Australasia                                     70k                                                              1%

With a brand-new identity, Jumeirah announced plans to double the size of its current property portfolio of twenty-six by 2030. It recently announced new properties including Jumeirah Red Sea in Saudi Arabia, Jumeirah Marsa Al Arab in the UAE, and Jumeirah Le Richemond Geneva in Switzerland. The new strategy focusses more on boutique-style properties, targeting operators in gateway cities and resort destinations in Europe, the Americas, Africa, and Asia.

At the beginning of the year, flydubai introduced a multi-million dollar retrofit project  of many its twenty-nine Next-Generation Boeing 737-800s; its eighty-six plane fleet also includes fifty-four Boeing 737 MAX 8s and three Boeing 737 MAX 9 aircraft; six new planes are expected to join the fleet by the end of the year. To date, eight aircraft have had a full cabin refresh with the installation of the carrier’s flagship lie-flat Business Class seats and the new economy seats from RECARO. The airline will retain an all-economy configuration on some of its aircraft and will upgrade the seats to the new RECARO economy seats with Inflight Entertainment. In the first four months of 2024, the carrier had carried almost five million passengers – a 13% rise in numbers on the year – and had expanded its network by adding Al Jouf, Langkawi, Mombasa, Penang, The Red Sea, Basel, Riga, Tallinn and Vilnius. As the summer season, (June to October), approaches, flydubai now operates to one hundred and twenty-five destinations in fifty-eight countries. CEO Ghaith al Ghaith noted that figures would be even higher had it not been for the ongoing delays in aircraft deliveries; however, he is confident that the carrier is “still on track for one of the busiest summers on record with the start of the seasonal summer schedule from June”. Summer flights will be introduced to locations including Batumi, Corfu, Dubrovnik, Mykonos, Olbia, Santorini and Sochi.

Emirates Airline has also confirmed plans to refit forty-three Airbus A380s and twenty-eight Boeing 777 aircraft, and on completion, the retrofit will have been carried out on one hundred and ninety-one aircraft. Its President, Tim Clark, noted that “the addition of more aircraft, fitted with our newest generation seats, updated cabin finishings and a contemporary colour palette also marks a significant step in ensuring more customers can consistently experience our premium products across both aircraft types.” The refurbishment includes updated first-class cabins, new business class seats and new premium economy seats.  Emirates has also announced nine destinations for its new A350 aircraft that will fly to Bahrain, Kuwait, Muscat, Mumbai, Ahmedabad, Colombo, Lyon, Bologna and Edinburgh.

Dubai Taxi Company PJSC announced its Q1 financial results, posting revenue 16% higher, on the year, to US$ 152 million, driven by revenue improvement across all its segments; net profit was 15% higher at US$ 29 million, not helped by the introduction of corporate tax as well as by rising finance costs. Excluding the tax impact, net profit increased 26%, with free cash flow at US$ 33 million; it had a cash balance of US$ 12 million, including Wakala deposits. There was a 40% YoY increase in EBITDA to US$ 46 million, with a 30% margin – up 5% on the prior year.  Its core taxi segment revenue came in 15% higher, attributable to increased trips and trip lengths, as well as higher tariffs, which was also supported by the additional taxis added to the fleet. There was a 7% increase – and 17% on the quarter – in its limousine segment, as its taxis and limousines completed twelve million trips, an increase of 8% on the year; it also acquired ninety-four new taxi licenses at the latest RTA auction. The bus segment revenue increased, on the year, by 28%, to US$ 10 million, also driven by the increase in fleet size and new service contracts. Revenue in the delivery bikes segment increased more than four times, on the year. The utility also added that, “in addition to our plans to grow further in Dubai, we see attractive opportunities to expand and broaden our services in neighbouring emirates.”

In Q1, Parkin Company posted an 8.0% hike in revenue to US$ 59 million, attributable to an increase in public parking revenue, issuance of seasonal permits, and developer parking demand.  Net profit was up 5.0% to US$ 28 million, on a higher EBITDA, partially offset by an increase in depreciation and amortisation provisions, higher interest expense and the introduction of the new 9.0% corporate tax rate from 01 January. Being the sole operator of public parking spaces in Dubai, its public parking revenue rose 11% to US$ 27 million, equating to 46.1% of total revenue. Other revenue streams saw seasonal cards and permit revenue increasing 17% to US$ 10 million, developer parking up 13% to nearly US$ 5 million and a 1% rise in fines to US$ 14 million. Q2 results will be impacted by the April storm which the firm estimates will cut quarterly revenue by at least US$ 1 million.

Dubai Electricity and Water Authority has posted positive Q1 consolidated financial results, with increases in revenue of US$ 1.58 billion, (6.7%), EBITDA of US$ 708 million, (9.0%), operating profit of US$ 271 million, (11.6%), and net profit of US$ 177 million. This was driven by growth of 6.4% in electricity and 5.9% in water, as customer account numbers climbed on the year, by 4.7%, to 1.17 million. DEWA’s net cash from operations was 26.9% higher at US$ 900 million. Q1 saw DEWA’s gross power generation increasing 6.2% to 10.3 TWh, with the utility generating 1.46 TWh of clean power, 19.8% higher than that recorded in Q1 2023.

DEWA’s dividend policy mandates that a minimum annual dividend of US$ 1.69 billion should be paid out in the first five years of trading on the DFM, starting October 2022, with the dividends paid semi-annually in April and October. Last October and last month, two dividends, each totalling US$ 845 million, were distributed pertaining to the 2024 financial year. The next interim dividend, relating to H1 2024, is due to be paid this October.

On Thursday, Spinneys saw its first day of trading on the DFM, with the final offer price set at US$ 0.417, (AED 1.53) per share, at the top end of the offer price range, which raised US$ 375 million and implying a market cap of US 1.50 billion. By the end of the day, and the trading week, the stock was trading 4.6% higher at US$ 0.436 (AED1.60) with 55 million shares changing hands, valued at US$ 69 million.

Starting fiscal year 2024, Spinneys’ dividend policy is to pay dividends on a semi-annual basis and maintain a dividend pay-out ratio of 70% of annual distributable profits, after tax. The supermarket chain operates seventy-five premium grocery retail supermarkets under the Spinneys, Waitrose and Al Fair brands in Oman and the UAE, where it plans to open new stores this year. It has a 27% share in its target market in Dubai and 12% of the US$ 6.27 billion, (AED 23 billion) target market in the UAE in 2022, amid continued growth in its online sales, its private label brands and its fresh food offerings. Spinneys expects to expand its footprint in the UAE and Saudi Arabia because of the growing demand of retail products in the region. The latest Kearney’s report points to UAE whitespace projected to have an annual CAGR 2.2% growth rate over the coming years, driven by a robust economy, strong population growth and accelerating real estate development.

The DFM opened the week on Monday 06 May, 119 points (2.8%) lower the previous five weeks and gained 30 points (0.7%) to close the trading week on 4,173 by Friday 10 May 2024. Emaar Properties, US$ 0.19 lower the previous three weeks, gained US$ 0.06, closing on US$ 2.19 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 4.55, US$ 1.54, and US$ 0.37 and closed on US$ 0.64, US$ 4.56, US$ 1.54 and US$ 0.37. On 10 May, trading was at one hundred and sixty-nine million shares, with a value of US$ 83 million, compared to ninety million shares, with a value of US$ 61 million, on 03 May 2024.

By Friday, 10 May 2024, Brent, US$ 6.72 lower (7.5%) the previous week, gained US$ 0.09 (0.1%) to close on US$ 82.78. Gold, US$ 111 (4.7%) lower the previous fortnight, gained US$ 65 (2.8%) to end the week’s trading at US$ 2,368 on 10 May 2024.

With Boeing having acknowledged several employees had committed “misconduct” by falsely claiming tests had been completed, the Federal Aviation Administration has opened a fresh investigation into the Boeing 787 Dreamliner. The main checks are to see whether Boeing completed inspections to confirm adequate bonding and grounding where the wings of certain 787 Dreamliner planes join the fuselage, and “whether company employees may have falsified aircraft records”. The government regulator noted that the embattled carrier is “reinspecting all 787 airplanes still within the production system and must also create a plan to address the in-service fleet” while the investigation is taking place. Boeing confirmed that after receiving the report “we quickly reviewed the matter and learned that several people had been violating company policies by not performing a required test but recording the work as having been completed”. At a recent Congressional investigation, a quality engineer, and whistle-blower, at the company said that Boeing was taking shortcuts to bolster production levels that could lead to jetliners breaking apart, and that excessive force was used to jam together sections of fuselage. To add to their on-going, self-inflicted problems, last Tuesday, Boeing had to call off its first-ever astronaut launch, at the final moment, after discovering a valve problem in the Atlas V rocket. It is the latest delay for Boeing’s Starliner after the project was delayed for years because of problems with the capsule.

The latest whistle-blower, Santiago Paredes, who worked for Spirit AeroSystems, has claimed that parts left the factory with serious defects. The former quality inspector at the firm, which used to be owned by Boeing, was nicknamed “showstopper” for slowing down production when he tried to tackle his concerns. In the twelve years, until 2022, he worked for the company and claimed he often found up to two hundred defects on parts being readied for shipping to the plane maker. He was accustomed to finding “anywhere from fifty to one hundred, two hundred” defects on fuselages – the main body of the plane – that were due to be shipped to Boeing, and “I was finding a lot of missing fasteners, a lot of bent parts, sometimes even missing parts.” Spirit AeroSystems and Boeing have both come under intense scrutiny after an unused door came off a brand new 737 Max shortly after take-off in January, leaving a gaping hole in the side of the plane. According to investigators, the door had originally been fitted by Spirit, but had subsequently been removed by Boeing technicians to rectify faulty riveting. The incident prompted the Federal Aviation Administration to launch an audit of production practices at both firms which found multiple instances where the companies failed to comply with manufacturing control practices.

Wednesday was another bad day for the plane maker when the front of a Boeing 767 FedEx cargo plane was seen dragging its nose across a runway after landing in Istanbul, causing sparks to fly out underneath it. The captain could only use its back landing gear to land, with the plane eventually dipping its nose onto the runway.

Although Q1 operating profit jumped 39.0%, to a record US$ 11.22 billion, (driven by a significant increase in income from insurance underwriting), Warren Buffett’s Berkshire Hathaway Inc posted a 64.6% slump in net income; the main driver behind the fall was much lower unrealised gains, from its common stock holdings, as the share price of Apple declined. During the period, it also repurchased US$ 2.6 billion of its own stock. An accounting rule requires Berkshire to report unrealised gains and losses with net results, and Buffett urges investors to ignore the resulting volatility.

Earlier in the week, Which? listed the results of a survey that priced the value of sixty-seven popular groceries last month in eight of the leading UK supermarkets; Aldi has come out as the cheapest, as it has been every month this year. As can be seen from the table below, the gap between Aldi and Waitrose, (the most expensive), was GBP 31.23.

		Supermarket		GBP
		Aldi		112.90
		Lidl		115.23
		Asda		126.98
		Tesco		128.17
		Sainsbury’s		131.02
		Morrisons		134.87
		Ocado		136.86
		Waitrose		144.13

Food inflation has slowed to 4.5% – its lowest level in over two years. According to research by Kantar, Waitrose and Ocado were the only UK grocers to win new shoppers in Q1.

Going against the trend, brewing giant Heineken will reopen sixty-two pubs that were closed in recent years and invest US$ 62 million in refurbishing more than six hundred sites across the UK; the cash injection will be invested into its 2.4k Star Pubs & Bars chain and will create more than 1k new jobs. By the end of the year, the UK operation will have reopened one hundred and fifty-six pubs over the preceding two years. The brewer will select locations it said reflect how many of its customers have cut back on how often they commute into city centres, and its “major refurbishments will concentrate on transforming tired pubs in suburban areas into premium locals.” Last week, major pub chain Greene King, with brands such as Abbot Ale, Greene King IPA and Old Speckled Hen, said it would open its new US$ 50 million brewery by 2027.

With Bethesda itself already facing cuts announced earlier in the year, Microsoft is closing three studios – Tango Gameworks, Arkane Austin and Alpha Dog –  with Roundhouse Games being absorbed into Elder Scrolls Online developer, ZeniMax Online Studios. Microsoft has yet to announce how many jobs will be lost but they will all be made at subsidiary Bethesda – which the tech giant bought for US$ 7.5 billion in 2020. This is but the latest string of cuts to come in an industry that has already seen tens of thousands of jobs lost, with more to come.

International Airlines Group posted a US$ 73 million profit, well up from the US$ 10 million posted in Q1 2023. While IAG’s fuel costs were 5.0% lower, operating costs were higher given the increasing number of flights; employee costs jumped by more than 14%, due to staff wages being pushed up and the recruitment of more staff before what is predicted to be a busy summer schedule. IAG, which not only owns BA and Iberia but also Iberia and Vueling, indicated that it was continuing to register a rebound in leisure travel, especially between European cities, and is expecting a profitable summer. It was noted that whilst leisure travel was performing well in a competitive market, business travel was lagging and recovering more slowly, after Covid had paralysed the sector. Q1 passenger revenue per available seat kilometre was 4.4% higher than in the same period last year.

As it tries to regain its former iconic reputation, tarred by the actions by some former senior staff, Qantas has agreed to pay US$ 66 million to settle a legal case accusing it of selling thousands of tickets for flights it had already cancelled. However, by the time Alan Joyce stepped down in September 2023, (earlier than his expected retirement date), Qantas was facing growing public anger over expensive airfares, mass delays and cancellations, and its treatment of workers. In a deal with the Australian Competition and Consumer Commission, Australia’s biggest airline will also launch a plan worth up to US$ 25 million to compensate affected passengers. Its Chief Executive, Vanessa Hudson, who took over from Alan Joyce late last year, acknowledged that the move represented an important step toward “restoring confidence in the national carrier.”  She also said the company had revamped its processes and invested in technology to avoid a repeat of the problem. Known as the “ghost flight” case, the ACCC claimed that in some instances, Qantas had sold tickets for flights that had been cancelled for weeks.

Because 1k artistes were played often enough to generate US$ 125k in royalties, Spotify confirmed that it has paid royalties in the UK, of US$ 937 million, to UK recording artists. The Swedish company was unable to say how much of those royalty payments actually went to musicians because of contracts having different T&Cs. Some estimates note that the average artiste’s share is about 16%.  75% of all the royalties paid to UK artists came from international listeners. It seems that Spotify has about a 50% share of the UK music streaming market, which means artistes could make the same amount again via platforms like Apple Music, Amazon Music and Tidal. No UK performer was in Spotify’s Top 10 most-played chart, with the three best being Ed Sheeran, Coldplay and Harry Styles with 6.35 billion, 5.58 billion and 5.11 streams respectively. No guesses who was top of the list – Taylor Swift (29 billion streams) – which also featured Puerto Rican star Bad Bunny, Mexico’s Peso Pluma and Colombia’s Karol G.

A lot has happened to online used car retailer Cazoo since Alex Chesterman, (who also founded the property website Zoopla and LoveFilm, a predecessor of Netflix), launched the company in 2018. A beneficiary from the pandemic, when car buyers were forced to make their purchases online, it saw its market cap on the New York Stock Exchange at a staggering US$ 7.5 billion – now it stands at just US$ 30 million. Never having turned in a profit in its history, it posted 2022 and 2021 losses of US$ 880 million and US$ 680 million respectively. Last December, it restructured US$ 630 million of debt. Its workforce in 2021 was 4.5k and the current 1k are in danger of losing their jobs, as Cazoo closes in on administration, with the SEC ordering it to find administrators within the next ten days.

Struggling fashion chain, Ted Baker, could well be on its way to having a new owner, Mike Ashley. Reports indicate that his Frasers Group has emerged as the preferred partner for the chain, following the collapse of No Ordinary Designer Label (NODL), Ted Baker’s existing UK licensing partner. Earlier in the year, the likes of Next and OSL, Ted Baker’s US licensing partner, had been in contention but subsequently pulled out. The billionaire retailer has many brands in his portfolio including Evans Cycles, Gieves & Hawkes, House of Fraser, Jack Wills and Sports Direct. Eighteen months ago, Ted Baker delisted from the London stock market after being bought by ABG, for US$ 262 million.

The National Housing Supply and Affordability Council has warned the Australian government that the country will miss its 2029 target, to add a further 1.2 million new homes to the nation’s portfolio. It warned of deteriorating conditions across the housing system, unless the government fulfils all of its promises. Describing Australia’s housing market as inequitable, unaffordable and undersupplied, it noted that its housing system was very far from healthy.  It is estimated that there are 170k on wait lists for public housing and another 122k homeless people experiencing homelessness. To meet its five-year target, it seems inevitable that the administration will have to double its US$ 6.60 billion, (AUD 10 billion) investment. The much-undersupplied market sector is not being helped by lagging construction times, a rising population, an underinvestment in social housing for many years and unaffordable mortgages and rents.

The US government says it has revoked some licences that allowed US chip makers to export certain goods to Chinese technology giant Huawei but has yet to be specific about which ones. This follows Huawei’s release of an AI-enabled computer, powered by a chip created by Intel. For the past five years, the Commerce Department had restricted technology exports, such as computer chips, to Huawei, citing alleged ties to the Chinese military. In 2019, during the presidency of Donald Trump, US officials added Huawei to a so-called “entity list,” which led to US companies having to apply for licences from the government to export or transfer some technologies. Despite this hurdle, licences have been granted to some US companies, including Intel and Qualcomm, to supply Huawei with technology that was not related to 5G.

Following the expected BoE decision to keep rates on hold, Andrew Bailey has said it needs to “see more evidence” that price rises have slowed further before taking action to cut interest rates, (currently at 5.25%), but that he was “optimistic that things are moving in the right direction”. The central bank’s governor also said he expected inflation, which currently stands at 3.2%, would fall “close” to its 2% target in the next couple of months. However, he did warn that “we need to see more evidence that inflation will stay low before we can cut interest rates”. After falling into a technical recession, he expects that the Q1 economy would show a 0.4% expansion, (up from an earlier 0.1% forecast), helped by to the size of the population increasing and some measures in the government’s spring Budget, such as the cut to National Insurance; its Q2 prediction is 0.2%. It noted that “consumer confidence has been on an upward trend during most of the past year,” but added that businesses investment remained “subdued” due to lower demand and “uncertainty”.

At the beginning of the week, more worrying news for the Sunak government emanated from ONS data showing productivity in the public sector, dominated by education and healthcare, was 6.8% below pre-pandemic levels, at the back end of last year. Figures like this show that the public sector is indeed a drag on the UK’s economy which is still not firing on all cylinders. The data showed that between Q3 and Q4, there was a 1.0% decline and 2.3% on the year, with long-term sickness one of the main drivers, along with a seemingly big increase in strikes seen in the NHS and other public utilities, including education and transport.

However, things got better for the embattled Rishi Sunak by Thursday, with The Office for National Statistics Stronger noting that, after falling into a minor recession late last year, the UK economy grew by 0.6% in Q1 – the fastest rate for two years, Yesterday, the governor of the Bank of England, Andrew Bailey, commented that the economy had turned a corner, but that it was not yet a strong recovery. It is expected that this improvement will continue for the rest of the year, and ahead of the year-end general election, with inflation dipping and wages heading higher. Most of the economy – including services, retail, public transport, car manufacturing and health – came to the party, the construction sector is still struggling. There is every indication that things are getting better and business picking up again and these results must have thrown a spanner in the works for Kier Starmer.

A week after the collapse of Bonza, Australia’s newest budget air carrier, Australian tourists are stranded in tropical South Pacific Vanuatu, after the country’s national airline cancelled international flights for four days. It is understood that the carrier had debts of US$ 77 million, of which US$ 51 million were loans. Its fleet of five Boeing 737s have already left the country – one returned to its lessor, Canada’s Flair Airline, and the other four, (Bazza, Shazza, Sheila and Malc) returned to AIP Capital. There are some twenty parties which could be in interested in saving the carrier. Yesterday, Air Vanuatu confirmed that all international flights until Sunday were cancelled, and flights after that day are “under review”. The airline confirmed its owner, the Vanuatu government, is considering putting it into voluntary administration. Meanwhile some lucky tourists are in limbo awaiting what will happen on the Island In The Sun!

Waiting for the Great Leap Forwards!                                  03 May 2024

Amali Properties unveiled its first master-planned community, Amali Island on The World Islands, housing twenty-four villas, priced at between US$ 13.6 million and US$ 34.0 million, with one villa valued at over US$ 68 million; each villa will have up to fifty mt of exclusive beachfront. Designed by architects Elastic, the villas at Amali offer two architectural approaches – Minima and Grande – with each villa featuring private berths, with direct access to villas, and luxurious amenities such as rooftop terraces, outdoor firepits, teppanyaki bars, jacuzzies and multiple pools. The Amali Island project – spanning a total area of 1.2 million sq ft and linking two of The World Islands, Uruguay and São Paolo – offers seven distinct architectural styles.  Residents will also have exclusive access to their own 10k sq ft clubhouse, which includes, inter alia, a world-class spa and gym facilities, a gourmet restaurant, swim-up bar, cigar lounge, horizon and saltwater pools, yoga decks. Amali Island will also have private berths, a floating helipad, as well as a floating padel court. Amali Properties was founded in 2023 by Dubai billionaire and Damac Properties chairman Hussain Sajwani’s son Ali and daughter Amira.

J1 Beach, formerly known as La Mer South, is due to reopen in September, with Merex Investment announcing that work is nearing completion. The updated location will introduce three beach clubs, chosen from up to twenty applications, and ten licensed restaurants and in total will be home to thirteen luxury cuisine establishments in a stunning beachfront setting. The three clubs will be Gigi Rigolatto, with Italian elegance, Sirene Beach by GAIA, with authentic Greek Mediterranean flavours, and Bâoli, East Asian techniques combined with French and Mediterranean flavours. The facility will also have swimming pools, sunbeds, and even a jetty guest service, with the developer’s vision being to make J1 beach a Reportage Properties’ project.

Reportage, a leading UAE real estate developer, reported YTD estimated sales at US$ 572 million, having sales of over US$ 1.0 billion in 2023. Two of the company’s special offers on selected projects are a 10% discount on all of their projects, with a 10% down payment, and 1% monthly instalments until units handing off, a 5% discount, with a 5% down payment, and 1% monthly instalments. It has a thirty-five-project portfolio not only in the UAE but also in Egypt, Turkiye, Morocco and Saudi Arabia. It recently completed the Oasis Residence 2 project in Masdar City, which includes about three hundred and four residential units, and last year started handing over units in two other Abu Dhabi projects. It also completed the first phase of the Rukan Lofts project, which is being developed in the Dubailand area, in cooperation with the Continental Investment Company, as well as launching the 1.8k-unit Reportage Village, and the 653-townhouse Bianca project, in Dubai.

Abu Dhabi’s Aldar Properties has unveiled its second residential project in Dubai. In partnership with Dubai Holding, its Athlon Project will feature 1.5k units comprising three to six-bedroom villas and townhouses starting at US$ 762k. Athlon will have green spaces, parks and zones for sports and fitness as well as having ten km of tracks and trails, with its cycling loop directly connected to Al Qudra cycling track. Sales at the Athlon project will begin next Tuesday, 07 May. Their first project was Haven by Aldar, launched last October, and located near the Global Village entertainment centre, focusses on wellness.

Swank Development, a real estate developer from Portugal, has recently opened an office in Dubai, and plans to launch its first project in Meydan, Mohammad bin Rashid City. Swank’s first project in Meydan will be a gated villa community, offering a range of four to six-bedroom villas and mansions.

According to a recent survey by Bayut, apartments in Dubai Investments Park, Discovery Gardens and Liwan offer the best Q1 rental returns of up to 11.0% to property buyers in the affordable category. Dubai Sports City, Dubai Silicon Oasis, and Motor City have seen returns on investment of 10.0%, based on projected rental yields for apartments, with Green Community, Al Sufouh and Damac Hills giving rental returns of over 8.0%. When it comes to villas, International City gives average RoI of over 7.0%, followed by Damac Hills 2 and The Valley, with returns of 6.0% plus. Mid-tier villas in Jumeirah Village Triangle, JVC and Mudon have projected RoIs ranging between 6.0% – 8.0%. In the luxury villa segment, Sustainable City has ROIs of over 7.0%, whilst Al Barari and Tilal Al Ghaf present robust RoIs exceeding 6.0%. Its CEO, Haider Ali Khan reckons that, despite continuing global uncertainties, Dubai’s realty sector stands up well and that “the emergence of new master communities and innovative approaches to off-plan developments underscore Dubai’s resilience and appeal as a real estate hub”.

As per Bayut’s data analysis, affordably priced apartment rentals increased from 1.0% to 17.0%, while mid-tier segment apartments rose by up to 12.0%. Conversely, luxury apartment rentals have witnessed decreases of up to 4.0%.

Reasonably-priced villas have generally become cheaper by up to 3.0% with rental houses in Mirdif recording upticks of 1.0% to 7.0%. Mid-tier villa rentals have recorded increases in the range of 2.0%to 17.0% with properties in Jumeirah Village Circle and Town Square posting price decreases of under 2.0%. Luxury villa rentals have surged by 13.0%, although four-bedroom homes in Al Barsha and Damac Hills have become relatively more affordable by 12.0% to 14.0%.

In the affordable sector, Deira and Al Nahda are the more popular choices for apartments, while, for villas, Damac Hills 2 and Mirdif stand out. In the mid-tier segment, Jumeirah Village Circle and Bur Dubai apartments continue to be highly sought, as do properties in JVC and Arabian Ranches 3 for villas. In the luxury category, Dubai Marina and Business Bay top the list for apartment rentals, along with Dubai Hills Estate and Al Barsha for high-end villa rentals.

The UAE’s property market continues to record strong growth on the back of government initiatives and the expansion of its economy. According to consultancy ValuStrat, in Q1, there was “significant” growth in Dubai’s real estate sector, with villa and apartment prices registering annual increases of 29.6% and 20.1%. Valustrat considers that Dubai’s real estate cycle is expected to head towards a “new phase”, with a projected resurgence in the apartment market and tempered growth for villas.

According to the consultancy, in Q1, the Dubai real estate market posted significant growth across its residential and commercial sectors. The capital values in the residential segment were 6.4% higher on the quarter and 24.7% on the year to 167.5, compared to the base of 100 points in Q1 2021. This growth was driven by a 5.7% quarterly and 20.1% annual increase in apartment valuations. Top annual performers were Discovery Gardens (32.6%), The Greens (29.8%), Palm Jumeirah (29.0%), The Views (24.8%), Town Square (24.5%), Al Quoz Fourth (24.1%), and Dubai Production City (23.9%). Villas witnessed an annual increase of 29.6%, reaching a decade high in prime villa values.  In Q1 2024, villa valuations grew 7.7%, on the quarter, with the highest annual performers beng Jumeirah Islands (32.2%), Palm Jumeirah (31.9%), Dubai Hills Estate (30.6%), and Mudon (27.2%).

Prices of prime properties in Dubai grew 26.7% on the year and 7.3% on the quarter, to a record 173 points, compared to 100 base points as of Q1 2021. Highly desired prime villas reached a new 10-year high of 211.8 points with annual capital gains of 33.1% and 8.5% on the quarter. Capital gains in the luxury apartments sector were 21.6% annually and 6.2% higher, when compared to the previous quarter, attaining a record 149.4 index points.

Residential asking rents jumped 11.7% on the year, and 3.0% on the quarter since the previous quarter. Apartment and villa rentals rose 4.4% and 1.3% on the quarter and 16.4% and 6.1% on the year to US$ 23.4k and US$ 110.0k. Residential occupancy in Dubai was estimated at 87.7%. There are 46.6k new builds entering the market this year, with estimated completions of 5.8k apartments and 1.0k villas in Q1. Interestingly, it is estimated that 86.0k apartments and 21.2k villas are currently under construction with promised handovers by 2028. For off-plan homes, the average price was 5.3% higher at US$ 736k, with the citywide average transacted price for off-plan properties at US$ 5,444 per sq mt (US$ 506 per sq ft).

Moreover, there was a significant uptick in the office sector, with valuations soaring by 29.9% annually and 4.3% quarterly – the twelfth consecutive quarter of growth. The pertinent ValuStrat Price Index reached a record 194.2 points, compared to the 100-point base set in Q1 2021. The weighted average price for office space was US$ 435 per sq mt (US$ 403 per sq ft). Continued double digit annual growth was seen in DIFC (38.7%), Jumeirah Lake Towers (36.1%), Business Bay (33.3%), and Barsha Heights (24.2%).

This week saw the ground-breaking ceremony of the Immersive Tower by DIFC, located within the heart of the financial district. The US$ 300 million, thirty-seven storey mixed use tower, conceptualised by AEDAS and developed by DAR Group, encompasses 58.6k sq mt of office space and approximately 10.6k sq mt of retail space while over 680 sq mt has been earmarked for amenities; it has a total built up area of 115k sq mt. Scheduled for completion in Q2 2027, the new commercial property is designed to suit the needs of the workplace of the future. In addition to office units – ranging in size from 60 sq mt to 158 sq mt – tenants will also have access to a Members’ Club, located across the 26th, 27th and 28th floor. Last year, commercial space in DIFC witnessed high demand and closed the year with 92% occupancy. The first residential project by DIFC to open for sale in 2023, DIFC Living, fully sold out within forty-eight hours – a sure indicator of the robust demand for residential property in the heart of DIFC.

Although no agreements are in place, China’s H World International is planning to introduce its Ji Hotel brand into the Dubai market. It is a subsidiary of H World Group – one of the country’s biggest multi-brand hotel chain management groups – and its portfolio includes European brands such as Steigenberger, IntercityHotel, Maxx and Jaz in the City. The company is “aggressively” looking to re-establish a Steigenberger’s presence in Dubai, having been deflagged from its location in Business Bay in 2021, and could have at least ten properties in the emirate over the next decade. H World Group operates 9.4k hotels in eighteen countries and has a market cap of US$ 12.0 billion.

Established in 2010 as a midscale brand, there are about 2k Ji Hotels in China and its first international foray was the Ji Hotel Orchard Singapore – opened in 2019. Ji Hotel uses a plug-and-play model – or modular – where the rooms’ interiors are part-assembled in China and then installed at the property within one hour. There are five modules designed to fit each room – bedside/headboard, toilet/shower, sink/mirror, TV/entertainment and desk area. This allows HWI to change and upgrade the interior every few years, and it is currently on its fifth design cycle. It would be looking at JVs for its Dubai plans, unlike its franchising strategy seen in China. HWI currently has one property in the city, the IntercityHotel at Dubai Jaddaf Waterfront, which opened in 2021.

An agreement between Dubai South and AGMC, one of the leading importers of luxury vehicles in the country, will see a new US$ 136 million showroom and service centre at Dubai South being built to serve customers of its automotive brands. Spanning 33k sq mt and located at The Business Avenue, a flagship location near the VIP Terminal and Al Maktoum International Airport, the new state-of-the-art facility, will feature BMW, Mini, Rolls Royce, and other brand vehicles and a fully-fledged service centre to provide customers with after-sales and maintenance services. Dubai South,the largest single-urban master development focusing on aviation, logistics and real estate, is also located close to Jebel Ali Free Zone and Expo.

With Emirates expecting delivery of sixty-five A350s on order from Q3 and a mix of two hundred and five 777-9s and 777-8s next year it is ratcheting up recruitment amid a change in its pilot recruitment strategies, which include higher salaries, new roles and a radical change to eligibility. This year, HR will host roadshows in more than twenty-six cities in over eighteen countries, focussing on three categories.

First Officers who are non-typed rated. Such pilots have normally only experience on turbo props and smaller jets. They will be fully trained to be able to fly all the carrier’s wide body fleet of one hundred and forty-four Boeing planes and will be in a position to fly two hundred and five of the new Boeing 777-Xs when these aircraft enter the fleet from 2025.

Accelerated Command Pilots. ACP was only available for its fleet of Airbus 380s but now has been extended to its fleet of Boeing 777s. It presents an opportunity for motivated captains, flying narrow-body aircraft, to graduate to wide-body on Emirates’ fast track promotion programme.

Direct Entry Captains. It is recruiting senior experienced pilots, already flying on wide-bodied aircraft, to command its A350 fleet of sixty-five aircraft, as well as its fleet of 380s. It has also increased the base salary for the new recruits on both the A350s and A380s.

The Dubai carrier currently has 4.4k pilots, having recruited four hundred and twenty last year. It is now offering enhanced salary packages for First Officers with experience of over 4k flying hours on modern Airbus fly-by-wire or Boeing aircraft.

Last week, DP World signed a significant partnership agreement in Malaysia, (its first in that country), and opened two new facilities in the Philippines. In moves that will bolster Dubai’s trade and logistics connectivity in SE Asia, the Malaysian deal was with Sabah Ports – a wholly owned subsidiary of Malaysia’s publicly-listed Suria Capital Holding Bhd – to establish a partnership to manage Sapangar Bay Container Port in Sabah. This will see a doubling in the port’s capacity and aims to enhance the state into a pivotal trade hub within East ASEAN Growth Area. In the Philippines, DP World has upgraded the Batangas Passenger Terminal, located 110 km from Manila, which has doubled in capacity to eight million passengers a year and has become country’s largest inter-island hub, enhancing connectivity between mainland Luzon and the surrounding island provinces. The newly opened Tanza Barge Terminal, handling up to 240k TEUs a year, will save approximately 150k truck trips annually, as well as providing a direct sea link to Manila. In 2021, DP World established Singapore as its Asia Pacific headquarters and currently, it operates ports and terminals in Australia, China, Indonesia, Malaysia, the Philippines, South Korea, Thailand and Vietnam.

According to a Boston Consulting Group report, Dubai has been placed as the third most popular destination for professionals to relocate to, behind London and Amsterdam but ahead of Abu Dhabi and New York. The other top ten locations were taken by Berlin, Singapore, Barcelona, Tokyo and Sydney. The Dream Destinations and Mobility Trends report analysed the work preferences of 150k people in one hundred and eighty-eight countries between October and December 2023. It also noted that Australia, US and Canada were the three most sought-after countries for professionals to move to for work.

Another study by Robert Half noted that the country’s jobs market has recovered well from the pandemic, mainly due to proactive government measures to attract skilled workers and incentivise companies to set up or expand their operations. It also suggested that the UAE is shifting to an employers’ market, with an increasing number moving in because of economic problems in their own countries. It notes that many candidates are willing to accept lower remuneration to gain a foothold in the labour market, with the influx of talent leading to greater competition.

The country’s non-oil private sector continued to expand in April, albeit at a slower pace mainly due to disruptions from the mega storm last month which saw the heaviest rainfall ever seen since records began in 1949; the S&P Global PMI dipped 1.3 to 55.3 – its weakest level since last August – but still well above the 50.0 threshold between expansion and contraction. New orders last month increased at their slowest pace since February 2023, and notwithstanding the adverse weather, overall growth is still in positive territory because of help from the buoyant domestic economic conditions. Again because of the weather, which caused major disruption as roads and buildings flooded, transport services stalled and several businesses were forced to close, there was a sharp slowdown in new business gains – but unsurprisingly a sharp rise in backlogs of work. Intense competition for new work resulted in falling average prices charged for the sixth consecutive month in April.

Meanwhile, April’s S&P Global Dubai PMI was 2.9 lower at 55.1 – the lowest in eight months – driven by a sharp slowdown in new business growth. Backlogs of work increased considerably in April, which was linked to temporary business disruptions and elevated pressure on operating capacity. Respondents noted robust domestic economic conditions and the impact of long-term business expansion plans, alongside competitive pricing strategies, have helped with the strong domestic economic growth. April saw higher staffing numbers, attributable to new projects and strong demand condition. There was an accelerated rise in purchasing activity and although there was robust inputs demand, with stocks of purchases rising at the slowest pace since March 2022, there were marked rises in staff costs and purchasing prices, (because of an increase in raw material costs), margins were further cut because average prices were reduced, with price discounting being attributed to competitive market conditions and efforts to boost sales. Business confidence remains upbeat, despite the weakening Index over the previous three months.

A week after signing a similar agreement with Columbia, the UAE and Ukraine have signed a Comprehensive Economic Partnership Agreement which aims to enhance bilateral trade flows by cutting tariffs, removing barriers and improving market access for both merchandise and service exports. The agreement follows an impressive increase in bilateral non-oil trade, which climbed 43% to reach an all-time high of US$ 53 million in 2023 – more than double the total achieved in 2021. Like other CEPAs, (that have already been signed with Cambodia, Congo-Brazzaville, Costa Rica, Georgia, India, Indonesia, Israel, Kenya, Mauritius, South Korea and Turkey), it will also open pathways for investment and joint ventures in sectors such as energy, environment, hospitality, tourism, infrastructure, agriculture and food production. It will also support the rebuilding of key industries and infrastructure in Ukraine, while also helping to strengthen supply chains to the MENA region for major exports such as grains, machinery and metals. Such agreements have helped boost the country’s non-oil foreign trade, which, last year reached a record US$ 708.4 billion, (AED 2.6 trillion) and (AED 3.5 trillion including trade in services) in 2023. Last year, the UAE and Ukraine shared US$ 386 million in non-oil trade, with joint FDI stock standing at US$ 360 million by the end of 2022.

In the latest Leading Maritime Cities report, compiled by Singapore’s DNV and Menon Economics, Dubai retained its leading position in the Arab world, whilst moving two places, on the global scale, to eleventh as an international maritime hub. The five key factors behind Dubai’s rise include shipping centres, maritime technology, ports/logistics, attractiveness/competitiveness, as well as financial/legal aspects. The report also highlighted Dubai’s accent on green technology in the maritime sector. Singapore has retained its position as the leading maritime city in the world for 2024.

Eight years ago, the federal government liberalised fuel prices so that they could be aligned with market rates until the onset of the pandemic which saw prices frozen by the Fuel Price Committee. In March 2021, prices were amended to reflect the movement of the market once again. With prices having risen every month in the quarter to 30 April, the trend continues into May 2024, (except for diesel). The breakdown in fuel price per litre for May is as follows:

• Super 98: US$ 0.858, to US$ 0.910 in May (up by 6.0%)                    YTD from US$ 0.768 – 18.5%

• Special 95: US$ 0.826, to US$ 0.877 in May (up by 6.3%)                  YTD from US$ 0.738 – 18.8%

• Diesel: US$ 0.837, from US$ 0.842 in May (down by 0.6%)               YTD from US$ 0.817 – 3.1%

• E-plus 91: US$ 0.807, to US$ 0.858 in May (up by 6.3%)                   YTD from US$ 0.719 – 19.3%%

The Central Bank of the UAE posted a February 11.0%, on the year, increase in cash deposits (equivalent to US$ 19 billion), to US$ 198 billion, with monthly cash deposits and quasi-monthly increases up 1.92% to US$ 194 billion and 27.4% to US$ 269.0 billion respectively. (Quasi-cash deposits are term deposits and savings deposits in dirhams for residents in addition to deposits by residents in foreign currency). Government deposits jumped 11.1% on the year to US$ 105.5 billion, as money supply rose 12.8% to US$ 33.7 billion.

Following the US Federal Reserve’s decision to maintain its Interest Rate on Reserve Balance unchanged, the Central Bank of the UAE has followed suit and has decided to maintain the Base Rate applicable to the Overnight Deposit Facility at 5.40%. The CBUAE has also decided to maintain the interest rate applicable to borrowing short-term liquidity from the CBUAE at 50 bp above the Base Rate for all standing credit facilities.

Dubai Aerospace Enterprise Ltd announced a 9% increase in its total Q1 revenue, on the year, to US$ 344 million, resulting in a 5.2% drop in profits before tax of US$ 70 million. Firoz Tarapore, DAEs CEO, stated, “strong demand for aircraft leasing and maintenance services drove total revenue growth”, and that “our order book positions until 2026 are committed on long-term leases to top rated airline customers”. Cash Flow from Operations increased by 14% and Available Liquidity climbed to US$ 5.0 billion.

e& posted its consolidated financial results for Q1 2024, with consolidated revenue 9.0% higher at US$ 3.87 billion, and consolidated net profit increasing 7.0% to US$ 626 million, on the year The group’s consolidated EBITDA rose on the year by 3.0% to US$ 1.74 billion, resulting in an EBITDA margin of 45.0%.The number of e& UAE subscribers reached 14.5 million in Q1 2024, while consolidated group subscribers were up 5.0%, topping 173 million,

Emirates Integrated Telecommunications Company posted an impressive a 62.7% surge in Q1 net profit to US$ 164 million, as revenue nudged 4.1% higher to US$ 975 million. EBITDA at US$ 433 million, was up 4.1% on the year, with a 44.3% margin – 4.6 points higher. Capex was at US$ 98 million, while operating free cash flow (EBITDA – Capex) for the year was up 28.2% to US$ 327 million. The company’s mobile customer base grew, at an annual 5.7%, to 8.7 million subscribers, with net additions of 108k, (1.7 million post-paid customers with net additions of 47k subscribers and seven million prepaid customers with net additions of 61k). Meanwhile the fixed customer base rose by a 11.1%, year-over-year, to 616k subscribers, with net additions of 12k subscribers over the quarter. Mobile service revenues grew 7.4%, to US$ 437 million, primarily driven by higher post-paid revenues. Fixed services revenues topped US$ 262 million, an annual 2.7% annual growth mainly driven by Home Wireless and enterprise broadband plans. Other revenues were broadly stable at US$ 277 million, as higher interconnect and inbound roaming revenues offset the reduction in hubbing revenues.

TECOM Group posted a 15% year-on-year increase in Q1 net profit to US$ 80 million, as revenue rose 10.0% to US$ 154 million, attributable to occupancy rates across the commercial and industrial leasing portfolio reaching an all-time high of 91%. Q1 EBITDA increased 10% YoY to US$ 120 million, while EBITDA margins remained at 78%. Funds From Operations stood at US$ 113 million, representing a 15% annual increase on improved collections and increased performance of income-generating assets.

This week, Spinneys announced that it would raise the number of shares allocated to the UAE Retail Offering of its IPO, due to high investor demand, from 5% to 7%, (forty-five million shares to sixty-three million); the total size of the offering remains unchanged at nine hundred million shares, representing 25% of the company’s total issued share capital. The IPO subscription period closed on Monday 29 April for the UAE Retail Investors, and a day later for Professional Investors. Trading on the DFM is expected to commence next Thursday, 09 May. Spinneys confirmed that the final offer price for its shares has been set at US$ 0.417, (AED Dh1.53) per share, at the top end of the previously announced offer price range of the IPO. This means that offer proceeds came in at US$ 375 million, (AED 1.38 billion), and values Spinneys at (AED 5.51 billion) and implies a market capitalisation at listing of US$ 1.50 billion, (AED 5.51 billion). The IPO was oversubscribed by sixty-four times in aggregate.

Dubai Financial Market has posted its Q1 consolidated financial results showing a 64.4% surge in revenue to US$ 40 million and a 170.8% increase in net profit before tax to US$ 26 million. Total revenue included US$ 17 million in operating income and US$ 23 million in investment returns and other income, whilst total expenses excluding tax reduced by 4.2% reached to US$ 14 million. Q1 trading was 31.6% higher at US$ 6.81 billion, whist the General Index was up 4.59%, whilst the market capitalisation increased 6.0% to US$ 198.91 billion from its level at the end of 2023. Sector wise, foreign investors accounted for 47% of trading value in Q1, with net purchases of US$ 354 million, and having 20% of the market cap by 31 March. In Q1, DFM attracted 44.3k new investors, of which 85% were foreign investors.

The DFM opened the week on Monday 29 April, 114 points (2.7%) lower the previous four weeks and shed 5 points (0.1%) to close the trading week on 4,143 by Friday 03 May 2024. Emaar Properties, US$ 0.10 lower the previous fortnight, shed US$ 0.09, closing on US$ 2.13 by the end of the week. DEWA, Emirates NBD, DIB and DFM started the previous week on US$ 0.65, US$ 4.56, US$ 1.50, and US$ 0.37 and closed on US$ 0.65, US$ 4.55, US$ 1.54 and US$ 0.37. On 03 May, trading was at 90 million shares, with a value of US$ 61 million, compared to 112 million shares, with a value of US$ 59 million, on 26 April 2024.

The bourse had opened the year on 4,063 and, having closed on 30 April at 4,156 was 93 points (2.4%) higher. Emaar started the year with a 01 January 2024 opening figure of US$ 2.16, to close the quarter at US$ 2.13. Four other bellwether stocks, DEWA, Emirates NBD, DIB and DFM started the year on US$ 0.67, US$ 4.70, US$ 1.56 and US$ 0.38 and closed YTD at US$ 0.64, US$ 4.60, US$ 1.51 and US$ 0.38.  On 31 March, trading was at 153 million shares, with a value of US$  million, compared to 138 million shares, with a value of US$ 58 million, on 31 December 2023.

By Friday, 03 May 2024, Brent, US$ 1.73 higher (2.0%) the previous week, lost US$ 6.72 (7.5%) to close on US$ 82.78. Gold, US$ 64 (2.7%) lower the previous week, shed US$ 47 (2.0%) to end the week’s trading at US$ 2,303 on 03 May 2024.

Brent started the year on US$ 77.23 and gained US$ 9.77(12.7%), to close 29 March 2024 on US$ 86.33. Meanwhile, the yellow metal opened 2024 trading at US$ 2,074 and gained US$ 229 (11.0%) to close YTD on US$ 2,303.  

In March, global air cargo markets continued their recent double-digit growth, with a 10.3% increase, (in cargo tonne-kilometres, on the year), in demand – and 11.4% for international operations. Capacity, measured in available cargo tonne-kilometres also rose, increased by 7.3% (10.5% for international operations). The Q1 statistics were even better than the exceptionally strong Q1 2021 performance during the COVID crisis. Key operational environment factors included:

• global cross-border trade and industrial production increased by 1.2% and 1.6% in February
• the manufacturing output PMI climbed to 51.9 in March, indicating expansion. However, the new export orders PMI remained slightly below the 50 threshold indicating growth expectations, rising to 49.5
• inflation rates varied in March, with rates falling in the EU (2.6%) and Japan (2.7%), rising in the US (3.5%), and China experiencing slight deflation (-0.01%)

Regional performance in March:

• Airlines in Asia-Pacific, North America, Europe, ME and Latin America experienced 14.3% year-on-year demand growth for air cargo, with notable increases on the Asia-Europe route (17.0%) and within Asia (11.8%). Capacity increased by 14.3% year-on-year
• North American carriers saw modest 0.9% year-on-year demand growth, with decreases in March capacity (-1.9%)
• European carriers witnessed 10.0% year-on-year demand growth, with intra-European air cargo and Europe–ME routes as notable performers. March capacity increased by 8.0% year-on-year
• ME carriers reported the strongest growth at 19.9% year-on-year, with significant expansion in the Middle East–Europe market. March capacity increased by 10.6 percent year-on-year
• Latin American carriers experienced 9.2% year-on-year demand growth, while African airlines saw 14.2% annual growth, despite a contraction in the Africa–Asia market compared to February

Having cancelled all flights last Tuesday, Bonza, Australia’s newest budget airline went into voluntary administration, leaving thousands of passengers stranded around the country. The company has appointed Hall Chadwick as voluntary administrators for its operating and holding company. In 2021, the carrier became the first new launch, since 2007, and started flights last year, in air space dominated by Qantas and Virgin Australia, which account for 95% of the country’s domestic aviation market. It is reported that on Tuesday, its fleet of eight Boeing 737 Max fleet was repossessed by creditors. As soon as it started flying, it was beset by problems such as aircraft shortages, inability to find to find slots in the lucrative Sydney market and low patronage, with the latter seeing prices on several routes being slashed.

With a UK judge announcing that he had done “all that he reasonably could do” to fulfil his financial obligations, Boris Becker’s bankruptcy has officially ended. The former Wimbledon champion was declared bankrupt in June 2017, owing creditors almost US$ 62 million and the court was told that

he still owed about US$ 53 million – but lawyers said the 56-year-old had reached a settlement agreement with the trustees appointed to oversee his finances. The German tennis player was jailed in 2022 for hiding US$ 3 million in assets to avoid paying any liabilities but his lawyers noted that he will provide a “substantial sum” into the bankruptcy estate. Although bankruptcy orders end after a year in England and Wales, a judge suspended the automatic discharge of the order in 2018 because Becker was “failing to comply with his obligations”; this has now been lifted.

April UK house prices fell by 0.4% on the month, and 4.0% from its summer 2022 peak, to US$ 328k, as potential buyers continued to face pressure on affordability; on an annual basis, the pace of house price growth slowed from 1.6% in March to 0.6% in April. Nationwide noted that the rising cost of borrowing was the main driver behind this latest fall. The figures are based on the building society’s own mortgage lending, which does not include buyers who purchase homes with cash or buy-to-let deals. Surprisingly, cash buyers account for about a third of UK housing sales. This comes after several major financial institutions upped new fixed-rate mortgage deals because the dial has turned, with many now expecting rate rises rather than rate falls. Yesterday, Halifax became the latest by raising most of its mortgages by 0.2%. It is estimated that 1.6 million mortgage holders will see their relatively cheap fixed-rate deals expiring to be replaced by a more expensive repayment plan.

Still reeling from an seemingly arrogant, ignorant and inept senior management set-up  over recent times, the Post Office has turned to Nigel Railton  to become its interim chairman for twelve months. The former boss of Camelot was appointed by Business Secretary Kemi Badenoch after former incumbent Henry Staunton was sacked in January. He takes on the role as hundreds of sub-postmasters are still waiting for compensation over the Horizon scandal. The new Post Office chairman also chairs Argentex Group, a London-listed provider of currency management services, and is a trustee of the Social Mobility Foundation.

In a new strategy reducing the number of its restaurants, by two hundred and thirty-eight, in favour of building more hotel rooms, Premier Inn owner Whitbread is to cut 1.5k jobs, equating to 4.1% of its 37k workforce. It plans to sell one hundred and twenty-six of its less profitable restaurants, with twenty-one sales already having been agreed, and close one hundred and twelve restaurants and convert the space into new hotel rooms. It said the branded restaurants it plans to turn into hotel rooms made a loss of US$ 24 million in the year, while the restaurants it is selling made a loss of US$ 11 million. Whitbread said the changes would add more than 3.5k hotel rooms across its estate, and that the new hotel rooms would be served by unbranded restaurants. The cuts will leave it with one hundred and ninety-six branded restaurants, and three hundred and eighty-seven restaurants that are unbranded and part of the hotel. The food chains will be affected across the board, and closures will depend on where the restaurant is sited, rather than its brand. The moves are part of a three-year US$ 188 million cost-cutting programme. The cuts come after Whitbread’s pre-tax profit rose 21% to US$ 566 million for the year to 29 February.

Latest figures show Aldi’s market share has fallen – by 0.4% to 10.4% – as people seemingly head back to traditional supermarkets for their shopping. The NIQ survey was taken in the twelve weeks, ending 20 April, and indicated that sales rose just 1.3% in the period. Over the same period, Lidl, (which saw its market share climb to 8.2%), Sainsbury’s, Tesco and Morrisons saw growth figures of 9.5%, 6.6%, 5.8% and 4.4%.

Sergey Brin, one of the company’s co-founders, owns more than seven hundred and thirty million Class B and C shares, entitling him to a pay-out of US$ 146 million; the owner of Google confirmed that it intends to pay quarterly cash dividends in the future, but it will depend on “review and approval by the company’s board of directors”. Revenue was 15.0% higher at US$ 80.5 billion, whilst its Q1 net profit surged 57.2% to US$ 23.7 billion, attributable to enhanced business in Search, YouTube and advertising divisions. Operating income soared 46.2%, on the year, to about US$ 25.5 billion. Earnings per share jumped 61.5% to US$ 1.89, whilst its cash and marketable securities stood at more than US$ 108 billion as at 31 March. On the news, its share value soared 14.1% to US$ 180.20 in after-hours market trading.

The US and EMEA markets accounted for 77.5% of Q1 revenue, with figures of US$ 38.7 billion and US$ 29.5 billion. Services business, including advertisements, Android, Chrome, hardware, Maps and Google Play, accounted for nearly 87.4%, (US$ 70.4 billion), of the company’s total sales – 13.6% higher compared to Q1 2023; advertising revenue from Search, YouTube and other businesses increased 15.2% to more US$ 54.2 billion over the same period. Cloud business, including the company’s infrastructure and data analytics platforms, collaboration tools and other services for enterprise customers, rose 28.4% to nearly US$ 9.6 billion.

Following UK government action, in January, to stop the sale of The Daily and Sunday Telegraph newspapers to an Abu Dhabi backed RedBird IMI bid, the papers are up for sale again. Since then, legislation has been put forward to ban foreign states from owning UK newspapers and news magazines, with RedBird confirming it would halt the takeover and put the media firm up for sale. It noted that its plans were “no longer feasible” and would now look to secure the “best value” for the titles, which include the Spectator magazine, and stating that “we have held constructive conversations with the government about ensuring a smooth and orderly sale for both titles.” UK Culture Secretary Lucy Frazer said she had “raised concerns about the potential impact of this deal on free expression and accurate presentation of news” but added that she would “allow the parties to conduct an orderly transition”. The sale came about because the papers were seized by Lloyds Banking Group from long-time owners, the Barclay family, which had failed to pay back a loan of more than US$ 1.25 billion. The bank started an auction process but at the last minute the Barclay family paid off their debt with money lent by Sheikh Mansour bin Zayed al-Nahyan, and in return, the Barclay family agreed to transfer ownership to the Gulf-backed consortium.

After five years at the helm of Europe’s biggest bank, HSBC, its group chief executive Noel Quinn has surprisingly announced his retirement after working there for thirty-seven years; he will remain at the bank until a replacement is found. Last month, it announced a 1.8% drop in Q1 pre-tax profits to US$ 12.7 billion, and an interim pay-out of US$ 0.10 per share, as well as a planned US$ 3.0 billion buyback of its shares. In a bid to focus more on faster-growing markets in Asia, it has recently sold the off its operations in Canada and announced plans to do the same with its business in Argentina.

Changpeng Zhao resigned from Binance last November and pleaded guilty to violating US money laundering laws, with the firm he founded ordered to pay US$ 4.3 billion, after a US investigation found it helped users bypass sanctions. Although Judge Richard Jones said Zhao put “Binance’s growth and profits over compliance with US laws and regulations,” and prosecutors had sought a three-year sentence for the former Binance boss, he was only sentenced to four months’ detention. Furthermore, US officials said in November that Binance and Zhao’s “wilful violations” of its laws had threatened the US financial system and national security, and that “its wilful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform.” Nigerian authorities are currently investigating the company, registered in the Cayman Islands.

It is reported that Philips has reached a US$ 1.1 billion  deal to settle lawsuits in the US relating to potentially faulty breathing devices, manufactured by its US subsidiary Philips Respironics.  Three years ago, it was found that foam fitted in breathing machines, used to treat sleep apnoea and other disorders, could degrade, releasing potentially toxic particles into masks worn by patients. More than five million machines were ultimately recalled worldwide, and, in January, the US Food and Drug Administration said it had received 116k reports of problems, while five hundred and sixty-one deaths had been linked to the devices. (That being the case, it seems that Philips came out well from this episode). The Dutch medical products maker stated that it did not “admit any fault or liability, or that any injuries were caused” by the devices. Last month, Philips Respironics reached an agreement with the Department of Justice in a US court, a “consent decree” under which it will face regular inspections of its US facilities for the next five years. The latest settlement covers a class action lawsuit as well as individual personal injury claims in the US.

In a bid to resolve nearly all of the lawsuits it faces over claims that its talc products, including baby powder, caused cancer, Johnson & Johnson plans to offer US$ 6.48 billion over twenty-five years to former customers with ovarian cancer claims; this represents the vast majority of the more than 59k lawsuits it faces. In total it is setting aside about US$ 11 billion to address the talc litigation, with this being the third settlement offer the company has put forward to try to address the claims from former customers, which have weighed on the company’s reputation and stock price. Again noting that none of the cases against it had “merit”, it is keen to settle the long running saga. In 2023, it proposed to pay nearly US$ 9.0 billion for a more comprehensive deal, which would have addressed lung cancer and mesothelioma claims, as well as litigation from state attorneys general in the US. The company said it was working separately to resolve those matters and had addressed 95% of the mesothelioma claims. Johnson & Johnson said the US$ 6.48 billion sum was “far better recovery than the claimants stand to recover at trial” and that the slow nature of the legal process meant most of those effected would never have “their day in court”. It also announced a tentative US$ 700 million settlement with the states in January.

It is reported that Goldman Sachs is to abolish the existing pay ratio, imposed under EU rules, and which the Sunak government recently decided to scrap. The removal of the artificial cap will allow the bank to reward its best-performing staff by making multimillion pound payouts. Richard Gnodde, chief executive of Goldman Sachs International, said it had decided to bring its remuneration policy in the UK in line with its operations elsewhere in the world. He added that the shift would “mean lower fixed pay, but a higher proportion of discretionary compensation”, adding that it “also reflects the prudential objective of our regulators”. The removal of the cap means several hundred UK-based Goldman staff will now be eligible for variable pay worth up to 25 times their base salaries, according to insiders. Goldman is among the first major investment banks to signal its intention to pursue a revised approach to remuneration in the wake of the cap’s abolition by UK regulators last October. Other firms are also understood to be reviewing their UK compensation practices in light of the cap’s abolition.

Noting that UK, Europe and the US accounted for only 7% of its total revenue, grocery delivery firm Getir has said it will be leaving them to focus on its core market in Turkey where it generates the bulk of its revenue. It had earlier quit Italy, Spain, France and Portugal, and had auctioned off much of its equipment in the UK. The company had expanded quickly in Europe and had a payroll of 23k after three years but there had been speculation that its UK operations were in financial trouble. Since its entry into the UK in 2021, Getir had grown to become a multi-billion-dollar food delivery firm in just a few years. It confirmed that it will focus on its core market in Turkiye where it generates the bulk of its revenue and that FreshDirect, its US subsidiary, will continue its operations. It added that it had raised investment from Abu Dhabi’s Mubadala and US company G Squared to fund its exit from the Western market.

Claiming to be the world’s largest fast-charging network, Tesla’s Superchargers can be found all over the world. This week it was announced that the EV maker has sacked its entire Supercharger division, as part of strategy to cut 10% of the workforce, with Elon Musk noting that the company needed to be “absolutely hard core” about cost reduction. William Jameson, strategic charging programs lead at Tesla, noted that Mr Musk had “let our entire charging org go”, whilst the man himself wrote that he still planned to grow the Supercharger network, “just at a slower pace for new locations.” Last year, seven large car manufacturers including Mercedes, Honda, BMW and Hyundai-Kia, set-up a JV to build a rival fast-charging network. The quality and reach of the Supercharger network has long been a huge advantage for Tesla and was indeed a key selling point for potential buyers. However, with regulators in both Europe and the US pushing the firm to open the Supercharger network to owners of other electric vehicles, it will offer less of an advantage in the future. Tesla’s network of chargers is widely seen as industry leading, and recently it cut deals with several rival carmakers in North America to adopt its “NACS” charging standard so that their vehicles could use the network.

With declining global sales, the EV sector is going through a rough patch with slowing demand and the resulting price war in the world’s largest car market as carmakers try to maintain their sales numbers and margins. The latest is car giant BYD that saw Q1 profits slump by more than 47%, (on the quarter), to US$ 630 million, as sales of its battery-only vehicles slumped by more than 43.0% to 300k units; last year it exported 240k units.  BYD and its rivals have been involved in a price war in China, as they compete for market share at a time of slower domestic economic growth. At the end of 2023, Tesla regained its crown as the world’s biggest seller of EVs, as it continues to cut prices (and margins) and tries to expand into new global markets.

It is no surprise to hear that China is once again flexing its muscles on the world’s economic stage. Just a decade ago, a Chinese company bought the country’s first stake in an extraction project within the “lithium triangle” of Argentina, Bolivia and Chile, which holds most of the world’s lithium reserves. Since then, the Chinese have gone on a spending spree and now  own an estimated 33% of the lithium at projects currently producing the mineral or those under construction. The BBC Global China Unit has identified at least sixty-two mining projects across the world, in which Chinese companies have a stake, that are designed to extract either lithium or one of three other minerals key to green technologies – cobalt, nickel and manganese. According to the Chatham House think tank, China has long been a leader in refining lithium and cobalt, with a share of global supply reaching 72% and 68% respectively in 2022. There are quite legitimate concerns that China’s dominance may well have a negative impact in the future. The fact that it has made more than half of the electric vehicles sold worldwide in 2023, has 60% of the global manufacturing capacity for wind turbines, and controls at least 80% of each stage in the solar panel supply chain, are more than enough to start alarm bells ringing.

The prodigal son of the EU, Hungary, continues to upset the status quo of the bloc; its strong ties with Russia continue to draw the administration’s criticism and now its increasing cooperation with China is raising eyebrows in Brussels.  The country’s foreign minister, Peter Szijjarto commented that “we do not intend to become the world leader,” about his country’s ambitious plans for manufacturing EV batteries, “because the world leader is China”; it has a 79% share of the lithium-ion global battery manufacturing capacity, ahead of the US on 6%, with, to the surprise of many, Hungary with 4%, with aims to soon move into second place. To say it has embraced China would be an understatement, as Hungary’s prime minister, Viktor Orban, has commented that his government has trumpeted its “opening to the East”. In a bid to tempt Chinese investment into the country, it has promised CATL US$ 855 million in tax incentives and infrastructural support to clinch the deal – more than 10% of the US$ 781 million investment. China already has a presence in the country, with its biggest battery maker, CATL’s factory in the east of the country, whilst last year, SemCorp separator foil factory and the Chinese EcoPro cathode plant also opened. Near to the country’s BMW factory, another Chinese battery maker, Eve Energy, has started operations, whilst work has started for a “gigafactory” for China’s BYD electric cars. By this summer, there will be seventeen flights a week between Budapest and Chinese cities, whilst, last year, China became the single biggest investor in Hungary with US$ 11.5 billion. South Korean and Japanese factories have already started manufacturing batteries or battery components there.

Noting a “lack of further progress” toward lowering inflation, the Federal Reserve’s key rate remains steady in the range of 5.25% to 5.50% – continuing to hover at its highest level in two decades. Its ‘raison d’être’ is that high borrowing costs help to cool the economy and reduce the pressures pushing up prices. However, inflation remains stubborn, at 3.5%, and is staying above the Fed’s 2.0% target, with many analysts, who had signalled Q2 rate rises earlier in the year, having to change their minds, with a minority now looking at a rate hike this year.

Minor signs that the US economy may be cooling came with this week’s job numbers. The Labor Department noted that the unemployment rate nudged 0.1% higher to 3.9%, with employers adding 175k new positions – the fewest number seen since last October, and for the first time in months that growth was weaker than analysts expected. Average hourly earnings rose 3.9% over the twelve months to April, a slower pace from the previous month. Some analysts seem to consider that this could convince the Federal Reserve to actually cut rates later in the year if this trend were to continue in the coming weeks.

The Organisation for Economic Co-operation and Development predicted that UK GDP will rise by 1% in 2025. The six other nations do not fare much better, with growth rates of between 1.1% to 1.7%. The organisation blamed the after-effects of a succession of interest rate rises in the UK for the lethargic performance, noting that the UK economy would be “sluggish” this year. The UK economy is now forecast to expand by 0.4% this year, a downgrade from the OECD’s previous projection for 0.7% growth, with Germany the only country with a lower growth level and on par with Japan. The US is forecast to see its GDP rise 2.6%, with all the others, (except for Canada’s 1.1%) all well below 1.0%. The global body also noted that UK tax receipts would “keep rising to historic high of about 37% of GDP”. The government has cut NI twice last year, totalling 4%, but the OECD said this “only partially offsets the ongoing fiscal drag from frozen personal income tax thresholds”. It also said that last year’s 6% hike in corporation tax is “less than fully compensated by allowing businesses to deduct the full cost of investing in machinery and equipment from their tax bill”.

The Organisation for Economic Co-operation and Development has warned the UK that the current high rates of 5.25% should remain until the rate of price rises eases further and stays there. The OECD anticipates inflation will be “elevated” at 3.3% in 2024 and 2.5% in 2025 – still above the Bank’s 2.0% target.

HH Sheikh Mohammed bin Rashid, as Ruler of Dubai, reviewed the strategic plan of the Dubai Aviation Engineering Projects and approved designs for the new passenger terminal at Al Maktoum International Airport which on completion will be the largest in the world; when fully operational, the new terminal will ultimately enable the airport to handle an annual passenger capacity of two hundred and sixty million. It will comprise five parallel runways, with a quadruple independent operation, west and east processing terminals, four satellite concourses with over four hundred aircraft contact stands, uninterrupted automated people mover system for passengers, and an integrated landside transport hub for roads, Metro, and city air transport. Following a visit to the Dubai Aviation Engineering Projects, HH Sheikh Mohammed noted that “today, we approved the designs for the new passenger terminal at Al Maktoum International Airport and commencing construction of the building at a cost of AED 128 billion, (US$ 34.9 billion), as part of Dubai Aviation Corporation’s strategy. “It will be five times the size of the current Dubai International Airport, and all operations at Dubai International Airport will be transferred to it in the coming years.” He also added that “as we build an entire city around the airport in Dubai South, demand for housing for a million people will follow. That being the case, the location will need up to 240k housing units over the next ten years.

“It will host the world’s leading companies in the logistics and air transport sectors. We are building a new project for future generations, ensuring continuous and stable development for our children and their children in turn. Dubai will be the world’s airport, its port, its urban hub, and its new global centre.” The world’s largest airport, covering an area of seventy sq km, will also be able to handle in excess of twelve million tonnes of cargo per annum. Accompanying the Dubai Ruler, Sheikh Ahmed bin Saeed stated, “It is expected that the first phase of the project will be ready within a period of ten years, with a capacity to accommodate one hundred and fifty million passengers annually.” It seems inevitable that DXB will no longer exist and would be valuable land for the redevelopment of the whole of Al Garhoud. There is no doubt that the Al Maktoum International (AMI) is planned in such a way as to represent a leap into the future! The world is Waiting for the Great Leap Forwards!