One of the busiest weeks since the financial crisis included announcements from Expo 2020 organisers, long-awaited visibility on Arabtec’s 1 million homes project in Egypt and a peace offer from beleaguered Saudi group Al Gosaibi, writes Business Editor Mustafa Alrawi
Arabtec eyes financing for Egypt project
On Wednesday the Dubai-listed builder confirmed it is in talks with lenders to finance the first phase of its US$40 billion project in Egypt to ultimately build 1 million affordable homes. The news that it is talking to banks signals that it is close to finalising an agreement with the government of the North African country and that work on the first 100,000 units should begin soon, offering some much needed visibility for shareholders on a strategically important project. They were set to meet today, at its AGM in the capital, a week after it was announced that the new board, to be voted on at the gathering, would not include chairman Khadem Al Qubaisi. The company’s founder Riad Kamal was also omitted for the list of nominees, however he told The National that he left the board 18 months ago, despite still being included as a member on Arabtec’s website.
Al Gosaibi extends peace offer
The Al Gosaibi family of Saudi Arabia offered a new twist in its six year tussle with its bitter enemy Maan Al Sanea when it extended an olive branch on Tuesday. An offer of a peace deal is on the table if negotiations can be entered to end the Middle East’s longest running corporate “frozen conflict”. Simon Charlton (pictured), the chief executive of the family partnership Ahmad Hamad Al Gosaibi and Brothers (Ahab), said that with the cost of legal action becoming counterproductive the time has come to reach a settlement of the marathon affair. The news came after Ahab announced it had reached an initial deal with its leading creditors to settle claims of more than US$6 billion of debts. With the Saudi stock market opening to foreigners from June, it will be a boost for investors that this saga, at one stage believed to include up to $20bn in outstanding debts, could soon be over.
Abu Dhabi rents to climb on low supply growth
As the Cityscape property show started in the capital on Tuesday, brokers warned that tenants in Abu Dhabi are likely to face further rent rises as the level of new housing supply falls to its lowest since 2009. This year housing stock growth will be 2.9 per cent compared to an average annual growth over the past five years of close to 5 per cent. Broker JLL estimated that average housing rents in the city increased 4 per cent during the first quarter and Asteco reported that occupancy rates for rented homes in prime projects stood at close to 100 per cent during the quarter. However, it is worth remembering the business cycle in the UAE typically ends in the summer when many expats leave. At that point occupancy rates fluctuate and realised rental prices adjust to reflect changing population levels. To view the property rental market in the first quarter of any year will always give a more bullish picture than in the third.
Dubai urges UAE businesses to join the ‘Expo effect’
Organisers of Dubai’s world fair in 2020 called on the business community of the UAE to partner up with the event and help build on the ‘expo effect’ which is expected to bring tens of billions of dollars of economic benefits to the country and create thousands of jobs across the region. At the expo site on Tuesday, chief executives of some of the biggest firms in the UAE, including Gerald Lawless, boss of hotel operator Jumeirah, Osman Sultan, du’s CEO, and Fadi Ghandour, founder of Aramex, were given a glimpse of what the event will look like and also how they can be an integral part of its success. Organisers have an ambitious vision for the event, expecting Expo 2020 to have an impact as far as central and south Asia and Africa as well as the Middle East. One business chief said “never doubt them, they always deliver”.
IMF downgrades growth forecast for country
On Saturday, the IMF urged Arabian Gulf governments to cut total public spending amid lower oil prices, offering a gloomier picture for the UAE’s economy this year. The IMF also cut its projections for the UAE’s growth this year to 3.2 per cent – a decrease of 0.3 percentage points against its January forecast - as crude remains around 40 per cent lower than its summer peaks in 2014. This is the second time in six months that the IMF has revised its growth forecast for the UAE downwards. In October, the IMF projected growth of 4.5 per cent – 1.3 percentage points higher than its current projection. The wider Middle East’s economic growth forecast has also been cut twice in the same period. The outlook will continue to be suppressed as long as crude remains below $70 a barrel. Brent for June settlement was at $62.73 on Wednesday on the London-based ICE Futures Europe exchange.
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