Dubai’s tourism and hospitality sectors see rebound
Dubai’s tourism and hospitality sectors are slowly but surely making their way into a rebound, driven by various hotels and a host of initiatives that are designed to appeal to both residents and tourists.
“With the UAE successfully showcasing itself as a safe destination in the world, and Emirates Airline ramping up it’s network, tourism is witnessing green shoots,” said Avinash Adnani, managing director of Pluto Travel. “We are getting queries from faraway destinations such as Canada, and the US about potential travellers. Dubai is emerging as one of the top attractions as the world tries to get back to normalcy.”
Helal Saeed Almarri, director general of Dubai Tourism, said that Dubai Tourism has been “greatly encouraged” by the market’s response to the strategic initiative to reopen Dubai to tourists on July 7.
“People are much more optimistic and well informed now and are ready to go on holidays to destinations that are safe and have put in place strong health and safety protocols,” he said. “We rethought business strategies and plans, working closely with stakeholders and partners, to develop innovative initiatives to manage the ‘new normal’. In cooperation with key authorities, we mapped out stringent health protocols and precautionary measures that would reassure even the most demanding safety-conscious tourists.”
According to the World Tourism Organization (UNWTO), the Covid-19 pandemic could cost the global tourism industry and related sectors between up to $3.3 trillion in lost revenue depending on the timing of recovery.
Dubai, however, has positioned itself to be leader during the recovery period, with its airline and hotel industry actively looking into ways to welcome both tourists and residents.
Bookings received by Emirates Airline and flydubai have already started showing positive signs for the tourism sector. Emirates will be operating to a total of 70 destinations across six continents in August, while flydubai is set to expand its network to 66 destinations over the summer.
Alex Alt, senior vice president and general manager of Oracle Hospitality, noted that safety rightly remains consumers’ top priority when they consider traveling “As the hospitality industry turns a corner on the road to recovery, technology will be critical to protecting travelers and workers alike. The hospitality industry is doubling down on technology to facilitate social distancing and reduce face to face interaction for guests’ protection.”
In the run-up to the city’s reopening to foreign tourists, experts said that Dubai left no stone unturned to assure tourists of a smooth and safe experience at every stage of their travel journey, from arrival at airports to the point of departure from Dubai.
“We knew that most travellers will look at the type of healthcare services and processes in place before selecting a holiday destination. We put in place a zero-tolerance approach in the management of health and safety protocols at hotels, retail outlets and tourist attractions with regular monitoring to ensure compliance,” said Issam Kazim, CEO of Dubai Corporation for Tourism and Commerce Marketing (DCTCM).
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GCC states to spur sukuk’s rally to $170b in h2
GCC countries will lead a rally in sukuk issuance in the second half of 2020, with low oil prices and a consequent surge in deficits triggering strong financing demand among sovereign issuers, Moody’s Investors Service said.
However, after four years of rapid growth, overall global sukuk issuance is set to fall five per cent this year to about $170 billion in the aftermath of the coronavirus pandemic, it added.
“The decline will be partly limited by the financing needs of the GCC countries because of lower oil prices and the pandemic,” said Nitish Bhojnagarwala, vice-president and senior credit officer at Moody’s. “We expect issuance will rally in the second half of the year to around $90 billion, led by sovereigns in the Gulf.”
Despite the decline, 2020 will still see the second highest sukuk issuance total ever, following a 36 per cent increase in 2019. Total issuance in the first six months of 2020 dropped to $77 billion, down 12 per cent from the same period last year, as activity in Malaysia and Indonesia flagged. Issuance in southeast Asia dropped by 25 per cent, while volumes in the Middle East rose seven per cent.
Moody’s said in the second-half, volumes are likely to rebound as governments raise money to finance their responses to the coronavirus crisis.
“Persistently low oil prices could also increase deficits and financing needs among oil-exporting issuers, primarily in Gulf countries. We expect some African sovereigns and corporates to enter the market, following the lead of Egypt and Nigeria earlier this year. Though the green sukuk market is in its infancy, issuance is likely to accelerate as efforts to combat climate change gain traction,” said the report.
According to S&P Global Ratings, the volume of the global issuance of sukuk nose-dived 32 per cent in the first quarter of this year against the first quarter of 2019, and a further decline is expected in the second quarter of 2020 as several countries implement measures to control the spread of Covid-19.
The sukuk market is expected to recover in the third quarter of 2020 but the analysts at the S&P Global are of the view that the volumes of sukuk issuance in the second half of 2020 won’t be sufficient to compensate for the decline in the first half.
S&P Global Ratings said most government issuers of sukuk are likely to turn to conventional bond markets as they grapple with the impact of weaker economic environments and tight budgets while financing conditions are likely to be extremely difficult for issuers with weak credit quality.
International Islamic Financial Market has said that the steady rise in issuance volume during 2019 was mainly due to sovereign sukuk issuances from Asia, the GCC, Africa and certain other jurisdictions while Malaysia continues to dominate the sukuk market though share of countries like Indonesia, the UAE, Saudi Arabia and Turkey increased with good volume.
Abu Dhabi’s Aldar Properties, Saudi Arabia’s Almarai Company and Dubai’s DP World, Emaar Properties and Dubai Islamic Bank issued sukuk to raise funds last year. Aldar issued a $500 million sukuk to refinance its debt while DP World issued a $1 billion sukuk.
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Union properties inks dh946m debt deal with emirates NBD
Dubai’s developer Union Properties, which is set for a major three-year turnaround plan, announced on Monday that it reached an agreement with Emirates NBD for the full restructuring of its outstanding Dh946 million debt with the bank.
The developer of some of the landmark properties in Dubai said the agreement with Dubai’s largest lender would substantially improve the debt profile of the group. “As a result, Union Properties will have a significant reduction of its installments as compared to the situation prior to this debt restructuring and better repayment terms which will improve the cash flow position of the company,” the developer said in a statement.
Khalifa Hasan Al Hammadi, chairman of Union Properties, said the restructuring outstanding debt with Emirates NBD was the number one priority for the group.
“With better cash flow and the support of our main creditor, we can from this day exclusively focus on the development of our activities and projects. This is a strong sign of confidence from our banking partner and an important milestone for our group. We have efficiently dealt with legacy issues and are now fully geared for a new growth chapter in our history, which will improve our commitment to the banks and enhance the confidence of our shareholders,” said Al Hammadi.
The developer recently unveiled a three-year plan to turn around its fortunes after several years of underperformance and mounting losses.
The blueprint envisages the launch of a new project, Motor City Hills, which will extend to 2.9 million square feet of gross floor area. The project, comprising 195 villas, 490 townhouses and six commercial plots, is adjacent to the Dubai Autodrome.
“We once steered the real estate market in the UAE, and we are looking to take our rightful place to pioneer the industry once again with products suitable for all customer and investor categories,” said Al Hammadi. He said the group would be introducing for the first time villa and townhouse plots in one of the prime locations on Shaikh Mohammad Bin Zayed Road to meet the growing demand for plots to build personalised house designs.
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UAE stocks post dh15 billion in market cap gains
UAE financial markets on Monday posted combined gains of Dh15 billion in market cap driven by upbeat sentiments following the positive performance of some of the listed companies, atop of which comes Abu Dhabi National Energy Company PJSC (TAQA).
Despite the cautious lull in Monday’s early trades, Abu Dhabi’s main stocks index edged up 0.51 per cent to 4,353 points, with DFM’s General Index following suit and closing slightly higher at 2,093 points.
In ADX, TAQA was the best performer amid intensive trades worth over Dh32 million, which sent its share up to Dh1.42. Aldar Properties rose to Dh1.75 and ADQ to Dh35.
In DFM, Emaar picked up to Dh2.67, Emaar Properties to Dh2.13, and Aramex to Dh3.51.
A total of 5,759 deals were conducted worth around Dh360 million over 276 million shares.
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Coronavirus: Saudi Aramco chief optimistic over oil demand rise
The head of Saudi Aramco said Monday he was optimistic that the global demand for oil was growing as the worst of the coronavirus pandemic “might be behind us”.
Amin Nasser told reporters through a video conference that global demand for crude oil currently stands at around 90 million barrels per day, just 10 million barrels short of the pre-pandemic level.
“At year-end demand is expected to be in the mid-90s,” Aramco’s chief executive added.
Demand for oil was hit hard by the world-wide shutdowns to counter the pandemic, sliding at one stage by over 20 million bpd.
“While it remains unclear how long the current wave of uncertainty will continue, we see growing evidence that the worst of the crisis might be behind us,” Nasser said.
“We are witnessing a partial recovery in the energy market in the second half of 2020 as countries around the world take steps to ease restrictions and reboot their economies.”
Nasser described the second-quarter performance as the worst in generations.
“As a result of the Covid-19 pandemic, the second quarter has proven to be the most challenging economic period in generations with most industries suffering severe disruptions,” Nasser said.
Aramco, the world’s leading energy company, posted a massive 73 per cent slump in its second quarter net profit on Sunday due to low oil prices and production.
In the three months to June 30, the company posted a net profit of $6.6 billion compared to $24.7 million in the same period of 2019.
Aramco’s net profit in the first six months of the year also plunged 50 per cent to $23.2 billion compared to $46.9 billion in the corresponding period of last year.
Nasser said the company will cut capital spending in the coming years and in 2021, it will be “significantly lower” than the previously announced figures.
But he insisted that the company will go ahead with plans to raise its maximum sustained capacity to 13 million bpd from 12 million bpd currently.
Nasser said Aramco can maintain the 12 million capacity for one year without any additional spending.
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Middle East cloud kitchen company iKcon secures $10m funding
Dubai-based cloud kitchen platform, iKcon, has successfully secured $10 million of funding since inception, including a recently closed pre-series A round of $5 million led by Arzan VC, AlTouq Group, and Nazer Group among other investors.
Founded in Dubai in early 2019, by Khalid Baareh and Kareem Abughazaleh, iKcon addresses the growing demand for food delivery across the Middle East. Currently, iKcon operates 10 cloud kitchens across the UAE with plans to start operations in Saudi Arabia in Q4 2020 and other countries in the region throughout 2021. IKcon has plans to rapidly grow its network to thirty cloud kitchens in the near future.
Khalid Baareh, co-founder and CEO, said: “One of the big issues that restaurants and food entrepreneurs face is the financial and operational burden of expanding. Another major issue is their ability to adopt technology to improve their operational capabilities. IKcon’s business model solves both of those issues through its proprietary technology, operational know-how and a passion for quality food. I’m very proud of the strong and experienced team we’ve built, which allows us to execute seamlessly and continue our growth trajectory in one the fastest growing delivery markets.”
“We plan on launching iKcon’s Series A round in Q4 2020. The funding will fuel iKcon’s regional expansion and technology built out. We are laser focused on developing proprietary technology to accelerate the evolution of data analytics, process automation and AI as a key differentiator in our fast-growing space. The next few years are going to be very exciting and transformational years for the food delivery market,” Khalid added.
The company has successfully partnered with numerous leading brands operating in the region, helping them reach a significantly larger customer base in a short time frame with no capital or operating expenditure, resulting in substantially better returns. The Covid-19 pandemic has accelerated the food delivery market’s growth and proven the resiliency of iKcon’s business model.
Kareem Abughazaleh, co-founder and COO, said: “Driven by operational excellence and technology, iKcon acts as a franchisee on the behalf of its partner restaurants and brand owners. We enable each to adjust their offering to a new era of food delivery by extending their reach within the same city, within the same country and across borders.”
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Mideast M&A deals decline in H1
Overall Middle East merger and acquisition deal values and volumes dropped year-on-year by around 58 per cent and 26 per cent respectively, in the first-half of 2020, despite an uptick in the months of May and June.
The regional decline in M&A deals is in line with the slump in global activity that saw total deal values dropping in the first six months by 41 per cent from H1 2019, according to the latest report by global law firm, Baker McKenzie.
Globally, M&A deal activity has slowed down significantly compared with H1 2019 due to the Covid-19 pandemic. The year started out a bit slow in January, but then picked up in February. However, when Covid-19 started to spread across the world in March, global deal volumes started a steep decline, which peaked in April with a 34 per cent decline in volume and a 69 per cent decline in value.
Sovereign wealth funds including Abu Dhabi’s Mubadala, Adia, and Saudi Arabia’s Public Investment Fund have been deploying billions of dollars to buy stakes in companies ranging from India’s Jio platform, and facebook Inc, to Citigroup Inc. Adia bought 1.16 per cent in India’s digital giant for $752 million, and Mubadala Investment invested $1.2 billion to buy a 1.85 per cent stake.
The value of M&A deals in the Gulf states, including proposed deals, is up tenfold so far in June compared with the same period last year, according to data compiled by Bloomberg. That volume stands up well against the 44 per cent drop globally this month, the data show.
According to a Bloomberg report, Abu Dhabi has been leading the region in the past two years in bringing in more international investors to some of its prized assets. The emirate’s state-owned energy producer Abu Dhabi National Oil Company raised $10 billion by selling a stake in its natural-gas pipelines to a group of investors including Global Infrastructure Partners and Singapore’s sovereign wealth fund.
Since embarking on a transformation plan, Adnoc has sold shares in its distribution unit and brought foreign investors into its refining and oil-field servicing arms. KKR & Co and BlackRock Inc agreed last year to invest $4 billion in Adnoc’s oil pipelines.
Sovereign wealth funds including Saudi Arabia’s Public Investment Fund are deploying billions of dollars to buy stakes in companies ranging from facebook Inc to Citigroup Inc to take advantage of a downturn in prices.
As for volume, Middle East M&A witnessed a decline in volume during the first half of 2020 with only 196 deals. The decline can be attributed to the volatility across markets around the world due to the global Covid-19 pandemic.
“Covid-19 has had a significant impact on M&As across the region,” said Omar Momany, partner and head of the Corporate M&A Practice Group at Baker McKenzie Habib Al Mulla. “However, the dramatic increase in the value of deals made during the final two months of H1 2020 showcases a positive outlook and an early recovery sign for M&A activity for the remainder of the year. As the world begins to emerge from Covid-19, we can expect markets to begin to bounce back leading to more opportunities for investment, distressed M&As and consolidation within the region.”
Cross-border M&A deal volumes and value both declined from H1 2019. The volume of activity fell from 163 to 132 and values decreased by 5.032 billion in comparison to H1 2019.