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Unlimited VAT refunds for tourists visiting UAE

Tourists visiting the UAE have a reason for joy as the government has set no minimum limit for tourists’ VAT refund, which will come into effect from Sunday, November 18.

Gary Byrne, director of new markets and group strategic partnership at Planet, said the daily maximum VAT refund for tourists has been capped at Dh10,000 in cash. But if the refund claim exceeds that amount, then the funds will be transferred electronically to the tourist.

“If it is a cash refund, then the limit is Dh10,000 and if it is unlimited, then the tourist will be refunded by transferring the amount electronically to his/her account, debit or credit cards,” Byrne told on the sidelines of a Press conference in Dubai on Wednesday. Planet will manage the entire process for tourist VAT refunds on behalf of the UAE’s Federal Tax Authority (FTA).

Byrne revealed that the number of companies registering for the tourist VAT refund scheme are expected to more than double from currently 4,500-plus to 6,000 by the end of 2018 and 10,000 by early next year.

The registered companies come from all sectors, mainly electronics, gold traders, general traders, souks and others, he added.

“Most of the malls and retail groups have been engaged with us and are ready for VAT refund. We are engaging on a multi-level to have everyone on board. Yes, 100 per cent of major malls and retail groups are ready,” he said.

Byrne expects most of the VAT refund from tourists will be from purchases of gold jewellery, electronics and luxury goods.

The total value of tax inclusive purchases from the retailer must amount to a minimum of Dh250 to be eligible for a refund. Tourists will not receive the full 5 per cent VAT because the refund is limited to 85 per cent of the VAT amount paid to the retailer, less a one-off administrative fee of Dh4.80 per tax-free form.

Khalid Ali Al Bustani, director-general of the FTA, said retailers must pass credit check and continuously settle tax payments and submit VAT returns to be eligible for the refunds.

“If they’ll stop paying taxes and tax returns in future, the FTA can terminate them from the scheme… and if tourists are leaving after 90 days, they won’t be getting a refund,” he said.

Rob Dalla Costa, VAT director at KPMG, said the refunds are likely to have a positive impact on the psychology of tourists looking to shop in the UAE.

“Refunds will cover a broad range of goods sought by tourists, and are in line with practices in other countries… to date, thousands of retailers have registered to take advantage of the scheme. This is yet another important marketing initiative retailers can use to boost sales and ensure that the UAE remains an attractive shopping destination,” Costa said.

Byrne said this scheme will certainly play a key role in boosting inbound tourism to Dubai and the UAE.

“It is a very positive move. We have witnessed it in a number of countries that we operate in that the tourism and inbound tourism sector is very welcoming of such schemes. The government has had the foresight to adopt such scheme and we see it as very positive for Dubai and UAE tourism industry,” he said.

Damac’s booked sales and revenues dip, profits halve

Property developer Damac’s net profits for the first 9 months of 2018 halved to Dh1.1 billion as compared to Dh2.3 billion for the same period last year as booked sales and revenues declined.

Dubai-based developer’s booked sales for 9 months fell 46.6 per cent to Dh3.2 billion as against Dh6 billion for the same period last year. Its revenues plunged from Dh5.8 billion to Dh5.2 billion during the comparative period.

Earnings per share (EPS) was reported at Dh0.18 per share for the first nine months of 2018 as compared to Dh0.38 for the same period last year.

“Our medium to long term outlook remains optimistic, as we push forward with our landmark developments at full force. By offering a strong value proposition that appeals to a broad spectrum of buyers, including a growing number of investors making Dubai their second home, we are maintaining demand for our unique projects,” said Hussain Sajwani, chairman, Damac Properties.

Dubai’s property market has been going through slowdown cycle with both rentals and prices declining. According to Q3 report issued by local consulting firm ValuStrat, property prices in Dubai are 22.3 per cent cheaper since the peak of mid-2014. Although residential capital values dipped by nine per cent in third quarter of 2018, the decline has slowed to 2.9 per cent since the previous quarter, it said.

Jason Hayes, founder and CEO, Luxury Property, recently said that property prices are at the bottom of the cycle. During the first nine months of 2018, Damac doubled the number of deliveries to 3,800 units, compared to 1,923 units in the same period in the previous year.

Damac’s total assets stood at Dh25 billion while gross debt stood at Dh4.9 billion as at September 30, 2018 compared to Dh5.4 billion as at June 30, 2018. Its gross profits fell from Dh2.9 billion to Dh1.9 billion during comparative period, a decline of 34.4 per cent.

As of 30 September 2018, the developer’s cash and bank balances stood at Dh6.2 billion, while development properties stood at Dh 8.9 billion, total shareholders’ equity stood at Dh 14.1 billion. Its shares fell half a per cent on Wednesday to Dh2.05 on the Dubai Financial Market.

UAE executive nominated to chair global agri-business alliance

Dubai – The Global Agri-business Alliance (GAA), a CEO-led private sector global initiative formed to tackle social, environmental and sustainability challenges to help farmers worldwide, has nominated Gaurav Dhawan, executive chairman of the UAE-based $2 billion Phoenix Group as its chairperson for 2019.

Dhawan was chosen to steward the Geneva-based GAA at its annual CEO Council meeting held in Singapore.

On taking up the new role, Dhawan said: “Agribusinesses have a crucial role to play in embedding sustainable policies and practices to safeguard our shared resources and strengthen rural livelihoods. As a global agribusiness company, Phoenix is committed to adopting climate-smart agriculture and in finding practical solutions to reduce the emission of greenhouse gases.”

He said that by working collectively with other stakeholders and peers, Phoenix is determined to take the lead on sustainability in the agri-business sector.

“The GAA is a key convener and platform for action and engagement and I am honored to take on the role of Chair for 2019. I look forward to working with all the members to strengthen our voice and positive contribution to achieving the Sustainable Development Goals,” he said.

UAE must end subsidy to avoid ‘slipping into hole’

UAE Minister of Energy and Industry Suhail bin Mohammed Faraj Faris Al Mazrouei said the country is fast shifting to renewables and should end subsidy to avoid slipping into a hole. He noted that GCC interconnected grid can be expanded to include more countries as power trading is emerging as a profitable market.

“Our energy strategy for 2050 is to rely 50 per cent on fossil fuels and 50 per cent on non-fossil fuel – the green forms of energy. Solar will be 44 per cent of our energy installed capacity of electricity by 2050. The total installed capacity will be around 44GW,” AI Mazrouei said during a panel discussion held as part of at the Abu Dhabi International Petroleum Exhibition and Conference (Adipec) on Tuesday.

“The pace of growth for us in the renewable energy in the UAE is going to be very fast.”

The minister said that pricing will be an important factor.

“At the end of the day, different forms of energy are competing on price to consumers. Price of generation should be competitive for the utility company to make money.”

The minister said the crucial step forward is a shift from subsidised system to a non-subsidised one in energy sector.

“Without that we are in a hole and that hole is going to get deeper and deeper as the population grows. So we are really solving a big issue for the governments in the Middle East. This is the essence of everything that we are doing. And we are sharpening the pencils and pushing the developers to reduce costs as we move.”

The minister noted that the UAE will be self-sufficient in gas but for that subsidy has to end.

“The Supreme Petroleum Council in Abu Dhabi has announced that the UAE will be self-sufficient when it comes to gas. And that cannot be done if you are subsidised. We will do that without subsidy. We are depending on technology and larger products that we will launch to break the record year on year and achieve that target.”

AI Mazrouei also revealed plans to expand the GCC interconnected grid to include other countries.

“Connectivity with rest of neighbours is important. We are blessed today with GCC interconnected grid. We can move electricity from Oman to Kuwait in range of 2,000MW. But for security and supply reason, we are using a limited 1,000MW. More trade has been done since past three years. That gives us a hope of creating market for power trading in the GCC. We are thinking to interconnect with Jordan, Iraq and Egypt.”

However, he mooted need for reforms in the sector. “Price is important. We need to be competitive if we want to develop this sector. Some reforms need to happen to tariff down the road. We have consumers who are using 20 to 30 times the average. We need to encourage slab system and efficiency improvement. Every time we tap into a challenge, we discover an opportunity,” he added.

Dubai airport to handle over 90 million passengers

Dubai International Airport is expected to handle over 90 million passengers this year, said Paul Griffiths, chief executive of Dubai Airports at an aviation industry conference on Tuesday.

The airport, the hub for Emirates and flydubai, welcomed 67.5 million passengers in first 9 months of 2018. Passengers using the airport rose 5.5 per cent to 88.2 million in 2017.

Saj Ahmad, an analyst at London’s StrategicAero Research, said Dubai International’s continued investment and growth ensures that it will remain the international gateway of choice as over 90 million passengers transit through the airport this year.

“The introduction of flights from flydubai into Terminal 3 alongside Emirates will be a key catalyst into bolstering traffic numbers and with a focus on next years runway resurfacing work, the shift of some flights to Dubai World Central will provide a much needed re-focus on investment and development there to help the city cope with expanding traffic,” Ahmad told.

With the north-south nexus for travel gravitating around Dubai, he said that Emirates’ organic growth means that Dubai International is well positioned to maintain its status as the worlds busiest international airport. “Even with next years runway works which will temper demand and passenger numbers, the airport is still on track to reach approximately 100 million passengers by 2020 or 2021,” he said.

Emirates earnings are being squeezed by higher oil prices, a strong dollar, and instability in the global economy, the airline’s chief commercial officer said on Tuesday. The warning came ahead of Emirates’ half-year financial results for the period ending September 30, which will be released on Thursday.

“The profit will be badly hit by the fuel,” Thierry Antinori said at an aviation conference in Dubai, adding that the airline’s fuel costs had risen by 40 per cent. “It’s difficult to manage.”

The airline’s profit more than doubled to Dh2.8 billion ($762 million) last year. But this year concerns about the global economy and political instability are hurting profit, Antinori said.

“It’s not been a walk in the park,” he said of the first-half.

The airline is optimistic despite pressure on margins; passengers numbers rose in the first half and its cargo unit is “excelling”, Antinori said.

“We see the glass half-full. There is always opportunity.” Chief Executive of sister airline flydubai Ghaith Al Ghaith issued a similar warning, telling the conference higher oil prices had made it a tough year.

 

Air Arabia profits hit by high oil, currency volatility

Low-cost carrier Air Arabia on Tuesday said its 9-month profits fell 17 per cent to Dh530 million, hit by high oil prices and currency devaluation in key markets.

Sharjah-based airline said its 9-month turnover grew 8 per cent to Dh3 billion compared to Dh2.8 billion for the same period last year. More than 6.6 million passenger flew with the low-cost pioneer during the nine months of 2018 while the average seat load factor – or passengers carried as a percentage of available seats – for the same period stood at an impressive 80 per cent.

Net profit in the third quarter of 2018 reached Dh300 million, 20 per cent lower than the corresponding 2017 figure. More than 2.4 million passengers were served in the third quarter of 2018, a 5 per cent increase on the corresponding period of 2017, while the average seat load factor stood at an impressive 81 per cent.

Revenue for the third quarter ending September 30, 2018, stood at Dh1.28 billion, a 10 per cent increase compared with Dh1.16 billion in the same period of 2017.

“Supported by strong revenue figures and passenger demand, Air Arabia’s net profit for the third quarter and year to date remained strong despite profit margins being impacted by the sharp rise in fuel price and the currency devaluation witnessed in several key travel markets,” said Sheikh Abdullah bin Mohamed Al Thani, chairman, Air Arabia.

He said global economic outlook remains under renewed pressure and airlines worldwide have been challenged by pressured yield margins and increase in cost structure while political and economic tensions continue to drive currency and oil price volatility.”We believe that such impactful challenges are temporary and the long term outlook for the low cost travel in the region remains fundamentally strong”.

Adel Ali, chief executive officer, Air Arabia, told in an interview last month that the airline aims to place an order for around 100 aircraft next year and is negotiating with different plane manufacturers including Airbus, Boeing and Embraer.

“We are just under 60 planes and by 2025 we will be around 100 aircraft, depending on how and what events unfold in the world,” Ali had said during the interview.

Air Arabia’s shares on Tuesday fell in line with overall decline in the equity markets, dropping 1.6 per cent to Dh0.925.

Nakheel profits drop as handovers halve in 9 months

Nakheel’s net profit for the first 9 months of 2018 fell 3.5 per cent to Dh3.86 billion as against Dh4 billion for the same period last year as the number of deliveries nearly halved.

The Property developer said its year-to-date property handovers totalled 588 units as compared to 1,200 handovers in the first 9 months of 2017.

“While residential development remains its core business, the focus on expanding its hospitality, retail and leasing divisions continues. Annual revenue from these sectors is now Dh2.6 billion – almost 40 per cent of the total – and continues to grow as new projects are delivered,” it said in a statement on Wednesday.

So far this year, Nakheel has announced contracts worth Dh7 billion for a diverse range of infrastructure, residential, retail and hospitality projects, including Deira Mall, Nad Al Sheba Mall, the main bridge connecting Deira Islands and mainland Dubai, the RIU and Centara joint venture resorts at Deira Islands, PALM360, and the newly launched Dragon Towers.

Last month, Nakheel announced two new residential projects – Dragon Towers and Jumeirah Park Homes – for sale, adding a significant number of units to its development pipeline, which will be reflected in future profit figures as the projects are delivered.

The Dh713 million Dragon Towers broke ground last month and is due for completion in 2021, while construction of 147 four-bedroom homes with private pools at the high-end Jumeirah Park community is due to begin in early 2019.

Nakheel will also showcase a Dh58 billion worth of real estate projects at the Dubai Property Show at London Olympia from November 16 to 18.

Meanwhile Nakheel is heading back to Britain to showcase a plethora of real estate projects – collectively worth Dh58 billion – at the Dubai Property Show at London Olympia.

More than 29,000 British citizens have invested Dh88 billion in Dubai property, according to the Dubai Land Department, with Nakheel’s own customer portfolio including 2,530 Britons who have spent Dh5 billion on its properties. Nakheel exhibited at the first DPS London in 2016, and is back two years later for the second event with a new and exciting range of projects and attractive payment schemes, including low deposits, post-handover payments plans of up to seven years and five years’ free service charges. Prices start at Dh449,000.

Aqil Kazim, CCO at Nakheel, said: “The Dubai Property Show is a golden opportunity to showcase our projects to an audience that is already our third largest group of investors outside the Middle East. The city’s world-famous projects and enviable lifestyle are already well-known among UK citizens, with many calling it their second home, but we are boosting British investment and strengthening Dubai’s relationship with this part of the world even more through this show and other initiatives. Dubai is a magnet for expatriates to live and work in the emirate. These people need accommodation, creating a huge demand for rental properties, which offer impressive investment returns of six per cent and over.”

Nakheel’s arrival in London comes hot on the heels of the release of Dubai Government’s new tourism targets: 21 to 23 million annual visitors to the emirate by 2022 and 25 million by 2025. Dubai is already the fourth most visited city in the world and home to the world’s busiest airport with 88.2 million international passengers last year. The emirate’s population is expected to increase from 3.2 million today to more than five million by 2030.

“Innovative thinking and bold ambition have turned Dubai into one of the world’s most successful, fastest-growing cities, with Nakheel’s ground-breaking real estate projects playing a key role in the city’s past, present and future,” Kazim said.

Adnoc invests dh5.1b to boost bu hasa capacity

Abu Dhabi National Oil Company (Adnoc) will invest Dh5.1 billion to upgrade and expand its Bu Hasa field, which will increase crude production to 650,000 bpd as part of its D486 billion investment plan to massively expand its oil capacity and become first self-sufficient and then exporter of gas in the coming years.

An engineering, procurement and construction contract has been awarded to Tecnicas Reunidas by Adnoc’s subsidiary, Adnoc Onshore, which operates the field. The works are expected to take 39 months to complete and the upgrade will increase oil production capacity from 550,000 bpd to 650,000 bpd by the end of 2020.

The award of the contract follows the recent endorsement by Abu Dhabi’s Supreme Petroleum Council of Adnoc’s plans to increase its crude oil production capacity to four million bpd by 2020, and 5 million bpd by 2030. Yasser Saeed Al Mazrouei, CEO of Adnoc Onshore, and Ricardo Sanchez Galindo, upstream business development director at Tecnicas Reunidas, signed the deal.

As part of its Dh486 billion five-year investment plan, Adnoc will increase its oil production from existing 3.4 million bpd to four million barrels per day by 2020 and five million bpd by 2030.

In May 2018, Adnoc announced a Dh165 billion downstream investment plan to triple its production of petrochemicals to 14.4 million tonnes per annum by 2025.

“We are on track to meet our production capacity target of 3.5 million barrels of oil per day by the end of this year – to four million barrels per day by the end of 2020 – and this contract is yet another sign of our clear commitment to making smart investments to maximise the value of Abu Dhabi’s oil resources and drive significant in-country value, in line with our wise leadership’s directives,” said Dr Sultan bin Ahmad sultan Al Jaber, UAE Minister of State and Adnoc Group CEO.

The asset upgrade and expansion include facilities, new pipeline networks and production hubs, as well as the conversion of three trains in a central degassing station and other related facilities.

In addition to the incremental oil production from Bu Hasa, the project will streamline water handling, implement a second gas lift recovery phase and improve the overall production efficiency while reducing the number of inactive wells.

Adnoc’s upstream director Abdulmunim Al Kindy said Tecnicas Reunidas has been selected after an extremely competitive tendering process, ensuring they will contribute in excess of 60 per cent of the total contract as in-country value, which will amount to over Dh3 billion of value add to the UAE economy.

Damac’s booked sales and revenues dip, profits halve

Property developer Damac’s net profits for the first 9 months of 2018 halved to Dh1.1 billion as compared to Dh2.3 billion for the same period last year as booked sales and revenues declined.

Dubai-based developer’s booked sales for 9 months fell 46.6 per cent to Dh3.2 billion as against Dh6 billion for the same period last year. Its revenues plunged from Dh5.8 billion to Dh5.2 billion during the comparative period.

Earnings per share (EPS) was reported at Dh0.18 per share for the first nine months of 2018 as compared to Dh0.38 for the same period last year.

“Our medium to long term outlook remains optimistic, as we push forward with our landmark developments at full force. By offering a strong value proposition that appeals to a broad spectrum of buyers, including a growing number of investors making Dubai their second home, we are maintaining demand for our unique projects,” said Hussain Sajwani, chairman, Damac Properties.

Dubai’s property market has been going through slowdown cycle with both rentals and prices declining. According to Q3 report issued by local consulting firm ValuStrat, property prices in Dubai are 22.3 per cent cheaper since the peak of mid-2014. Although residential capital values dipped by nine per cent in third quarter of 2018, the decline has slowed to 2.9 per cent since the previous quarter, it said.

Jason Hayes, founder and CEO, Luxury Property, recently said that property prices are at the bottom of the cycle. During the first nine months of 2018, Damac doubled the number of deliveries to 3,800 units, compared to 1,923 units in the same period in the previous year.

Damac’s total assets stood at Dh25 billion while gross debt stood at Dh4.9 billion as at September 30, 2018 compared to Dh5.4 billion as at June 30, 2018. Its gross profits fell from Dh2.9 billion to Dh1.9 billion during comparative period, a decline of 34.4 per cent.

As of 30 September 2018, the developer’s cash and bank balances stood at Dh6.2 billion, while development properties stood at Dh 8.9 billion, total shareholders’ equity stood at Dh 14.1 billion. Its shares fell half a per cent on Wednesday to Dh2.05 on the Dubai Financial Market.

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