The weak US dollar, to which the dirham is pegged, increases the affordability of UAE real estate for many foreign buyers and could boost demand in the face of subdued market conditions, though it will be no panacea, analysts say.
“Looking at the top buyer groups, where the currency is not pegged, who invest in UAE property we can see that on a currency basis alone, compared to January 2017, Indian rupee-denominated buyers would now find purchasing property in the UAE 6 per cent cheaper and British pound buyers would find it 13 per cent cheaper,” said Taimur Khan, senior analyst at consultancy Knight Frank.
The dollar index fell nearly 10 per cent in 2017 and is approaching a three-year low, with confidence in the historical might of the US economy flagging. Some hedge-fund managers anticipate the greenback could shed another 10 per cent of its value in the coming year. The UAE dirham – like most GCC currencies – is pegged to the dollar, and has naturally depreciated in value. Purchasing property in the UAE is likely cheaper for many of the foreign buyers that make up a sizeable chunk of the country’s real estate investor base.
Foreign buyers accounted for around 20 per cent of real estate transactions in Dubai in the 18 months to June 2017, according to statistics from the Dubai Land Department. The top buyers were from Saudi Arabia, India and the UK, the department said.
“The fall in the dollar is likely to have contributed to Dubai’s total property transaction volumes increasing by 14 per cent year-on-year in 2017,” Mr Khan said. “As a result of the currency drop and other draws of the market we expect this deprecation will spark some additional interest.”
The uplift in property transactions in 2017 was also due to a very weak 2016, when international purchases recorded a 30 per cent year-on-year decline, noted Tim Fox, chief economist at Emirates NBD bank. Still, the weaker US dollar “probably played a part in it”, he said. "To the extent that the dollar is likely to remain soft in the medium term, this should continue to underpin foreign demand.”
However, analysts cautioned against assuming the weak dollar would be the reason to jumpstart a stagnant UAE real estate market, which has recorded falling sales and rental prices over the past two years.
“More fundamental factors such as supply and demand, job market and government spending have a far more direct impact on property markets,” said Mohamed Bardastani, senior economist, Middle East, at research group Oxford Economics.
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Read more:
VAT clouds UAE’s commercial real estate market in 2018, says JLL
Which currency will come out on top in 2018?
Why GCC states should ditch the dollar peg and switch to a currency basket
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Dubai residential property sales prices fell on average 1.3 per cent in 2017 compared to 2016, according to data from market research consultancy Reidin, while sliding an average 7.6 per cent over the same period in Abu Dhabi. Rental prices were down even more heavily, over 10 per cent in some parts of the country.
The decline in prices reflects high volumes of supply, subdued demand due to a softer job market, and cuts in public expenditure over the past year. Meanwhile, the introduction of VAT this year added costs to commercial property transactions.
“It is rather difficult to disentangle and isolate the impact of a weaker dollar on the UAE property market from the more familiar market factors…which are more fundamental to the overall performance of the property market,” Mr Bardastani said.
“Demand for real estate still seems subdued, so we are sceptical about whether people are buying more in general, let alone solely due to the dip in the currency.”
Rather than creating a real estate market boom, the dollar drop is more likely to drive prospective buyers who are already considering a purchase to a quicker decision based on affordability.
“I don’t expect this recent weakening to drive a boom in the sector as much as continue to provide room to some buyers, given the limited impact on purchasing power,” said Mohamed Abu Basha, head of macroeconomic analysis at EFG Hermes bank.
The strength of the dollar particularly in 2014 to 2016 was a key headwind impacting external demand for UAE real estate so the dollar weakening is “definitely a positive development”, added Monica Malik, chief economist at Abu Dhabi Commercial Bank.
“However, there are other factors limiting external demand for properties – notably, ongoing weak regional demand due to slow economic growth in key GCC buyer markets such as Saudi Arabia,” she said.
The recent uptick in oil prices, which has fuelled renewed growth in GCC economies, as well as expansionary fiscal policy and increased government spending on infrastructure in the run-up to Expo 2020 Dubai is expected to drive a recovery in UAE real estate from 2019, experts added.
The 12 Syrian entities delisted by UK
Ministry of Interior
Ministry of Defence
General Intelligence Directorate
Air Force Intelligence Agency
Political Security Directorate
Syrian National Security Bureau
Military Intelligence Directorate
Army Supply Bureau
General Organisation of Radio and TV
Al Watan newspaper
Cham Press TV
Sama TV
Sweet%20Tooth
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NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
COMPANY%20PROFILE
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Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Indika
%3Cp%3E%3Cstrong%3EDeveloper%3A%3C%2Fstrong%3E%2011%20Bit%20Studios%3Cbr%3E%3Cstrong%3EPublisher%3A%3C%2Fstrong%3E%20Odd%20Meter%3Cbr%3E%3Cstrong%3EConsole%3A%3C%2Fstrong%3E%20PlayStation%205%2C%20PC%20and%20Xbox%20series%20X%2FS%3Cbr%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
Scoreline
Man Utd 2 Pogba 27', Martial 49'
Everton 1 Sigurdsson 77'
Kanguva
Director: Siva
Stars: Suriya, Bobby Deol, Disha Patani, Yogi Babu, Redin Kingsley
Company%20profile
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How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
- Avoid suspicious social media ads promoting fraudulent schemes.
- Only invest in crypto projects that you fully understand.
- Critically assess whether a project’s promises or returns seem too good to be true.
- Only use reputable platforms that have a track record of strong regulatory compliance.
- Store funds in hardware wallets as opposed to online exchanges.
COMPANY PROFILE
● Company: Bidzi
● Started: 2024
● Founders: Akshay Dosaj and Asif Rashid
● Based: Dubai, UAE
● Industry: M&A
● Funding size: Bootstrapped
● No of employees: Nine
Vidaamuyarchi
Director: Magizh Thirumeni
Stars: Ajith Kumar, Arjun Sarja, Trisha Krishnan, Regina Cassandra
Rating: 4/5
The specs: 2018 Mercedes-Benz E 300 Cabriolet
Price, base / as tested: Dh275,250 / Dh328,465
Engine: 2.0-litre four-cylinder
Power: 245hp @ 5,500rpm
Torque: 370Nm @ 1,300rpm
Transmission: Nine-speed automatic
Fuel consumption, combined: 7.0L / 100km
VEZEETA PROFILE
Date started: 2012
Founder: Amir Barsoum
Based: Dubai, UAE
Sector: HealthTech / MedTech
Size: 300 employees
Funding: $22.6 million (as of September 2018)
Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC
UAE currency: the story behind the money in your pockets
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Racecard
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RESULTS
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The specs: 2018 Opel Mokka X
Price, as tested: Dh84,000
Engine: 1.4L, four-cylinder turbo
Transmission: Six-speed auto
Power: 142hp at 4,900rpm
Torque: 200Nm at 1,850rpm
Fuel economy, combined: 6.5L / 100km
Tu%20Jhoothi%20Main%20Makkaar%20
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”