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?
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.”
Saudi banks increase loans by $77.1bn in Q2
- Kingdom is moving toward Vision 2030 by developing the trade sector and ensuring its sustainability
CAIRO: Saudi Arabia’s bank loan portfolio rose by SR289 billion ($77.1 billion) in the second quarter of this year from the same quarter a year ago, according to a recent statistical bulletin released by the Saudi Central Bank, also known as SAMA.
Bank loans totaled SR2.42 trillion at the end of the second quarter of 2022, up from SR1.95 trillion in the second quarter of 2021, showed the SAMA report.
The SR289 billion increase was led by an SR191.1 billion growth in miscellaneous activities. Its share increased by 2 percentage points to 52 percent in the second quarter of 2022.
The data showed that the value of Saudi banks’ aggregate loan portfolio totaled SR2.24 trillion at the end of the second quarter of 2022, up 14.8 percent from the year before and up 4 percent from the previous quarter.
The annual growth in bank loans dropped to a negative in 2017 and remained below zero until the third quarter of 2018. However, bank loans have been seeing an upward trend ever since, according to the SAMA report.
From the third quarter of 2018 until the end of 2019, the value of Saudi bank loans grew at an average rate of 3.7 percent year on year; between 2020 and the second quarter of this year, it grew at an average rate of 14.8 percent year on year.
The dominating segment in the Kingdom’s loans was miscellaneous economic activity, which acquired 52 percent of the total loans this quarter.
Commerce came in second, holding 17.2 percent of total loans in the country, recording SR385.7 billion in the second quarter, showed the data.
The Ministry of Commerce in the Kingdom has been moving toward the Saudi Vision 2030 by developing the trade sector and ensuring its sustainability, according to the Kingdom’s Unified National Platform.
The platform stated: “The Ministry of Commerce’s mission focuses on improving the business environment in Saudi Arabia through enacting, developing and supervising the implementation of flexible and fair trade policies and regulations.”
Even though total bank loans expanded this quarter, two economic activities saw a quarterly decline in bank credit in the second quarter of this year: manufacturing and processing and transport and communication.
Bank loans to transport and communication fell by SR6.2 billion in the second quarter of 2022 from the same quarter the previous year.
Compared to the previous quarter, the sector dropped from 2.1 percent of total loans in the first quarter to 1.9 percent, showed the SAMA bulletin.
Bank loans given to manufacturing and processing fell by SR4 billion in the second quarter of 2022 from the same quarter the previous year.
The data showed that the sector dropped from 7.2 percent of total loans in the first quarter to 6.9 percent compared to the previous quarter.
QS Monitor taps 90% of global food trade
- Platform currently operates in 72 countries: Managing director Burak Karapinar
RIYADH: UAE-based global food trade startup QS Monitor has created a platform for food traders to ship their goods risk-free.
Established in 2020, the company mitigates the risk for exporters as they streamline their shipments to avoid food loss by providing traders with the requirements for their goods to pass security measures.
Burak Karapinar, the managing director and founder of QS Monitor, told Arab News that the platform currently operates in 72 countries, which amounts to almost 90 percent of the global food trade industry.
“We are in 72 countries and growing, but this represents almost 90 percent of the global food trade. So, the ones we don’t have on the platform right now are either small countries or ones that are not big in the food trade,” Karapinar said.
Calling it the “Google for food trade,” Karapinar explained that traders input the product along with the destination, and QS Monitor will provide a complete list of requirements.
But that is not at all. Joe Hawayek, the board member of QS Monitor, told Arab News that the platform also links users to testing laboratories in their country.
“We are linking them with a testing laboratory in their country that can conduct these tests, issue them with the relevant certification that says they have passed, and they take it and travel with it for their product from the start,” he added.
By linking these players, Karapinar is trying to mitigate the food loss in the supply chain caused due to contamination.
“To give you an idea, 72 percent of global food loss happens in the supply chain, not at home or on the consumer’s plate,” he pointed out.
As the Ukraine-Russia war affected the global food trade sector, the company plays a huge role in ensuring importers are still connected with exporters.
“That’s another beauty that we can provide to this platform. The onboarding of a supplier takes months. You need to be able to verify all the information and make sure the supplier meets your criteria and standards.
“Through our platform, you don’t need to do that. You can gather this information. And you can make your decision. So, we also add the trust element between the buyer and the seller,” Karapinar said.
Hawayek also added that Saudi Arabia and the UAE import most of their eggs from Ukraine, and because of the platform, importers could find alternative sources for their products. With a network of over 400 laboratories, the company provides several services through its platform and certification for Halal requirements for certain foods.
“We did more than 10,000 transactions last year; this includes certification testing, inspection, product registration, and supplier audits,” Karapinar added.
With 6,000 traders on the platform, Karapinar stated that the company currently has 1,000 traders on QS Monitor from the Kingdom and is planning to grow that number by a minimum of five times.
In addition, the company is currently in series A funding stage and is on its way to raising $8 million and expanding its staff from 18 to 60 people in the next five months.
QS Monitor also won UAE’s FoodTech Challenge provided by the Ministry of Climate Change and Environment, which features almost 600 companies.
Gazprom ramps up gas flow to Hungary via Turkstream pipeline, official says
- The agreement with Gazprom is for 15 years, with an option to modify purchased quantities after 10 years
BUDAPEST: Russia’s Gazprom has ramped up flows to Hungary via the Turkstream pipeline that brings gas to Hungary via Serbia, a Hungarian Foreign Ministry official said on Saturday.
EU member Hungary has maintained what it calls pragmatic relations with Moscow since Russia’s invasion of Ukraine, creating tensions with some EU allies keen to take a tougher line.
Hungary, which is about 85 percent dependent on Russian gas, firmly opposes the idea of any EU sanctions on Russian gas imports and Prime Minister Viktor Orban has also lobbied hard to secure an exemption from EU sanctions on Russian crude oil imports.
Foreign Minister Peter Szijjarto met his Russian counterpart Sergei Lavrov in Moscow last month, seeking a further 700 million cubic meters of gas on top of an existing long-term supply deal with Russia.
Under a subsequent agreement, Gazprom started ramping up gas flows to Hungary on Friday, Hungarian Foreign Ministry State Secretary Tamas Menczer said in a statement.
Menczer said Gazprom would add 2.6 million cubic meters of additional gas per day to previously-agreed deliveries via Turkstream through August, with the amount of September deliveries being negotiated.
Hungary’s reserves stored 2.84 billion cubic meters of gas by the middle of July, the lowest level for that period over the past five years based on data by the national energy regulator.
Under a deal signed last year, before the start of the war in neighboring Ukraine, Hungary receives 3.5 billion cubic meters of gas per year via Bulgaria and Serbia under its long-term deal with Russia and a further 1 bcm via a pipeline from Austria.
The agreement with Gazprom is for 15 years, with an option to modify purchased quantities after 10 years.
Arab News top picks of MENA’s 10 most funded fintech startups
- Technology-based sectors starting to dominate the business landscape in the region
RIYADH: The entrepreneurial ecosystem has been on the rise in the Middle East and North Africa region for a while, with technology-based sectors starting to dominate the business landscape.
Financial technology, popularly known as fintech, has been a promising sector for business people and investors alike, with startups entering and exiting the industry like never before.
The numbers speak for themselves. Startup funding increased 540 percent in the first quarter of 2022 compared to the same time last year, reported Dubai-based MAGNiTT, a startup research platform.
To get a sense of the action in the fintech domain, Arab News has compiled a list of the 10 most funded fintech startups in the MENA region.
Founders Hosam Arab, Daniil Barkalov
Funding $275 million
Investors 19 investors including STV, Global Founders Capital, Raed Ventures, Partners for Growth, Atalaya Capital.
One of the leading buy-now-pay-later platforms in the region, Tabby aims to provide financial freedom to shoppers by offering solutions without interest or debt fees.
Focusing on the retail sector, the company wants to improve the shopping experience of its loyal customers by offering a flexible checkout experience.
Tabby raised $150 million in debt financing in its last funding round and it aims to use it to fortify its balance sheet as well as strengthen its client base.
Founders Ahmad Al-Zaini, Musab Al-Othmani
Funding $198 million
Investors 17 investors including STV, Sanabil and Prosus
Headquarters Saudi Arabia
Foodics offers a point-of-sale management system for restaurants that lets business owners keep track of all their operations, from the kitchen to employees and sales.
The company offers many facilities that support restaurant operations, including micro-lending and payments catering to food and beverage establishments.
In its latest funding round, Foodics secured $170 million in a series C round, allowing it to grow its fintech arm and micro-lending operations.
Founder Abdulmohsen Al-babtain, Abdulmajeed Al-sukhan, Turki Bin Zarah
Funding $116 million
Investors 9 investors including Impact46, CheckOut.com and Nama Ventures
Headquarters Saudi Arabia
Another pioneer in the buy-now-pay-later market, Tamara is a Saudi-based fintech that offers its solutions to merchants and buyers alike.
The company aims to create a seamless experience for shoppers by providing a zero-interest fee for its services.
In 2021, Tamara raised $110 million in a series A round, making it a record-breaking round last year.
Founder Islam Shawky, Alain El-Hajj, Mostafa Menessy
Funding $68.5 million
Investors 10 including PayPal Ventures, Nclude and A15
Paymob, one of the players that changed the game in the Egyptian market, is a complete fintech solution for emerging markets and small and medium enterprises.
The company offers a complete digital payment solution for businesses to accept online and in-store payments.
Founded in 2015, Paymob raised $50 million in a series B funding round in May 2022, which was used in product development and market expansion.
Founder Tariq Sheikh
Funding $63.5 million, according to Forbes
Investors Touch Ventures and AfterPay
Founded in 2019, Postpay is a flexible payment firm that offers shoppers to pay in three monthly interest-free installments at its partner stores.
The company works with leading global brands such as H&M, Footlocker, Dermalogica and domestic merchants such as The Entertainer and Squat Wolf.
Last June, the company secured $10 million in equity investment; the funds will be used to fuel its expansion plans across the MENA region.
Founder Muhannad Ebwini
Funding $50.5 million
Investors 8 including Mastercard and AB Ventures
Headquarters Saudi Arabia
HyperPay offers a payment gateway for online businesses to accept and manage
payments online with flexibility and security.
Founded in 2014, the company has an extensive network of partners with banks across the Middle East and North Africa to better facilitate online payments in local currencies.
In its last funding round, HyperPay secured $36.7 million in June 2022 to enable the company to grow its team and introduce new payment solutions.
Founder Omar Saleh, Ahmed Wagueeh, Fatma Shenawy
Funding $47 million
Investors 12 including Quona Capital, Khawazimi Ventures and Nclude
Another Egyptian fintech startup that tops the list, Khazna, is a financial super app that offers a wide range of solutions for underserved individuals.
The company aims to provide
the 20 million underserved Egyptians with banking and financial options through their smartphones.
Founded in 2019, the company raised $38 million in March 2022, allowing it to replace cash-driven alternatives across Egypt.
Founder Daniel Robenek, Ola Doudin
Funding $30 million
Investors 15 including Wamda and Jump Capital
A new kind of fintech added to the list, BitOasis is a cryptocurrency trading platform that offers a digital asset wallet.
Founded in 2015, the company allows users to buy, sell, trade and exchange crypto assets in the UAE.
Raising $30 million in its last funding round, BitOasis got approvals from the Abu Dhabi General Market and partnered with police entities to combat crypto fraud.
Founder Khalil Alami
Funding $28.9 million
Investors 4 including Cashfree Payments and iMena Group
An award-winning payment gateway provider, Telr has offices in Singapore, the UAE, India, and Saudi Arabia.
The company offers businesses a set of application programming interfaces and tools to enable them to accept and manage online payments.
Telr raised $15 million in a funding round in 2021 by India-based Cashfree payments to better facilitate cross-border payments.
Founder Abdulaziz Al Jouf
Funding $25.3 million
Investors Saudi Aramco
Headquarters Saudi Arabia
Another award-winning startup, Paytabs, is a B2B online payments solutions provider that aims to give merchants digital payment features on their websites.
The company offers application programming interfaces to facilitate transactions in multiple currencies and other markets.
Founded in 2014, Paytabs is a Saudi Aramco-backed company that currently operates in the UAE, Saudi Arabia and Egypt.