11 novembre 2008 Par La Rando

Dubai bourse leads Gulf stocks slide

Stock markets in the oil-rich Gulf states continued to bleed on Tuesday, led by the Dubai bourse, as investors remained jittery over the pessimistic global economic outlook. Investors are becoming increasingly concerned over the future of Gulf economies as the price of oil, the main source of income, has dropped sharply coupled with reports of heavy losses by Gulf investments abroad. That is bound to force governments to cut public spending, the main driver of economic activities in the six-nation Gulf Co-operation Council (GCC), which pumps just under a fifth of the world’s crude supplies. The Dubai Financial Market (DFM) dived nearly 7.3 per cent to 2,343.15 points at close, a four-year low, after shedding more than nine per cent in the previous two days. The DFM Index was again dragged down by the market leader, property giant Emaar, which dipped a massive 9.9 per cent to a new record low of Dh3.74. Emaar, the largest publicly traded real estate firm in the Middle East with projects worth $100 billion (Dh367bn) underway, has so far dropped more than 75 per cent this year. The firm, in which the government of Dubai holds a 30-per cent stake, has lost 30 per cent in the past two weeks alone and more than 60 per cent in the past three months. Its price is way under its book value. The real estate sector, the largest in the DFM, shed 9.8 per cent and telecoms lost 9.9 per cent. However, in an upbeat assessment, Emaar chairman Mohammed Alabbar told a World Economic Forum meeting in Dubai on Monday that « domestic demand for real estate continues to outstrip supply, and it will be so for several years ». Also in the UAE, the Abu Dhabi Securities Exchange slumped 4.9 per cent to 2,975.28 points, below the key 3,000-point mark, with the leading real estate sector shedding 8.8 per cent. Banks were down four per cent and energy sank 7.6 per cent. The Saudi market, the largest in the Arab world, was trading down almost five per cent to below 5,500 points at mid-day. The Tadawul All-Shares Index (TASI) was dragged down by the leading petrochemicals sector, which shed 6.2 per cent, and banks, which dropped 5.2 per cent. The market leader, petrochemicals giant SABIC, was down 5.7 per cent after its chairman Mohammed Al Madi said on Monday that prices of its products lost 50 per cent in the past six weeks, affecting the fourth quarter results. SABIC has lost about 35 per cent in the past two weeks. Kuwait Stock Exchange, the second biggest Arab bourse, finished down 2.16 per cent at 9,056.10 points for the first time since August 2005. The leading banking sector was down three per cent and investment firms sank 3.5 per cent. The KSE Index has slumped more than 42 per cent since June 24 when it reached its peak of 15,654 points. The market failed to respond to statements by the Kuwait central bank, which said a crisis at the Gulf Bank, troubled by large losses in derivatives deals, was totally under control. Doha Securities Market closed down 6.25 per cent at 6,342.48 points, its lowest level in more than 20 months. It has lost 14.3 per cent in the past three days. The smaller Muscat Securities Market, the only Gulf bourse to close on Monday slightly up, ended down two per cent while the Bahrain Stock Exchange dropped 2.74 per cent. AFP

11 novembre 2008 Par La Rando

Home finance market feels impact of crisis

The mortgage volume in the UAE has begun to take a dip due to slowing real estate activity and tightening liquidity, say experts. The home finance market is feeling the impact of the rising cost of borrowing and a fall in the appetite for off-plan properties, the GCC Home Finance Summit in Dubai was told. Tighter regulatory mechanisms were also reducing demand for home loans. « The forecast of lower economic growth and the tighter credit market will impact real estate supply and demand, » said Sundar Parthasarathy, Senior Vice-President and Head of Retail Assets at Abu Dhabi Commercial Banks (ADCB). « Eibor has appreciated significantly over Libor, reflecting the increasing cost of financing in the UAE. « The high cost of lending has made a number of banks planning to launch home finance programmes to delay their plans. » He said the tightening liquidity has pushed home finance providers to increase their mortgage rates and lower loan-to-value (LTV) ratios. ADCB has revised its mortgage rates from around 7.5 per cent to 9.5 per cent and has lowered its LTV ratio to 70 per cent from about 90 per cent. The need to find a 30 per cent deposit is putting substantial pressure on customers, he said, making it harder for them to obtain a home loan. « The business has come down and everyone is seeing the same scenario, » said Parthasarathy. « ADCB’s mortgage volume last month halved to Dh200 million from the usual monthly figure of Dh400m to Dh450m. « Mortgage applications went down from between 35 and 45 to 15 applications a month. Before the liquidity issue erupted interest rates in the UAE were more expensive than those in the US. « A few months ago UAE rates averaged between 7.5 and eight per cent, regardless of the tenor of the loan. That was 2.4 per cent higher than the US’ 5.6 per cent rate for a 30-year mortgage and 5.2 per cent for a 15-year loan. » Tamweel and Amlak have reduced their LTVs from 90 per cent to 75 per cent and 65 per cent respectively. HSBC’s home finance department reduced its mortgage LTVs from 85 per cent to 60 per cent on apartments and 70 per cent on villas. Anecdotal evidence suggests that the spread between mortgage providers’ property valuations and actual property prices has widened significantly. This means that loan-to-price ratios are increasingly falling below LTVs, putting further pressure on demand. Varun Sood, CEO, Home Finance, Tamweel, admitted that global conditions had put the sector under threat. « In the past there has been access to international securitisation and domestic funding. Now the domestic debt market has tightened up and the international debt and securitisation market has completely disappeared, » Sood said. « The volatility in the cost of construction materials such as steel has made pricing difficult. Then you have the increasing constraints from the regulatory body – this is good but it has seen the attraction of off-plan sales decline, » he said. Karen Remo-Listana business24-7.ae

11 novembre 2008 Par La Rando

Damac Properties lays off 200 employees

Sliding property sales and severe slowdown in the global real estate market have forced Damac Properties to slash 200 jobs at its Dubai office, The National reported. « The job cuts have been made across divisions including sales, marketing, recruitment and administration, » wrote the Abu Dhabi-based newspaper. Employees were given three months’ severance pay and were also issued a No Objection Certificate (NOC), to allow them to look for new jobs in Dubai, according to the newspaper. The company’s chief executive, Peter Riddoch, said the decision was ‘inevitable’. “We regret that we have to lose colleagues but we believe that taking an early decision was the right thing to do,” quoted the newspaper. According to the company’s senior vice president of communications, Niall McLoughlin, the number of jobs lost represent just 2.5 per cent of Damac’s total workforce, the daily reported. “Despite the cutbacks, Damac, which expects to deliver 7,100 units to home buyers in 2009 and 2010, remains hopeful that the Dubai property market will fend off the challenges of a global economic meltdown.” business24-7.ae

11 novembre 2008 Par La Rando

Panel to oversee realty projects

The Dubai Government has formed a high-level committee that will oversee and decide on the launch of future real estate projects in the emirate in view of the global economic slowdown, a top government official said yesterday. The committee, which was formed in October this year, consists of Dubai-based master developers and a few private developers, Nasser Al Shaikh, Director-General of the Dubai Department of Finance, told Emirates Business. « For the first time, a committee has been formed to oversee the real estate development in Dubai and help synchronise projects of various developers with the intention of securing future supply. » The panel will not be looking at projects that have already been launched, Al Shaikh said, adding, « no projects will be called off, and the committee will only decide on anything to be launched in future. « Master developers control 70 per cent of the supply in Dubai’s property market and if all these parties work together then we can strike a balance between the future demand and supply. However, we are not trying to influence or control supply in the market. » He said the committee will not govern private developers and they can continue with their projects. Perceptions that the UAE realty is set for a correction have strengthened recently. Prices are expected to peak in the first half of 2009, but a decline is expected in the second half of the next year. However, developers said analysts have failed to interpret and take note of the sound economic fundamentals of the emirate. Al Shaikh reiterated that infrastructure projects will continue and only the yet-to-be launched real estate developments will be under scrutiny of the committee. Ruling out government plans to inject any funds into the real estate sector, he said: « All the master developers have sufficient cash flow and they do not require funding from the government. » A draft law to settle property disputes is also being drawn up. Judge Abdul Qader Mousa, Head of Dubai property court told our sister publication, Al Emarat Al Youm, that the new law will replace the federal civil procedures law. Parag Deulgaonkar

9 novembre 2008 Par La Rando

Bahrain property sector is booming says Capivest

MANAMA: Bahrain’s real estate is a growth market, even in this time of global financial turmoil, says a leading Islamic investment institution. With the lowest rate of inflation in the GCC and a real estate market by some estimates worth more than $5 billion, Bahrain’s property sector is seen by many as a market with huge potential. Capivest, one of the region’s emerging Islamic investment institutions, also unveiled a new luxury home project in Bahrain. Capivest launched the Saar Central, a brand new modern and luxurious villa community for the kingdom. The exclusive development will consist of 82 upscale villas built on an area of land measuring more than 65,000sq/m, offering a location advantage of being close to Manama and also to King Fahad Causeway. Saar Central is managed by Sakan Development Company, a real estate development company established by Capivest. The « limited edition » development is in the Saar region of Bahrain, a centrally located area that is home to some of Bahrain’s most prominent suburban neighbourhoods, said Capivest chief executive officer Nabil Hadi. « Capivest has long been committed to the growth and prosperity of the kingdom of Bahrain, and today’s announcement signifies a renewed effort to contribute to this country’s booming economy, » he said. Mr Hadi pointed out that Capivest’s overall growth trajectory involves the creation of a distinct real estate portfolio comprising high-quality projects, which are derived from a genuine understanding of the needs of different buyers. The spacious villas are designed specifically for luxurious family living, and have been constructed to take into account a family’s need for both privacy and the most modern amenities available. To maintain high quality standards of construction, Baker Wilkins & Smith was assigned as quantity surveyor for Saar Central, and Modern Architect was brought onboard from the beginning of the project as the engineering consultant to monitor construction developments. ‘The team of Bahraini architects who designed Saar Central villas captured the spirit and essence of Arab architecture in combination with prevailing modern undertones by incorporating some traditional elements such as arches, adding space and allowing for maximum light admission,’ Mr Hadi said. This unique combination of old and new distinguishes Saar Central villas among other existing developments in the market. « In turbulent economic times such as these, Capivest remains devoted to finding investment opportunities that will enhance the position of our key stakeholders, while creating a diverse investment portfolio that is both dynamic and robust, » he said. « We see the creation of Saar Central as an integral part of that philosophy. Saar Central is a unique real estate development in line with Capivest’s strategy to invest in a wide variety of growing sectors and industries, and a part of our efforts to improve both Bahrain’s and the wider region’s economy, » he said. gulf-daily-news

9 novembre 2008 Par La Rando

UAE economy strong enough to face global financial crisis

Following the decisions taken by the government in response to the international financial crisis, liquidity is available in the UAE, says Economy Minister Sultan bin Saeed Al Mansouri. And the economy is strong enough to deal with the repercussions of the global meltdown. « The UAE economy will enjoy a good growth rate but 2009 will be a real test for the global and UAE economies, » Al Mansouri told Emirates Business at the International Talent Conference organised by etisalat. « There is full co-ordination between the government, financial institutions and the private sector to alleviate the consequences of the crisis. » Mohammed Abdul Aziz Al Shehi, Under-Secretary at the Ministry, said the UAE was the country least affected by the financial crisis. The decisions taken by the government during the crisis in relation to the guarantee of deposits and the provision of Dh120 billion for the banking sector confirmed the strength of the UAE economy. « There is no a liquidity problem and projects are being executed without delay according to schedules that were set previously, » he said. « The evidence of that is the banks’ withdrawal of 15 per cent of the liquidity provided by the Central Bank. « The UAE economy is projected to achieve a growth rate of six per cent in 2008 compared with 5.8 per cent in 2007. Inflation is set to halve due to the drop in the price of oil and the increase in the value of the dollar by 20 per cent to 25 per cent against other currencies. » Al Shehi said the prices of some commodities, particularly food stuff, has started to come down in local markets. « A memorandum of understanding has been signed by the ministry and economic departments in Abu Dhabi and Dubai to intensify control of markets and curb manipulators, » he added. Etisalat Chief Operating Officer Ahmed Abdulkarim Julfar said the international crisis would affect all countries and institutions without exception. But despite the crisis etisalat remains determined to become one of the world’s top 10 firms. « Etisalat is in a good financial situation, » he added. « It will be slightly affected by the downturn. But the crisis will be an opportunity for etisalat to make acquisitions and enter new markets. » Abdel Hai Mohamad business24-7

9 novembre 2008 Par La Rando

EmiratesNBD plans acquisitions and expansion

EmiratesNBD, the Gulf’s largest lender by assets, said yesterday it was ready to acquire any troubled rivals and was seeking to expand in Saudi Arabia and enter markets ranging from India to China and beyond. « That’s a role we are ready to take on. The question is how to go about it. It could be a cash transaction or a no-cash transaction, » Sanjay Uppal, Chief Financial Officer for Emirates NBD, told the Reuters Middle East Investment Summit. « We are ready to consider the right targets for the right prices, » he said. Uppal said EmiratesNBD was not in any specific acquisition talks but saw a need for consolidation among UAE banks. Banks across the world’s top oil exporting region have been squeezed by the global financial crisis, which has hampered their ability to finance multi-billion-dollar infrastructure and industry projects launched during a six-year oil-fuelled boom. Even before the turmoil raised the pressure for financial consolidation around the world, EmiratesNBD was seeking to expand its presence in Gulf markets and planned to have operations from North Africa, to Turkey, to South Asia. Uppal said talks to buy the Royal Bank of Scotland’s stake in Saudi Hollandi Bank had gone cold, but it was still interested and keen to expand in the Gulf’s most populous country. EmiratesNBD already has one branch in the Saudi capital and is keen to expand to some 10 branches but is waiting for licences. « In general, we have not seen a lot of expansion of presence of GCC banks into other GCC countries, » he said, referring to the Gulf Co-operation Council. « We are the only UAE bank with a branch in Saudi. This does give us opportunities… Business has done well to the extent it can but we would like to have more branches in Saudi. » EmiratesNBD has applied for a banking licence in India but had no time frame for the launch of operations there, he said. It expects to open a branch in Singapore in the second quarter of 2009. The lender was also in the process of applying to open a representative office in China, as a first step to acquiring a banking licence. Uppal said the Asian focus was propelled by the growing markets there and by solid ties between India and the UAE, home to a large population of Indian expatriates and businesses. « Our initial focus in these markets originates from the increased level of activity between this region and those countries. Having a presence there will give us an advantage, » Uppal said. « We are not going to focus on competing with players that have a solid presence there. » Reuters

9 novembre 2008 Par La Rando

Dubai summit can ‘pave the way for a new era of progress’

Electoral systems around the world need to be reformed for better global governance – and new powers need to be integrated into the international decision-making framework, the World Economic Forum heard yesterday. Klaus Schwab, founder and executive chairman of the WEF, said real progress in the world’s governance system needed participation of as many global powers as possible. The world was witnessing a transformation, he said, which would affect the future and the coming generations. « There are transformational changes and we see them already in the world. We have to really re-think about the notion of capitalism and make it more integrated and more human, » he said. « We have to re-think about global governance and global co-operation. We have to re-think about the relation between governments and businesses as well as the relation between the rich and real economies. « Everybody is talking about new powers such as China and India, but the financial crisis showed the world that it must look at other places as well, including the Middle East and the GCC region, » Schwab said. The summit is a gathering of 700 of the world’s most innovative and relevant minds, including leaders from academia, business, government and civil society from around the world. It provides a platform to share ideas and collaboratively address some of the key issues on the global agenda to lay out solutions to some of the most pressing issues. The three main issues on the agenda at the summit are financial instability, food security and energy supplies. At the opening press conference, Schwab was joined by Mohamed Alabbar, Member of the Dubai Executive Council and Chairman of Emaar Properties and co-chairman of the summit. Alabbar said the gathering was a clear declaration to the world from the UAE and Dubai « that we are committed participants on the international arena… and we have sincere intention to launch and support practical solutions to overcome world challenges. » Alabbar said that despite the difficult circumstances lived by the region, Dubai remains to be the ray of hope for this region and the world as well. « The Dubai summit can pave the way for a new era of global socio-economic progress, » he said. « We were preparing for the summit for 11 months. Its timing has become critical due to the recent dramatic events in the world economy. « We saw the crisis originate in the developed world and have a significant impact on the developing world. This added more importance to the discussions about global challenges and integration during this critical time. » Al Abbar added that Dubai was the perfect place for such a historic meeting. « As a city, we are global in character and have always been forward-looking. » Mohmad Al Kady business24-7

9 novembre 2008 Par La Rando

Global business leaders warn of pain ahead: Dubai WEF summit

Business leaders gathered in Dubai on Saturday have warned the world to brace for even more painful economic times ahead, but said the victory of US President-elect Barack Obama offers hope for fresh leadership at a crucial time for the global economy. The financial crisis that began with bad US home loans is now moving from the banking sector into wide swaths of the global economy, costing millions of jobs, forcing working families to cut back and driving once-mighty companies into bankruptcy. The US government said on Friday the country’s unemployment rate shot to 6.5 per cent, its highest level in 14 years. Jobless rates are rising elsewhere too: The UN labor agency said last month that world unemployment will hit 210 million people by the end of next year, its highest rate in the past decade. How deeply the global downturn will cut remains uncertain, participants at a regional meeting of the World Economic Forum in Dubai said on Saturday. While they called for calm, they also acknowledged there is cause for concern. “We will be telling our children and our grandchildren about this crisis,” said Mohamed El-Erian, co-chief executive of Pacific Investment Management Co., the Newport Beach, California-based investment firm better known as PIMCO. “You cannot turn off the fuel of this crisis easily.” Consumers in the US for example, are facing the triple whammy of tougher access to credit, rising joblessness and falling home and investment values, El-Erian said. Cleaning up the fallout will take both time and sacrifice, participants said. “It’s going to be really tough,” El-Erian said. “You now have to save even more for retirement. This is a tough time, and it’s important that expectations be formulated accordingly.” The need to recalibrate spending and expectations was a theme sounded by others as well. Howard Davies, director of the London School of Economics and Political Science, said residents of countries like the US and the UK have no alternative but to increase savings and reduce household debt. And, he said, homeowners and individual investors need to accept that a big chunk of the nest eggs they had amassed on paper is likely gone forever. “People are going to have to recognise the wealth hit and be prepared to move on from that,” he said. The economic slump is not just affecting Western countries. Soud Ba’alawy, executive chairman of investment firm Dubai Group, said “each and every business is going to be challenged”. He predicted annual growth in the booming Gulf could slow to as low as 2 to 3 per cent, from 6 to 8 per cent previously. Business leaders were hopeful, though, that the future Obama administration will bring a renewed willingness by the world’s largest single-nation economy to work with other countries to fix the global economy. “You now have a golden opportunity for leadership at a time when leadership is needed both domestically and internationally,” El-Erian said. The three-day event, a forerunner to the World Economic Forum in Davos in January 2009, has attracted more than 700 economic and academic experts. AP

4 novembre 2008 Par La Rando

Oman joins bailout bandwagon by allocating $2 billion

Oman’s central bank yesterday jumped onto the bailout bandwagon allocating about $2 billion (Dh7.34bn) to lend to local banks and ease credit crunch in the country’s financial sector, its governor said yesterday. « We encourage banks to acquire the liquidity from each other or from foreign banks but in case they fail to acquire the liquidity we are willing to lend to them » Hamood Al Zadjali told Al Arabiya television. « We have allocated about $2bn, » he added. The central bank will lend at an interest rate of Libor plus 150 basis points. The central bank said it would provide dollar liquidity to banks in the Gulf state to make up for shortages caused by the global financial crisis. A central bank statement carried by the agency said the plan was in response to the « current situation on world markets » and includes dollar loans of one to three months by the central bank, as well as measures to make foreign exchange transactions smoother. The bank said the liquidity can be used only to fund local projects, pay back the depositors of hard currency, or service foreign loans that are due and cannot be extended. The plan has been launched together with the finance ministry. The global financial crisis has prompted Gulf Arab states to enact a slew of policy responses to combat tight liquidity conditions in markets and sagging investor confidence. The other five members of the oil-rich GCC have already pledged to stand by their banking sectors as the global financial crisis bites. Agencies