DUBAI: Fancy working from home in a poolside villa, bathed in year-round sun?
Prime Dubai properties have been snapped up in the past few months by buyers taking advantage of decade-low prices, easy financing and an economy open for business despite the pandemic.
Sales of luxury villas, sea-view apartments and second-hand family houses have jumped, re-energizing a property market that saw a sharp fall in activity at the height of the pandemic and had been in a five-year slump prior to that. But with rents still falling and oversupply weighing, the road to recovery will be long for one of the emirate’s main economic engines.
Dubai’s economy — reliant on trade, tourism and its international reputation as a regional hub for business services — was hard hit by the COVID-19 pandemic last year as firms slashed jobs. Many foreign workers, needed to support demand in a real estate sector that contributed 7.2 percent of GDP in 2019, left.
Yet market activity has picked up in the last six months, after lockdowns and curfews were lifted, estate agents say, helping to stabilize prices for family villas and high-end beach and golf course properties.
Realtor Matthew Bate, whose agency Nest deals mainly in high-end villas, says business has become much busier in the past few months as nationals, residents and foreign visitors took the opportunity to buy.
“We did have some distressed assets coming out of the COVID-19 lockdown. Now I would say we are back up into early 2020, 2019 prices,” he said.
While much of the world re-imposed coronavirus restrictions this winter tourist season, Dubai welcomed visitors and the UAE started one of the world’s fastest vaccination campaigns.
“We had a huge influx of tourists ... it exposed a lot of people to Dubai ... The last 2-3 clients we had, dealing with properties over 15 million AED ($4.08 million), they have properties in New York, London and they are now looking at Dubai,” he said.
Still, while prices of high-end villas have stabilized, apartment prices as a whole in the emirate were mostly still falling in February, a price index by ValuStrat shows.
S&P credit analyst Sapna Jagtiani does not expect Dubai’s real estate market to recover to pre-pandemic levels until some time next year.
“Prices are down by 40-50 percent from the last peak (2014) ... this is why we think a recovery in prices to similar levels will be slow and long,” she said.
Rents at the end of 2020 were about 5-10 percent lower than the market’s last trough a decade ago, Jagtiani said.
Even before the pandemic, the long-term economic trend in the United Arab Emirates had been sluggish since the 2014-2015 oil price crash, said Christopher Payne, chief economist at Peninsula Real Estate, a UAE-based investment and research company.
“Lower oil prices are also feeding through to population numbers; you have to cut costs, people get laid off and people leave the country,” he said.
Low prices, relaxed mortgage conditions and a desire for more spacious properties as the pandemic jump-started working from home, have driven secondary market sales transactions in Dubai to record highs every month since September, said Lynette Abad of Property Finder Group, a real estate search portal.
The dominance of secondary transactions marks a fundamental market shift for Dubai. Off-plan sales from new projects used to dominate, but several developers slowed or halted new projects last year. They included Emaar Properties’ Dubai Creek Harbor, a luxury development of waterfront apartments designed to house 200,000 people, sources told Reuters last April.
Dubai’s hosting of the Expo 2020 world fair, due to take place in October after being postponed because of the pandemic, as well as a recent series of measures to relax long-term visa and citizenship rules, should boost market sentiment in the medium- to long-term, analysts say. The recent normalization of the UAE’s ties with Israel and a thawing of relations with Qatar are also seen as positives that could boost investment in Dubai and its property market, they say.
But despite optimism over rising demand for certain sectors of the market, oversupply remains a key problem.
For years supply has outpaced demand for new houses and apartments in a market where most of the population are foreigners.
“The supply-demand imbalance is likely to worsen over the course of 2021. This will result from rising levels of supply, particularly over the next 12-18 months, and increasingly curtailed demand as businesses and employees navigate through downsizing and ultimately repatriation of unemployed workers,” Asteco, a real estate services company, said in a report.
New supply forecasts for 2021 vary. Real estate consultancy Knight Frank sees “historic levels” of new supply coming online this year, at around 83,000 residential units in Dubai, up from 35,808 last year, while Asteco expects around 41,500 this year, up from its estimate of around 34,050 in 2020.
“Some market indicators will look better in 2021 ... (like) growth in mortgage buying in Dubai, etc. ... But will it trigger recovery? Maybe not by itself. We think the main aspect that would trigger recovery is cutback on supply,” Jagtiani said.
Cutbacks to new projects have hurt developers’ bottom lines. Emaar, Dubai’s largest listed developer, reported a 58 percent fall in net profit last year and rival DAMAC Properties made a net loss of 1.04 billion dirhams ($283.16 million).
“There are multiple stresses on developers, mainly to manage liquidity and cash flow while making timely deliveries, additionally pre-sales may not be very encouraging in 2021 and mostly you’ll see reduced profit and higher leverage,” Jagtiani said.
A wave of restructurings swept the industry and some developers went bust in the years following the 2008 financial crisis.
Signs of further restructuring and consolidation are emerging, including Emaar planning a takeover and delisting of its malls unit, and state-linked Meraas Holding being brought under the investment vehicle of the emirate’s ruler, Dubai Holding.
Bigger players with links to the emirate or its rulers will likely be able to weather the storm, with access to cheap land and prime locations.
“Developers with stronger balance sheets will have higher chances of survival than smaller ones as market share will shift to developers offering the most flexible payment plans. It is difficult for small developers to address affordability concerns,” Mohamad Haidar of Arqaam Capital said.
Buyers return but Dubai real estate faces long road to recovery
Buyers return but Dubai real estate faces long road to recovery
- Shift in demand from off-plan to completed
- Brokers see pick up in sales and leasing activity
DUBAI: Fancy working from home in a poolside villa, bathed in year-round sun?
UK’s Liz Truss says defining mission will be reviving the economy
LONDON: The frontrunner to be Britain’s next prime minister Liz Truss said her government’s defining mission would be to revive the economy as she set out a series of measures to help parts of northern England.
Britain’s economic performance has lagged behind those of the United States, Italy and France in recovering from the COVID-19 pandemic. The economy is expected to enter a long downturn at the end of the year amid surging inflation and rising interest rates.
“The defining mission of my government will be to get our economy growing again, cutting taxes to put more money into the pockets of hardworking people,” Truss said.
Outgoing Prime Minister Boris Johnson had said reducing regional economic inequality was his main goal. But public spending in the north of England fell behind the national average in the first two years of his government, research by the Institute for Public Policy Research has shown.
Truss said she was committed to the current government’s goal of reducing economic inequalities but would do so in a “Conservative way,” interpreted as meaning a focus on tax cuts and deregulation.
Speaking ahead of election hustings in Manchester in northern England on Friday, Truss pledged to provide more devolution, to ensure poorer areas receive the government funding they need, and to build two new vocational colleges in the north of England that will be “the vocational equivalent of Oxford and Cambridge,” dubbed “Voxbridge.”
Truss has portrayed herself as a radical insurgent who would overturn the current failed orthodoxy and has proposed to reverse more than £30 billion ($36 billion) of tax rises.
Dubai sees air travel surge, expects World Cup boost
- The airport handled 160 percent more traffic over the past six months compared to the same period last year
DUBAI: Dubai International Airport saw a surge in passengers over the first half of 2022 as pandemic restrictions eased and the upcoming FIFA World Cup in Qatar will further boost traffic to the city-state’s second airfield, its chief executive said Wednesday.
Paul Griffiths, who oversees the world’s busiest airport for international travel, told The Associated Press that the airport handled 160 percent more traffic over the past six months compared to the same period last year, part of an air travel rebound around the world.
The nearly 28 million people who traveled through the airport over the past six months represent some 70 percent of the airport’s pre-pandemic levels, even as Dubai’s key source market of China remains closed due to severe pandemic restrictions. Griffiths said he expects the airport’s traffic to return to pre-pandemic levels by the end of next year.
“It’s a very, very welcome surge of traffic,” Griffiths said.
The first World Cup in the Middle East, he added, will send foreign soccer fans flocking to Al-Maktoum International Airport at Dubai World Central, or DWC. From there, they will travel daily to Qatar, a tiny neighbor that faces a hotel squeeze.
“We’ve actually seen a huge demand at DWC for slot filings for airlines wanting to operate a shuttle service,” he said. “I think the city has a lot to offer and a lot to gain from the World Cup.”
Among the airlines buying extra slots to shuttle soccer fans to the tournament from DWC are Qatar Airways, low-cost carrier FlyDubai and budget airline Wizz Air Abu Dhabi, he said.
During the first half of 2022, Dubai International Airport dealt with nearly 56 percent more flights than the same period in 2021, when contagious coronavirus variants clobbered the industry.
Now, in a sign of the health of the industry, Emirates said on Wednesday that it would pour billions of dollars into retrofitting much of its Airbus A380 and Boeing 777 fleet. At the height of the pandemic, the airline received a $4 billion government bailout.
Egypt’s central bank governor resigns as economic woes mount
- President Abdel Fattah el-Sissi accepted the resignation of Tarek Amer and named him a presidential adviser
- The currency is under pressure, sliding in value to about 19 Egyptian pounds to the US dollar
CAIRO: Egypt’s central bank governor resigned Wednesday as the Middle East’s most populous nation struggles to curb inflation triggered by Russia’s war in Ukraine, high oil prices and a drop in tourism.
President Abdel Fattah El-Sisi accepted the resignation of Tarek Amer and named him a presidential adviser, the Egyptian leader’s office said in a statement. The brief statement offered no explanation for Amer’s resignation.
No replacement was immediately named for Amer, who had been appointed governor of the central bank in November 2015. He has been criticized for his handling of Egypt’s financial challenges.
The currency is under pressure, sliding in value to about 19 Egyptian pounds to the US dollar. That followed a central bank decision allowing the currency to depreciate by around 16 percent in March to try to stem a growing trade deficit.
“It seems there’s a lot of tensions within policymaking circles, and I think that’s ultimately what led to Mr. Amer’s resignation,” said Jason Tuvey, a senior emerging markets economist at Capital Economics.
Tuvey said there are officials that oppose devaluing the pound and instead support measures like rationing gas consumption by curbing electricity usage, which could in turn harm business activity. Amer had traditionally been seen as in the camp that supported the pound’s depreciation as a way to secure a loan from the International Monetary Fund.
The London-based Capital Economics research firm predicts that Egypt’s currency will continue to slide, reaching 25 pounds to the dollar by the end of 2024 amid sustained pressure.
The resignation of the central bank head comes after key ministries were reshuffled Saturday as the government faces mounting pressure from economic challenges. The Cabinet shake-up, which was approved by parliament in an emergency session, affected 13 ministries, including health, education, culture, local development and irrigation. The country’s minister of tourism and antiquities also was replaced.
Egypt’s expansive tourism industry, which employs millions, was hit hard by years of turmoil, the COVID-19 pandemic and then the war in Ukraine. Prior to the conflict, around a third of tourists to Egypt came from Russia.
Russia’s war has been deeply felt in other ways in Egypt, the world’s largest wheat importer that sources around 80 percent of it from the Black Sea region.
In the first weeks after the invasion of Ukraine in late February, the price of wheat and other grains skyrocketed, as did the price of fuel. Although prices have come down somewhat, the cost of grains remains at least 50 percent higher than before the pandemic in early 2020. Furthermore, the cost of shipping to export those grains through the Black Sea is high.
Inflation in the country of 103 million people reached 14.6 percent in July, increasing pressure on lower-income households and everyday necessities. Around a third of Egyptians live in poverty, according to government figures.
The World Bank notes that Egypt’s government announced an assistance package worth 130 billion pounds (more than $8 billion) just before devaluing the pound in March to alleviate the impact of rising prices. The package aimed to increase public-sector wages and pensions, as well as expand direct cash assistance programs.
Egypt’s Gulf Arab allies have come to its assistance with multibillion-dollar investments buoyed by high oil prices that have helped their bottom line.
Saudi Arabia’s sovereign wealth fund, known as the Public Investment Fund, recently established a division in Egypt that has already announced deals worth $1.3 billion with the aim of bringing in $10 billion into Egypt.
Saudi-Uzbek trade exceeds $95m in the first half of 2022
- The two countries will bolster ties further with the signing of 12 new deals this week
RIYADH: The mutual trade between Saudi Arabia and the Republic of Uzbekistan reached $95 million in the first half of 2022, a substantial increase considering that bilateral trade barely exceeded $17 million last year.
According to a joint news statement, the value is expected to grow rapidly by the end of 2022. The numbers assume significance in the aftermath of the pandemic.
In fact, the number of Uzbek companies running on Saudi funds increased from about nine to 38 in the last five years. Of the 38, 19 are sole proprietors, and the rest are joint ventures.
The two nations will bolster the ties further by signing 12 new agreements on Wednesday and Thursday when Uzbekistan President Shavkat Mirziyoyev visits the Kingdom.
According to an Uzbek state agency, high-level talks will take place in Jeddah, where the two nations will discuss opportunities to enhance multilateral cooperation further.
The discussion will focus on the green economy, technology and digitalization, innovations, small business and entrepreneurship.
Following the meeting, new agreements are expected to be signed in the energy, telecommunications, agriculture, chemical and petrochemical industries, besides encouraging ties in culture, sports and education.
The Kingdom has become one of the largest foreign investors in energy infrastructure and one of Uzbekistan’s most significant developers of green energy projects.
ACWA Power’s Uzbek interests
Recently, the Ministry of Energy of Uzbekistan and Saudi energy company ACWA Power signed several investment agreements for about $3 billion.
ACWA Power will develop and operate a wind energy project with a production capacity of 1,500 MW in the Karakalpakstan region of Uzbekistan.
When commissioned, the plant will become the largest of its kind in Central Asia and one of the largest wind power plants in the world.
ACWA Power also signed an agreement to establish the 100MW Nokus wind farm project, the first renewable energy project to be implemented in partnership with Uzbekistan’s public and private sectors.
The power generating company also won a $108 million wind contract after proposing a tariff of 2.56 cents per kilowatt-hour, the lowest in Uzbekistan.
Additionally, the Ministry of Energy of Uzbekistan signed a 25-year power purchase agreement with ACWA Power to establish a combined-cycle gas turbine power plant in Shirin, located in Syrdarya, Uzbekistan. The deal amounts to $1.2 billion.
According to the statement, these projects will contribute to achieving Uzbekistan’s national goal of raising the total renewable energy generation capacity to 30 percent by 2030.
Saudi Fund for Development
Moreover, the Saudi Fund for Development has contributed to the implementation of many projects in Uzbekistan, including funding the Samarkand-Gozar Road project, with a total value of $30 million.
The fund also contributed to 20 projects in the republic, including building pumping stations and other projects involving sewage, chemicals, mining, building materials, water and agriculture.
According to the Ministry of Agriculture of Uzbekistan, the Saudi and Uzbek delegations have discussed issues of cooperation in agriculture, including the prospects for enhancing mutual trade in agricultural products.
Both parties will likely sign memorandums of cooperation in agriculture, veterinary medicine and livestock development at the meeting.
They also agreed to deepen cooperation in the agricultural sector to enhance trade in farming, livestock and other products between the countries.
After signing the memoranda, action plans will be prepared, including specific measures and areas for developing cooperation and joint projects.
The Saudi side invited the Uzbekistan delegation to attend its most prominent exhibition of the agro-industrial complex, which will be held at the end of October in Riyadh.
Saudi banks shut down 42 branches in 12 months, increase digital presence
- More banks are switching to increased virtual interactions and digitalization, and new banks are opening entirely on that premise
CAIRO: Saudi banks shut down 42 branches over the year ending in June, revealed the Saudi Central Bank, also known as SAMA.
The number of bank branches in Saudi Arabia also inched lower to 1,927 in the second quarter this year from 1,932 in the same quarter last year.
So, what are the reasons behind this decreased number of bank branches, and when did this trend begin?
The most common assumption would be the COVID-19 pandemic and its prolonged effect on the entire economy, including the financial and banking sectors.
Between the fourth quarter of 2019 and the first quarter of 2021, which includes the peak of the pandemic, 68 branches were closed.
Also, bank branches continued to decrease quarterly long after lifting COVID-19 restrictions, albeit there was no clear trend.
Between May 2020 and June this year, 137 bank branches in the Kingdom shut shop.
It is worth mentioning that branches that have closed are not second-tier or underperforming banks but some of the largest and well-performing ones. For instance, Al Rajhi Bank, which had 543 branches in the fourth quarter of 2020, reduced it to 515 by June this year.
While COVID-19 sparked the digital revolution, advanced and innovative technologies did the job.
The past three years of the pandemic slowly began the transformation toward digital banking, which can be seen closely in the Saudi banking sector.
More banks are switching to increased virtual interactions and digitalization, and new banks are opening entirely on that premise.
Last February, SAMA licensed and welcomed the Kingdom’s third digital bank D360 Bank, following the launch of STC and Saudi Digital Bank in June last year.
Similarly, according to SAMA, 19 Saudi fintech companies have been authorized to provide payment services, consumer microfinance and electronic insurance brokerage over the past few months.
So, what does the future of digital banking in the Kingdom hold and will the population accept this digital revolution?
In a survey conducted by Ipsos in the Kingdom in October 2021, the research major pointed out that 61 percent still trust traditional banks, while 47 percent counted on mobile service providers and 40 percent depended on popular digital brands to carry out financial transactions.
The report added: “63 percent said that they will be making all their financial transactions through digital banking in the future, and 58 percent believe that people would no longer use cash as a payment method.”