UAE’S NON-OIL PRIVATE SECTOR GROWTH AT 30-MONTH HIGH
Dubai: The Emirates NBD Purchasing Managers’ Index (PMI) for the UAE rose to 57.3 in August from 56.0 in July, signalling the sharpest improvement in business conditions since February 2015.
Growth in the UAE non-oil private sector economy climbed to the fastest pace seen since February 2015, bolstered by sharp expansions in new orders and output.
August data showed new export orders rose for the first time in three months, with other Gulf Cooperation Council (GCC) countries being mentioned as key sources of international demand. Moreover, the ongoing upturn in new business translated into job creation across the non-oil private sector. Increasing output requirements prompted firms to engage in purchasing activity, which contributed to a record rise in inventories. Meanwhile, firms continued to face upward cost pressures. In contrast, output charges stabilised during August.
“The August PMI survey shows a strong expansion in the non-oil private sector, underpinned by sharply higher output, new orders and inventories. Firms have indicated that new projects and competitive pricing are supporting demand and activity in the non-oil sector. This is in line with our view that investment ahead of Expo 2020 will be the key driver of the UAE’s non-oil growth over the next few years,” said Khatija Haque, Head of Mena Research at Emirates NBD.
The surge in headline PMI was driven by faster new order growth and output growth last month, with firms attributing this to “new projects, enhanced marketing initiatives and good quality products.” New export orders increased slightly in August after two months of decline, and firms highlighted improved demand from other GCC countries. Stocks of pre-production inventories also increased at a faster rate last month as output accelerated and as firms anticipated future demand.
The headline PMI index is heavily weighted to the ‘volume’ components of the survey, which is what it is designed to do as a proxy for real GDP growth. New orders and output account for 55 per cent of the headline index, with inventories accounting for another 10 per cent. These components were all above 61 in August, significantly higher than the neutral 50 level and signalling very strong growth in the volume of goods and services ordered, sold and stored last month.
DH24B MEGA MIXED-USE PROJECT UNVEILED IN SHARJAH
Sharjah: A UAE-Saudi joint venture has launched what is said to be the largest privately-owned mixed-use real estate project in Sharjah. The Aljada development will take up 224 hectares on a site with easy access to the main access roads in the emirate.
The project is being helmed by Arada, for which this is second project after the successful launch of the Nasma residential community. Arada is projecting a gross real estate value of Dh24 billion (including the sales proceeds) from Aljada.
“The plot on which Aljada will be developed was purchased from the Sharjah Government earlier this year, and it lies almost entirely on a greenfield site,” said Prince Khaled Bin Alwaleed Bin Talal, Vice-Chairman of Arada and Chairman of KBW Investments.
The first phases are to be delivered from 2019 and the entire destination by 2025. It will by then have a resident base of around 70,000.
Arada came into being late last year, and features Prince Khaled and Shaikh Sultan Bin Ahmad Al Qasimi, Chairman of Basma Group as principal shareholders.
“As we said at the launch of Arada, we have been in the process of carefully evaluating several opportunities available to us. Our original plan had been to launch Aljada in 2018, but the resounding success we witnessed at Nasma Residences. The first phase sold out in a month’s time, (and) convinced us to bring forward this launch. We believe that this demand persists.”
All residential units will be available on either a freehold or 100-year leasehold basis to all nationalities. There will be 272 units released at the launch.
“We will be releasing other phases rapidly,” said Prince Khaled. “Our plan is to focus mainly on low-rise and mid-rise buildings across a range of sectors, including residential, commercial, hospitality, retail and leisure and entertainment.”
The proof that it will not be a development riding on residential alone is quite clear from the masterplan.
Aljada will feature a business park with 500,000 square metres of office space. The business park’s location is opposite Sharjah Airport International Free Zone and Sharjah International Airport, and with direct access to Al Dhaid Road.
“The Business Park will be ideal for companies that wish to be housed in offices with state-of-the-art design and the latest facilities — but at a lower overall cost of business than in many other parts of the UAE,” Prince Khaled added.
Aljada’s other focal point will be the “Central Hub”, which will be the base for most of the retail, apart from leisure and entertainment options. But there will be no standalone mall.
Elements of the Central Hub will be open before the first phase is complete. The other retail spots in the development will be two tree-lined boulevards of 4.4 kilometres in length and featuring select retail and F&B offerings.
Construction on the first phase is to begin in Q1-18. The plan is to issue the tender for the main contract by early November and to award it in January.
The masterplan was conceived by Woods Bagot, with the firm working closely with the Sharjah Urban Planning Council. Included in the Central Hub will be a piazza and anchored by a musical fountain display as well as the “largest children’s adventure and discovery complex in the Northern Emirates”.
“The Central Hub will also focus on Aljada’s aim of promoting an active lifestyle, with a number of sports on offer,” the Prince said. “That aim is complemented by Aljada’s linear parks, which are unique in the UAE in that they stretch the entire length of the development, allowing every resident access to lush green spaces only a few minutes’ distance from their front door.”
WHY THE GULF NEEDS A CHANGE IN ITS WORK ETHIC
Like any other European country, Spain suffered the implications of the global financial crisis.
However, after an arduous period, it managed to surmount the obstacles and recover its economic clout.
This in fact was achieved through many factors — at the forefront of which comes the financial support given by the European Union (EU) and the International Monetary Fund (IMF) as well as austerity policies adopted by the Spanish government, which led to a sharp reduction in government spending and deficit.
Spain subsequently achieved results better than its counterparts in the EU, many of whom are still experiencing serious troubles, such as Greece and Italy.
The first was afflicted by frequent and meaningless strikes while the latter’s burden continue to be its labour force and their lackadaisical attitude.
In Spain, the situation is completely different.
You will find modesty, the love of work, and dealing with others in a tolerant spirt, starting from the king and royal family to normal workers in public services.
These, indeed, are some of the key reasons why Spain managed to emerge stronger and overcome all obstacles related to their work ethic.
Wherever you go, even in hotels, restaurants, tourism facilities, you will see most of the workers, if not all of them, are Spanish — which we’ll not see in most of European countries.
It is true that while some workers come from Eastern Europe, Latin America, the Maghreb countries and even from Britain and France, the Spanish manpower is dominant.
But foreign workers are treated fairly and without any discrimination.
So the issue is not related to formal work values but to their significant results, which would contribute to reducing the number of those unemployed and supporting the national economy with the required financial sources.
It also underpins the balance of payments situation through reducing remittances to outside of Spain.
That would also contribute to increasing savings and small private investments, of huge importance to improving economic conditions.
The Spanish economy enjoys substantial privileges, not least the charming nature of its people.
These should be enough to achieve further improvements in the coming years.
Other European countries still affected by the crisis and mainly dependent on foreign workers can take lessons from the Spanish experiment, especially the respect for work and irrespective of its nature.
DUBAI LANDLORDS OFFER ‘FREE’ RENT, MULTI CHEQUES
Dubai: Landlords in Dubai aren’t just open to accepting multiple cheques and reducing lease rates, they are also offering rent-free periods just to attract tenants.
Despite claims that the property sector is bottoming out or showing signs of recovery, overall rents across the emirate are still on decline.
A slowdown in hiring and a sustained rise in the number of new apartments and villas continue to impact demand, prompting landlords to sweeten the deal.
With fewer jobs, there are fewer people with money to pay for rent.
Compounding the decline in demand is the increase in supply of new properties.
Just this year alone, some 30,000 units are expected to be turned over to investors. So far, about a tenth of the number has already been delivered.
As a result, according to Propertyfinder Group’s UAE Real Estate Trends 2017 report, Dubai residents have gained more negotiating power when it comes to dealing with landlords.
“New tenants and their brokers have been able to negotiate concessions that were previously dismissed or largely unheard of in the Dubai market, such as rent-free periods.”
A quick look at various property listings in Dubai shows owners enticing potential tenants with “free” rents, especially for flats that have recently been delivered. “Brand new, one-month free [rent], with appliances,” reads one listing.
Landlords are also resorting to other concessions, such as reducing rents for existing tenants, accepting multiple cheques and paying broker commissions. Owners have no other recourse, considering that they stand to lose money if their property stays empty even for just one month.
“Considering a one-month vacancy period equates to a loss of 8.3 per cent, which typically is close to, if not more than, the yield that most properties produce annually, concessions like these are not only smart business for the investor, but a win-win for all parties regardless of the market,” wrote Zhann Jochinke, chief executive officer, Keller Williams Real Estate.
Propertyfinder’s research among the nearly 24,500 Dubai apartments and villas advertised for rent showed that just about one in six specify the number of cheques required. Out of those that do, 1,842 listings state that tenants can pay in four cheques.
“The current market has seen some power returning to tenants – they can start to dictate more favourable terms and the amount of cheques is often one of those negotiation points,” said Lukman Hajje, chief commercial officer of Propertyfinder Group.
According to the latest report from Reidin, Dubai’s rental market fell 4.57 per cent year-on-year in May due to a sharp decline in values in both apartments and villas compared to a year earlier. Rents have declined in various locations, including in areas close to the Metro.
WORLD’S SECOND-LONGEST SERVING CENTRAL BANKER OUT IN OMAN
Dubai: Oman’s Ruler replaced the head of the central bank after 26 years in the job as the Gulf country struggles to cope with the impact of low oil prices on its economy.
Sultan Qaboos Bin Said, in a decree published by the state-run news agency late on Tuesday, appointed Tahir Bin Salim Al Amri as the central bank’s executive president. He replaced Hamud Sangur Al Zadjali, who served in the post since 1991, making him the world’s second-longest serving central banker after Romania’s Mugur Isarescu, according to data compiled by Bloomberg.
Al Zadjali, a Boston University graduate, was replaced hours after Moody’s Investors Service cut Oman’s banking outlook to negative from stable to reflect a reduction in the government’s ability to support the country’s banks as well as weaker economic growth and tightening liquidity.
With smaller oil reserves and less of a cushion in government savings than its wealthier neighbours, Oman is one of the most vulnerable countries in the Gulf Cooperation Council as lower oil prices pressure state finances. The budget deficit soared to more than 20 per cent of economic output last year, according to International Monetary Fund data.
“The priority for Oman is on the fiscal side and they didn’t do very much on that despite the oil price deterioration,” said Dima Jardaneh, head of Middle East and North Africa research at Standard Chartered in Dubai. “They needed to cut spending in a significant way but they weren’t able to over the past two years,” she said. “I think they were still counting on revenue measures to kick in but that will take much longer to make a difference.”
Under Al Zadjali, the central bank has repeatedly said it would maintain its currency peg to the dollar despite mounting investor pressure. Forward contracts on the Omani rial that expire in 12 months soared to a record 1,700 points in January 2016, when the price of Brent crude sank to the lowest level since 2003. And though the contracts have since eased to 575, they are still the highest among the six-nation Gulf Cooperation Council.
Oman’s benchmark MSM30 Index of stocks has also been among the world’s top 10 worst-performing indexes this year, retreating 12.3 per cent.
Sultan Qaboos also changed the central bank’s board of governors, appointing Sultan Bin Salim Bin Said Al Habsi as deputy chairman of the board for a five-year term.