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Adnoc signs dh4.3b concession deals with China oil giant

The Abu Dhabi National Oil Company (Adnoc) announced on Wednesday that it had signed two offshore concession agreements valued at Dh4.3 billion with the China National Petroleum Corporation (CNPC), the world’s third largest oil company.

Under a 40-year agreement, CNPC, through its majority-owned listed subsidiary PetroChina, was granted a 10 per cent interest in the Umm Shaif and Nasr concession and a 10 per cent interest in the Lower Zakum concession.

PetroChina paid a participation fee of Dh2.1 billion for the Umm Shaif and Nasr concession and a fee of Dh2.2 billion for the Lower Zakum concession, Adnoc said in a statement.

Dr Sultan Ahmed Al Jaber, Adnoc Group CEO, and Wang Yilin, CNPC Chairman, signed the agreements that have a term of 40 years and are backdated to March 9, 2018.

In the Umm Shaif and Nasr concession, PetroChina joins France’s Total and Italy’s Eni, which were recently awarded a 20 per cent and 10 per cent stake respectively.

In the Lower Zakum concession, CNPC joins an Indian consortium led by ONGC Videsh, Japan’s INPEX, Total and Eni.

Adnoc retains a 60 per cent majority share in both concessions.

Dr Al Jaber said the expanded collaboration with CNPC further strengthens and deepens the strategic and economic relationship between the UAE and China, the world’s second largest economy.

“Energy cooperation is an increasingly important aspect of the UAE’s relations with China, the number one oil importer globally and a major growth market for our products and petrochemicals. These agreements are new milestones in Adnoc’s thriving partnership with CNPC and also represent an important platform upon which we can explore opportunities further downstream,” he said.

“CNPC’s involvement in our offshore concession areas will help to maximise the returns from what are very attractive, stable and long-term opportunities. At the same time these agreements further underline the international energy markets’ confidence in Adnoc’s 2030 growth strategy as we accelerate delivery of a more profitable upstream business and generate strong returns for the UAE,” said Dr Al Jaber.

Taking a loan in UAE is going to be more expensive

The Central Bank of the UAE announced on Wednesday that it would raise interest rates by 25 basis points, paving the way for higher borrowing costs in 201

The Central Bank’s decision came soon after the announcement of a similar rate rise by the US Federal Reserve in its first interest rate increase of 2018 at the conclusion of a two-day policy meeting as the US economy continues to strengthen.

The Central Bank announced that, effective Thursday, March 22, 2018, it will raise interest rates applied to the issuance of its Certificate of Deposits in line with the increase in interest rates on the US dollar, following the Federal Reserve Board’s decision to increase the Federal Fund Rate by 25 basis points, the bank said.

The Repo Rate applicable to borrowing short-term liquidity from UAE Central Bank against Certificates of Deposits has also been increased by 25 basis points to two per cent.

Middle East to remain largest oil exporter: BP

Global energy landscape is set for fast change, but the Middle East will remain a large net energy exporter and the world’s largest oil exporting region through 2040, according to the 2018 BP Energy Outlook.

The Middle East remains the largest oil producer and the second largest gas producer, accounting for over 34 per cent of global liquids production and 20 per cent of gas production by 2040, according to the report.

By 2040, non-fossil fuels account for eight per cent of the Middle East’s energy consumption, compared with one per cent. Natural gas represents almost 60 per cent of the incremental energy demand growth, and it accounts for 54 per cent of the region’s energy consumption by 2040, against 52 per cent, BP forecast said.

However, according to a recent forecast from Siemens, the Middle East is expected to more than triple its share of renewable energy from 5.6 per cent in 2016 to 20.6 per cent in 2035.

Despite the growing share of renewable energy, natural gas is expected to remain the primary source of power generation in the region, accounting for 60 per cent of installed capacity through 2035.

“While the energy mix will see significant diversification over the next 20 years, natural gas will remain the prime energy source for power generation in 2035,” said Dietmar Siersdorfer, CEO, Siemens Middle East and UAE.

As per the UAE’ energy plan for 2050, the target has been set at 44 per cent from renewable energy, 38 per cent from gas, 12 per cent from clean fossil and 6 per cent from nuclear energy.

In the UAE, the integration of renewable, nuclear and clean fossil energy is planned to be funded with investment of Dh600 billion over the next 33 years, equating to an annual spend of more than Dh17 billion.

BP Energy Outlook forecast that the Middle East energy consumption would increase by 54 per cent by 2040, with natural gas representing almost 60 per cent of that growth. Oil and coal both lose share at the expense of gas and non-fossil fuels. The contribution of non-fossil fuels increases from one per cent to eight per cent in 2040, led by strong growth in solar, wind (each over 20 per cent per annum) and nuclear (15 per cent per annum). Still, by 2040, solar energy will represent only four per cent of total energy demand.

Abu Dhabi combines funds to form $250b swf

Abu Dhabi is combining two of its investment firms to create a wealth fund with assets of about $250 billion as the emirate moves ahead with consolidation of state-controlled companies.

The President, His Highness Sheikh Khalifa bin Zayed Al Nahyan has issued, in his capacity as the Ruler of Abu Dhabi, a law restructuring the Abu Dhabi Investment Council (ADIC), whereby it will become part of Mubadala Investment Company group.

“ADIC becoming part of the Mubadala Group is yet another step in Abu Dhabi’s efforts to accelerate the diversification of the UAE’s economy. With an investment vehicle of significant scale, world-class talent and wide geographical reach, we enhance the country’s competitive position,” said His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, Deputy Supreme Commander of the UAE Armed Forces, Chairman of the Abu Dhabi Executive Council and Chairman of the Mubadala Investment Company board of directors.

Under the new law, the Mubadala Investment Company board of directors will now become the board of directors for the Abu Dhabi Investment Council. The senior leadership of the ADIC will still manage the council. Eissa Mohammed Al Suwaidi will continue to lead the organisation as its chief executive officer, and will report to Mubadala group CEO and managing director Khaldoon Khalifa Al Mubarak.

“Bringing the Abu Dhabi Investment Council under the Mubadala Group is in line with Abu Dhabi’s efforts to create world-class investment vehicles of scale. ADIC has a strong history of investment, diversification and financial return, and will build on its record of creating value as part of the Mubadala Group, which is one of Abu Dhabi’s most respected and recognised global institutions,” said Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister, Minister of Presidential Affairs and Vice-Chairman of the Mubadala Investment Company board of directors.

Consolidation among Abu Dhabi institutions has been picking up. Mubadala completed a merger with International Petroleum Investment last year, making it the world’s 14th-largest fund with $125 billion of assets, according to the Sovereign Wealth Fund Institute. The ADIC has assets of $123 billion, according to the SWFI.

 

Egyptian developer unveils dh1.1 billion project in Dubailand

Continental Investments, a subsidiary of Egyptian real estate developer Landmark Sabbour, has launched the Dh1.1 billion Rukan project in Dubai. Its parent company aims to list on the Egyptian and Dubai bourses by the end of this year, its chairman said.

Ahmed Sabbour said the plan is to float 25 to 30 per cent of the company and 3 investments banks have been appointed to evaluate the company’s size.

“We will list our company on the Egyptian stock market before the end of the year. We are also studying the possibility of dual listing on the Dubai bourse. The company is still being evaluated by 3 advisory companies, so I can’t divulge the value to be raised through the IPO,” he said.

Commenting on the new project, Sabbour said a big portion of excavation work has already been completed and the foundation work will follow soon.

The first phase, which will make up around 50 per cent of the project, will be completed in Q3 2019 and 450 units will be delivered. The overall project consists of 900 units and will be completed in different phases.

Rukan is a combination of studios, 1, 2 and 3-bedroom apartments, townhouses and semi-attached twin villas.

“The price for a studio is Dh400,000, 1-bedroom apartment is Dh650,000, 2-bedroom is Dh800,000 and 3-bedroom will cost Dh1 million. We are targeting bank employees, millennials, Egyptians, Europeans and Emiratis,” Sabbour said on the sidelines of the project launch.

Making and losing money in commercial property

The sharp rise in US Treasury, British gilt, German Bund and other government bond yields is a disaster for real estate investment trusts (Reits) worldwide, including those in the GCC. In the $1.2 trillion US Reit market, prices of Reits investing in commercial property segments have fallen 20 to 30 per cent from their 2017 peaks. Take Equinix, the world’s leading data centre Reit, one of the world’s most profitable, high-growth property niches with such huge technological barriers to entry that only six firms dominate the market, a classic oligopolistic industry structure. Equinix shares have fallen 20 per cent from their recent highs. Shopping mall Reits have been gutted by lower mall traffic and Amazon’s death star impact on online retail economics. In other property niches, such as self-storage and nursing homes, oversupply has added to low liquidity and higher financing costs to pressure share prices.

A rise in the risk-free government bond yield increases the cost of borrowing to buy commercial property as well as lessens the present value of its future rental cash flows. Since most REIT’s cannot raise rental income from tenant leases at the same rate as the bond yields in capital markets, their profit margins compress. Bond yields will continue to rise as the Federal Reserve hikes its policy rate and shrinks its balance sheet amid an acceleration in synchronised global economic growth and higher US wage inflation.

Nakheel heads to property summit in Cannes

Nakheel is heading back to MIPIM, a property summit, for a third consecutive year to showcase real estate opportunities collectively worth more than $2.5 billion.

Nakheel is in Cannes, France, to encourage more international investors to become part of Dubai’s real estate sector.

The centrepiece of Nakheel’s marquee at MIPIM is a scale model of the Palm Jumeirah. PALM360, a twin-tower hotel and residential complex, is also on show. PALM360 comprises a Raffles hotel, Raffles-branded residences, including 16 penthouses each spanning 12,000 sqft and the world’s largest rooftop infinity pool.

Also featured is the Deira Islands waterfront city. Deira Islands is home to the Middle East’s biggest mall – Deira Mall – for which Nakheel awarded a construction contract for $1.1 billion last month.

Sanjay Manchanda, CEO of Nakheel, said: “Our large and diverse range of existing and upcoming projects is pivotal to further enhancing Dubai’s position as a global hub for living, trade, tourism, leisure – and investment. We are delighted to return to Cannes and honoured to represent Dubai for a third consecutive year.”

This is the cheapest place to rent apartments in UAE

Ajman is the cheapest place to rent an apartment in the UAE, three times cheaper than Dubai, reveals a new study.

In Ajman, average asking price to rent an apartment is Dh30 per square foot and Dh22 per sqft for villas, slightly less than Dh34 per sqft for apartments and Dh24 for villas in Sharjah. Average asking price for apartment rents in Ras Al Khaimah is Dh52 per sqft and Dh38 for villas.

According to Propertyfinder figures, Ajman also offers best rental yields for apartments of 9.6 per cent in the country, too. This is compared to 7.75 per cent in Ras Al Khaimah and 6.41 per cent in Sharjah. For villas, the best rental yield is offered in Ras Al Khaimah at 5.65 per cent followed by 5.55 per cent in Ajman and 3.7 per cent in Sharjah.

According to Propertyfinder trends, Ras Al Khaimah is the most expensive option of the Northern Emirates. But it gets points for being the least volatile, dropping in price by less than one per cent for an apartment or to rent a villa. The emirate is also setting itself up to draw crowds over the coming years, both of the tourist and residential variety.

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