Indian and Pakistani investors in Dubai
Investment flows into Dubai property market from India and Pakistan could come under severe pressure as tax authorities back in Indian and Pakistan take a closer look at overseas purchases made by their citizens. In particular, on the sources of income for such purchases and whether this income has been declared or not. News reports emerged from India on Wednesday saying that hundreds of resident Indians in Mumbai and Kerala have come under the scanner of the tax authority, after they could not properly reveal how they got the funds to buy property in Dubai. Real estate sources say the scope of the investigations on overseas asset purchases made by resident Indians could expand.
Indian investors continue to be heavy hitters in Dubai/UAE real estate; in the first 11 months of 2018, they pumped in Dh10 billion worth of funds. It is not known what’s the split between resident and non-resident Indian (NRI) purchases. But sources say that a significant portion could have been from resident Indians, especially as the Indian property itself was going through a tough phase following the 2016 “demonetisation” move. (In November 2016, India declared that it would be withdrawing older currency notes, and which immediately slowed down the working of the economy. Its effect is still being felt.)
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Building next phase of Dubai real estate
Once upon a time, in the fictional kingdom of assets, the prevailing doctrine was that the acquisition of financial and real estate assets were a form of savings – the ability to get higher “coupon clippings” for taking a higher amount of risk. And that over time, these “coupons” would overpower the dark forces of inflation such that net wealth would rise over time.
This was a fairly stable relationship that held from the end of the Second World War to the early 1980s. Around that time, as interest rates started to fall, the income distribution changed dramatically, as capital gains started to dominate wealth creation.
Today, as traditional asset prices in country after country start to exhibit declines, the question arises: Do we go back to the old way of thinking? And what happened in the interim that changed the fundamentals of the game?
We can safely say that the period of exceptionalism in real estate assets was a combination of liquidity driven factors as well as more fundamental forces of urbanization that lead to the asset price appreciation. The price pattern can be broadly broken down into two areas: 1) “flat land” where prices rise and fall as per the cost of construction as land is in abundance and 2) “zoned” areas, where land is limited as per government regulations, where prices rise at a rate that is greater than GDP growth.
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UAE banks must stop using compliance as a weapon
The banking community must rethink its strategy on compliance. This over-indulgence with compliance is not going down well with customers. They must lay down the primary criteria for their due diligence before entering into any client relationship. They should make conscious efforts to ensure prospective clients are made aware of the requisite disclosures.
Bankers are keen to show that compliance is a priority; thus, they highlight it much more in filings than in actual reviews. It seems their zealousness is more for regulators as a tick-box exercise on the checklist than about disclosure and its merits.
The related documentation is cumbersome, and it appears more of a formality than an objective assessment. This activism is playing havoc in the minds of customers. There is a shroud of secrecy with no transparency on the process of compliance.
In reality, banking sales teams with an eye on business do not necessarily make the disclosures set forth by their compliance. They even circumvent the process with the objective of not annoying customers. These eventually leave customers in the lurch, especially when confronted with compliance queries and putting business continuity at risk.
Compliance officers are apparently the killjoys for all those in the game. It is not just customers, but bankers too are miffed with them. It appears that people have reached a level of frustration with them, as they frown over every transaction for possible breach of convention.
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Can India’s tea post compete with Dh1 tea shops in UAE?
An Indian business is out to make “tea cafes” trendy hotspots in Dubai, in much the same way Starbucks or Caribou has done with coffee.
Tea Post, the largest operator of tea-focussed cafes in India with more than 175 locations, has sights on Dubai for its first international push. “Tea is a taste not just limited to Indian boundaries — the number of tea connoisseurs has grown rapidly globally in the last decade,” said Puneet Tibrewala, a Director at the company, which opened its first care in the western Indian state of Gujarat in 2013. “Dubai is an ideal launch pad to gain access and understand global markets – hence the reason to test the waters.” Or to have a sip of consumer tastes in this market, as the case here. Tea cafes have, in the last two to three years, been brewing up all across Dubai, offering sips across all price points. Whether it’s a home-grown brand such as Filli or those from abroad – TWG Tea or Dilmah – the choices are plenty. And, in the last year or so, all-day and all-night cafes have sprung in some neighbourhoods, their popularity driven by how well they serve up a cup of Dh1 ($0.27) “karak” tea. Can Tea Post then break into a hugely competitive marketplace? According to Tibrewala, the UAE’s geographical proximity to India helps, as does the “setting up the supply chain on account of local availability of ingredients”.
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UAE, Saudi Arabia to spur GCC non-oil economic pick-up
As coronavirus continues to reshape the global economic outlook for the coming quarters, growth in the GCC is poised to pick up on the back of stronger non-oil activity in Saudi Arabia and the UAE, economists said. Monica Malik, chief economist at Abu Dhabi Commercial Bank (ADCB), predicted that the GCC’s real non-oil GDP growth would accelerate to 2.6 percent in 2020 from an estimated 2.1 percent in 2019. “Stronger forecast non-oil activity in the UAE and Saudi Arabia is the key factor behind this estimated acceleration in regional growth,” said Malik. In the UAE, she sees a boost from the Expo 2020 Dubai, “with the timing later in the year as positive given the near-term concerns over travel.” She added the initial support related to Expo 2020 will be through investments, with the infrastructure being finalised for the event, followed by the boost to consumption activity – a rise in short-term employment and higher tourism. “We are also seeing traction building in Abu Dhabi’s investment programme, alongside the UAE having the most expansionary fiscal stance in the region in 2020. Our GCC forecast continues to reflect ongoing challenges to the non-oil economy, including real estate sector-related issues.” Malik expects Saudi Arabia to see the strongest real non-oil growth in the region, with building investment momentum. Notably, funds have already been raised for the initial stages of the investment programme, and therefore it is less sensitive to any downward pressure on the oil price.
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DIC gears to propel growth in UAE’s startup ecosystem
Dubai is a gateway to many opportunities in the region due to its business-friendly environment, world-class infrastructure and diversified economy and Dubai Internet City (DIC) plays a key role in helping them grow as the biggest technology hub in the Middle East. In an exclusive interview with Khaleej Times, Ammar Al Malik, managing director of Dubai Internet City, said: “As the regional startup and technology ecosystem grows with the UAE leading the field in digital transformation and artificial intelligence investment, my advice to budding entrepreneurs is simple: do not miss out on this opportunity.”
Following the homegrown successes of Souq and Careem, investors and venture capitalists have their eyes fixed on the Middle East as they search for the next unicorn company. Taking the first step to establish a business can be a daunting prospect, but startup incubators such as in5 Tech at Dubai Internet City provide all the assistance for the new companies.
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China coronavirus hits UAE online shoppers
Did that online order you were expecting by February 14 fail to turn up? You may not be the only one to be disappointed. UAE shoppers are finding their orders are getting delayed, especially when it involves merchandise from China. And it’s only going to get worse over the next few weeks. Blame it all on the Coronavirus. “Timelines for deliveries have definitely lengthened and for a variety of product categories – from clothing to toys to electronics,” said Altaf Patel, Procurement Manager at Dubai Bazaar, which operates an e-tailing portal and which sources more than 60 percent of its merchandise from China. “At the lower end of these categories, there are already shortages because most factories in China have not resumed taking orders.” It’s not just price-focussed portals like Dubai Bazaar that have sizeable China exposures; noon.com has sourcing arrangements through its offices on the Mainland and in Hong Kong. In the last two years, it has made headway by bringing in more Chinese suppliers onto its marketplace.
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Aster gets approval for 100percent ownership in UAE
Aster DM Healthcare has got formal approval for 100 percent ownership of its operations in the UAE. The clearance was provided by Dubai Government, as part of recent initiatives that allow businesses in certain sectors these rights. This will not result in any major cash outflow towards investment, according to the hospital operator. The entire process will be completed before March 31, according to the company’s founder. “We submitted two sets of documentation to Dubai Department of Economic Development for Aster DM to be granted 100 percent in the UAE,” said Dr. Azad Moopen, founder and Chairman. “One was for the hospitals and clinics and the second set for the pharmacies that we operate. They required a second set of documentation because retail was not part of the sectors that allow 100 percent foreign ownership. “The approval, the final one we received on February 3, legally confirms full ownership of the business here. Even earlier, we had all the economic benefits of being a 100 percent owned company. Now, we make the full transition legally as well.”
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UAE takes on climate change challenge
Inhabiting an arid desert landscape has not stopped the UAE from flourishing into a global business hub, an economic powerhouse and top tourist destination. Each generation experiences a better quality of life, as the country continues to progress rapidly, and our leadership drives the way forward into a new decade. But as ice sheets and glaciers melt at unprecedented rates and global warming spurs erratic weather patterns, the UAE will grow more susceptible to the damaging repercussions of climate change. From water scarcity and increased salinity in our seas to impacted communities living in the UAE’s coastal areas, there is much at stake for our nation.
There are two key strategies to tackle climate change – mitigation and adaptation.
Climate change mitigation, which entails reducing the emissions of greenhouse gases into the atmosphere, is critical. On a practical level, this could mean introducing new renewable energy sources or promoting a circular economy through waste recovery and recycling.
To restore environmental health, we must start designing and implementing more sustainable methods of economic development. And this is something our leaders are both mindful of and acting on. The government has set unified targets under the UAE Energy Strategy to increase the contribution of clean and renewable energy in the total mix from 25 percent to 50 percent by 2050, and to reduce the country’s carbon footprint of power generation by 70 percent.
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Union properties slips into Dh218.8m loss
Union Properties slipped into losses totalling Dh218.8 million against net profits of Dh62.32 million a year ago. Bank financing costs related to subsidiaries’ loans “contributed significantly” to achieving net losses last year, “which are currently being settled,” the Dubai headquartered developer said in a statement issued to Dubai Financial Market. The company instead focussed on the silver lining – that despite the “stagnation” in the real estate sector, the “Group was able to achieve revenues exceeding half a billion dirhams”.
Indeed, revenues were at Dh535.5 million, through down from Dh762.08 million in 2018.
It was last month that Union Properties issued a partial turnaround plan, built around a Dh200 million expansion of Dubai Autodrome. It also envisaged turning the destination into a standalone company. The developer added that it was negotiating a MoU with China National Chemical Engineering Ltd. for the expansion. No timeline had been specified. Two other subsidiaries were also to convert into private companies.
While there was speculation about even higher losses for 2019, shareholders will not be breathing easy. For that, Union Properties Board of Directors will need to show proof of concept that its plans will indeed change the fortunes of the company.