Week 06 - Asteco

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Transcript of Week 06 - Asteco


© Asteco Property Management | 2020 | asteco.com
35 YEARS | CELEBRATING THE PAST AND
TRANSFORMING THE FUTURE | Page 1
ASSET MANAGEMENT SALES LEASING
REAL ESTATE NEWS
UAE / GCC / MENA
SAUDI PROPERTY PRICES RISE FOR FIRST TIME SINCE EARLY 2015
UAE’S REAL ESTATE FUNDS BIDE THEIR TIME
OYO HOTELS & HOMES UAE EXPECTS 25% GROWTH IN BUSINESS TRAVEL FROM INDIA
IN Q1
TEMPORARY POP-UP HOTELS MAY BE HEADED TO MIDDLE EAST SOON
DUBAI
CONSTRUCTION PROGRESS AT DEIRA ISLANDS BRIDGES REACHES 75%
DUBAI’S REAL ESTATE DATA WILL NEED FILTERS
DUBAI PROPERTY PRICE DECLINES SLOW TO LESS THAN 1% IN JANUARY
DUBAI DEVELOPER SOBHA TARGETS $680M SALES IN 2020
DUBAI MARINA, OTHER ICONIC LOCATIONS REMAIN POPULAR WITH NEW DUBAI
TENANTS
DUBAI’S REAL ESTATE SECTOR HAS DEMONSTRATED ITS RESILIENCE - DLD
ACCOR TAKES OVER OPERATIONS OF TWO DUBAI DEVELOPMENTS HOTELS
UNITS UNDER DH1M ACCOUNT FOR 41 PER CENT OF DUBAI HOUSE SALES IN 2019
DUBAI PROPERTY: HIKES UNLIKELY ON HOME SERVICE CHARGES
LEASE OFFICE SPACE IN DUBAI FOR DH500
MORE CALLS EXPECTED IN 2020 TO SLOW RATE OF DUBAI PROPERTY PROJECTS
DUBAI RACES TO COMPLETE 160,000 HOTEL ROOMS BY OCTOBER
ELLINGTON SAYS WILTON REAL ESTATE PROJECTS IN DUBAI HAVE SOLD OUT
WHAT EXPO 2020 VISITORS WILL EXPECT FROM THEIR HOTELS
MBR CITY HOME SELLS FOR DH90 MILLION TO BE TOP DEAL
DUBAI LIKELY TO FOCUS NEW DEVELOPMENTS IN KEY POCKETS

© Asteco Property Management | 2020 | asteco.com
35 YEARS | CELEBRATING THE PAST AND
TRANSFORMING THE FUTURE | Page 2
ASSET MANAGEMENT SALES LEASING
DUBAI'S DRAKE & SCULL COMPLETES TWO CONTRACTS ON KEY KUWAIT PROJECTS
DISTRICT 2020 CALLS FOR START-UPS TO BE PART OF ITS INNOVATION ECOSYSTEM
EX-DRAKE & SCULL CHIEF FIRES BACK AT NEW CRIMINAL CHARGES
CONFIDENCE GROWING IN DUBAI PROPERTY MARKET DESPITE 'NEGATIVE TALK'
GLOBAL VILLAGE LAUNCHES PROMOTION TO WIN $380K APARTMENT IN DUBAI
DRAKE & SCULL AND KHALDOUN TABARI: HOW DID WE GET HERE?
ABU DHABI
ALDAR SAYS TO START HANDOVER OF FLAGSHIP YAS ISLAND WATERFRONT PROJECT
ABU DHABI PROPERTY PRICES FALL BY 11% IN 2019
HOW ABU DHABI PROPERTY PRICES, RENTS FARED IN 2019
ABU DHABI DEVELOPER UNVEILS NEW RESIDENTIAL PROJECT IN MASDAR CITY
WEWORK MAKES UAE DEBUT WITH HUB71 WORKSPACE TIE-UP IN ABU DHABI
ABU DHABI HOTEL MARKET BENEFITS FROM HIGHER DEMAND AND LIMITED SUPPLY
GROWTH
NEW CRUISE LINER JETTY TO BE BUILT AT ABU DHABI'S SIR BANI YAS ISLAND
UAE CONSTRUCTION FIRM SAID TO BE IN TALKS TO RESTRUCTURE $545M DEBT
NORTHERN EMIRATES
HOMEFRONT: 'DOES A 100-YEAR LEASE RENEW WHEN YOU SELL A SHARJAH
PROPERTY?'
INTERNATIONAL
BREXIT 'CLARITY' BRINGS MIDDLE EAST DEMAND FOR LONDON REAL ESTATE
FINANCE BILL 2020: BENEFITS NRIS ENJOY AS UAE RESIDENTS

© Asteco Property Management | 2020 | asteco.com
35 YEARS | CELEBRATING THE PAST AND
TRANSFORMING THE FUTURE | Page 3
ASSET MANAGEMENT SALES LEASING
UAE CONSTRUCTION PUTS UP
SAFEGUARDS AGAINST CHINA VIRUS
IMPACT Friday, February 07, 2020
Dubai: Chinese construction companies with projects in the UAE could face difficulties shipping in supplies from
China in the coming weeks, industry sources say. This could mean that these contractors could source more from
UAE- or Gulf-based suppliers to meet their immediate needs.
“There’s been talk that some ships carrying iron ore – the basic raw material for steel - into Chinese ports are still
held up,” said Bharat Bhatia, CEO of Conares, which operates two steel mills in Dubai. “A clear picture of whether
supply from China will be affected in the coming weeks will be got only after February 9.”
The Chinese government had extended the Lunar New Year holiday to February 9 after the virus spread across
cities and led to fatalities of more than 600. Several market sources said that a better insight of how Chinese
suppliers’ operations were impacted by the virus fallout can only be had after February 9.
This is what Chinese construction companies in the UAE – currently associated with some major projects – are
worried about. Any delay in supplies over the coming weeks could hit these projects hard.
Typically, Chinese contractors involved in overseas projects source all or most of their supplies from China itself.
They will need to do so to comply with the requirements to get loans from Chinese lenders on easier borrowing
terms.
A clear picture of whether supply from China will be affected in the coming weeks will be got only after February 9
- Bharat Bhatia of Conares
Already being felt
Even in the days leading up to February 9, key commodities related to construction- and building materials saw
price drops. This had to with concerns that China’s domestic demand for such materials will drop significantly
until such time authorities get a better grip on containing the virus.
“The market saw iron ore prices dropping from $91-$94 a tonne to $80, almost overnight,” said Bhatia. “Same with
zinc prices, which we use in our steel mills, with prices down to $2,220 a tonnes from $2,450 in 48 hours. These
are major moves in the commodity markets – and all borne out of fears over what would happen to Chinese
demand this year.
“The pressure on prices will continue – each day that the issue drags on without a cure.”
Bharat Bhatia of Conares reckons UAE steel mills can try and win more overseas contracts in current situation.
Shift their buying
Now, if Chinese contractors in the UAE start sourcing some of their immediate needs from within this market, it
could prove a major boost for manufacturers and traders. Competing against Chinese suppliers had always been

© Asteco Property Management | 2020 | asteco.com
35 YEARS | CELEBRATING THE PAST AND
TRANSFORMING THE FUTURE | Page 4
ASSET MANAGEMENT SALES LEASING
VALUATION & ADVISORY BUILDING CONSULTANCY OWNER ASSOCIATION
domestic manufacturers by stipulating that a certain percentage in each project should use ‘Made in UAE’
materials.)
Well stocked up
Meanwhile, UAE based construction company sources say they are well stocked to take care of their immediate
building material needs. According to Vinod Pillai, who heads the UAE operations at RP Group, “Our current
exposure to Chinese suppliers would be about 5-10 per cent. Where possible, we make the effort to source from
within the UAE or the wider Gulf.
“We do bulk purchases well in advance of project timelines – so, for now, the virus will not have any material
impact at any of our project sites in the UAE or outside. There’s also a lot of centralized purchases that we do,
which gets us cost benefits and access to regular supplies.
“There are a lot of alternatives we can choose if our Chinese suppliers are facing difficulties. We are covered for all
risks.”
Not a time for project delays
This is a crunch year for construction companies in the UAE; many of these projects have set completion
schedules ahead of the Expo 2020 Dubai’s opening date in October. While a virus outbreak is way beyond
anyone’s control, if the delays mount up there will be consequences.
Chinese construction companies are associated with some of the leading projects in the country. In recent
months, they have landed deals offering never-before-seen payment terms to the clients, who for many of these
projects do not have to pay until after completion. The Chinese companies are also taking direct equity in some
projects in lieu of payments.
“Their clout is immense – only the biggest local players could compete with them,” said one source. “The next few
weeks will be interesting, to see how they cope with the virus fallout.”
A CHANCE FOR UAE STEEL SUPPLIERS
With China fixated on solving the virus attack, steel suppliers in the UAE and Gulf now have a chance to pick up
overseas orders.
“Whether it’s Southeast Asia or East Africa, Gulf steel mills always have to compete with Chinese ones on prices,”
said Bharat Bhatia of Conares Steel. “That’s always going to be a tough task – we have had interest from even
Hong Kong and Myanmar. But there’s always a Chinese competitor waiting on the sidelines.
“Now, if Chinese suppliers cannot ensure supplies on time because of the current situation, there’s an opportunity
for Gulf steel mills. We have the capacity to crank up and meet any demand.”
Source: Gulf News
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© Asteco Property Management | 2020 | asteco.com
35 YEARS | CELEBRATING THE PAST AND
TRANSFORMING THE FUTURE | Page 5
ASSET MANAGEMENT SALES LEASING
DRAKE & SCULL AND KHALDOUN TABARI:
HOW DID WE GET HERE? Thursday, February 06, 2020
Who is Khaldoun Tabari?
Mr Tabari is a Jordanian businessman who first bought a stake in Dubai-based contractor Drake & Scull in 1998
and was its second-biggest shareholder at the time of its 2008 IPO, when it raised Dh1.22bn in an offer that
was 101-times oversubscribed.
After its float, as conditions for contractors in the UAE worsened, the company expanded overseas — including
into markets like Libya and Syria — and went on an acquisition spree buying businesses in India Germany, and a
company in Saudi Arabia that allowed it to move into general contracting.
What is he accused of?
The company’s current management filed 15 initial charges with the Abu Dhabi public prosecutor’s office on
matters ranging from fraud and embezzlement to forgery. In a statement last week, it said fresh criminal charges
had also been filed with the Abu Dhabi Public Funds Prosecutor against Mr Tabari, family members and other
executive managers. It also said criminal complaints had been filed against Mr Tabari and his daughter, Zeina (the
company's former head of investor relations) in Jordan.
So what happened?
What isn’t in doubt is that the company’s expansion plans went awry. Geopolitical tensions put paid to its
businesses in Libya and Syria, and the 2014 decline in oil prices not only stymied its move into general
contracting, it also meant the company was struggling to recoup payments for work carried out. It declared losses
of Dh826.6m in 2015 and Dh732.9m in 2016, leading Mr Tabari to step down as chief executive in August 2016.
The company's next chief executive, Wael Allan, developed a turnaround plan that involved bringing in new
investment.
A deal agreed with private equity firm Tabarak Investment Company involved Drake & Scull reducing its share
capital by 75 pr cent to extinguish accumulated losses of Dh1.7bn, wiping the slate clean ahead of a Dh500m
equity injection. Mr Tabari agreed to sell his shares in February 2017 as part of this process.
The new funding eventually came in October 2017, and although the company declared a profit for the first
quarter of 2018, hopes of a revival faded quickly. A rapid decline in its fortunes led to the company's shares being
suspended from DFM in November 2018 and its last filed accounts for the 2018 financial year show a full-year loss
of Dh4.5bn on revenue of Dh798m, leaving the company with negative net equity of almost Dh4.75bn.
How did things go so wrong so quickly?
This is the key sticking point in the dispute. By June 2018, less than nine months since funds were injected, the
company announced it had completed an investigation into “violations” by its previous management and had
passed on findings to the relevant UAE authorities. A statement issued accompanying its 2018 accounts in April
last year cited 15 complaints to the UAE public prosecutor dating back to its 2008 IPO and cover "'questionable
acquisitions by Drake & Scull of companies belonging to members of the previous executive management in
2009-2011", according to a statement published last year.
© Asteco Property Management | 2020 | asteco.com
35 YEARS | CELEBRATING THE PAST AND
TRANSFORMING THE FUTURE | Page 6
ASSET MANAGEMENT SALES LEASING
VALUATION & ADVISORY BUILDING CONSULTANCY OWNER ASSOCIATION
It said the restructuring plan that Tabarak as strategic investor had used as its basis of investment had been
developed on the back of "false information of backlog value, misrepresented projects' profitability and
percentage of completion" .
“Furthermore, the report omitted material information, including the number and status of overwhelming legal
cases against the company, and concealing the true liquidity needs of the company which far exceeded the Dh500
million dirhams injected,” the statement said.
Mr Tabari argued this is a smokescreen to cover mismanagement. He said that from the sale agreement in
February 2017 until funds were injected in October, the company had eight months to complete due diligence. In
his statement, he blamed Drake & Scull's subsequent demise on a “clear lack of strategy”, pointing to the fact that
Drake & Scull replaced five chief executives in a period of just over two years, and said an inability to effectively
manage the business led to the departure of key executives and technical staff, meaning they were unable to fulfil
contracts.
In a statement published on Wednesday in response to his claims, Tabarak said DSI "is managed by a highly
qualified and experienced board of directors working independently and without any supervision from Tabarak".
It said that as one of the shareholders in Drake & Scull, it is "following the measures taken and complaints filed
against members of the previous executive management, as well as the results of investigations carried out by
the UAE Public Prosecutor and all other related developments inside and outside the country".
Source: The National
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© Asteco Property Management | 2020 | asteco.com
35 YEARS | CELEBRATING THE PAST AND
TRANSFORMING THE FUTURE | Page 7
ASSET MANAGEMENT SALES LEASING
UAE, GCC CONSTRUCTION SET FOR
GROWTH IN 2020 Saturday, February 08, 2020
The construction sector in the UAE and GCC is poised to see stronger activity in 2020 compared to last year, on
the back of increased investments in oil and gas, utility, urban development, and infrastructure projects.
According to the latest figures by BNC Network, a total of $53.8 billion worth of projects were awarded in the UAE
in 2019, registering a 17 per cent year-on-year (YoY) drop. It sees a 10 per cent YoY decrease in contract award in
the UAE once the late capture projects accounted for in the coming weeks. Based on currently available tender
information, BNC expects the contract award in the UAE in 2020 to be $55 billion, an increase of $1.2 billion.
In 2019, a total of $73.1 billion worth of projects were completed in the UAE, an increase of nine per cent. With
many Dubai Expo-related projects nearing completion, other sectors such as energy, infrastructure, transport and
utility projects will maintain strong activity in the construction sector in the UAE and across the region.
In the GCC, a total of $143.3 billion worth of projects were awarded across the region last year, registering a four
per cent YoY growth. BNC forecasts a 13 per cent YoY increase in contract award in the GCC once the late capture
projects accounted for in the coming weeks. It expects the contract award in the GCC this year to reach $150
billion.
A total of $198.8 billion worth of projects were completed in the GCC in 2019, registering a three per cent YoY
growth.
"Construction activity will be dominated by the oil and gas sector in both the GCC and the UAE. Even though the
urban construction sector has contracted in the UAE, it will still contribute to the second largest value of projects
across the GCC. The urban construction sector across the GCC is also a strong second primarily due to the rapidly
growing contribution of Saudi Arabia. Another sector with significant activity will be the utility sector, in both the
GCC and the UAE," said Avin Gidwani, CEO of BNC Network.
Over the last few months, Dubai, Abu Dhabi and Sharjah have announced a number of new mega gas discoveries
which will also require billions of dollars in investment and development of the oil fields. Abu Dhabi's Dh50-billion
stimulus package Ghadan 21 will also be a major driver of the construction sector in 2020.
Rizwan Sajan, founder and chairman of Danube Group, said after the World Expo 2020 has served its purpose of
bringing more investment and job opportunities, giving a boost to the economy, investors and businessmen are
optimistic that the UAE government will launch some other long-term projects which will take its economy to the
next level of growth.
"Definitely, there is going to be more activity in 2020 because the country has been endeavoring to reduce its
dependence on oil and turn itself into a Shangri La of conducting businesses and vacationing. Considering all
these things, prospects seem very promising for construction sector in 2020 to achieve these goals," Sajan added.
In the near future, Sajan believes that the construction investments will be driven by hospitality, transport, energy
and social infrastructure development projects under various programmes.

© Asteco Property Management | 2020 | asteco.com
35 YEARS | CELEBRATING THE PAST AND
TRANSFORMING THE FUTURE | Page 8
ASSET MANAGEMENT SALES LEASING
VALUATION & ADVISORY BUILDING CONSULTANCY OWNER ASSOCIATION
"There are multiple reasons for this. We need more clients to consume what we have built, and also longer credit
extended by the traders has reduced their buying appetite. New announcement on infrastructure projects and
Etihad Railways type of projects will keep the manufacturers in the UAE busy in 2020," Bhatia added.
Ben Greenish, senior vice-president, dmg events, which organises Big5 construction expo, said the results of its
"Voice of the Construction Industry Report" survey comprising 6,000 respondents from 136 countries showed that
when considering where their business may look for opportunities further in the future, and based on where they
are not working currently, the GCC and the wider Middle East were the standout opportunities.
"The GCC was the most attractive option for respondents from Asia and Europe, as well as those from other GCC
states. Of the GCC countries, respondents felt there were the most opportunities to be found in the UAE - 56 per
cent - followed by Saudi Arabia - 44.4 per cent," Greenish said.
Some 36 per cent of respondents said their business would enter the UAE within the next twelve months.
Source: Khaleej Times
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© Asteco Property Management | 2020 | asteco.com
35 YEARS | CELEBRATING THE PAST AND
TRANSFORMING THE FUTURE | Page 9
ASSET MANAGEMENT SALES LEASING
DUBAI LIKELY TO FOCUS NEW
DEVELOPMENTS IN KEY POCKETS Tuesday, February 04, 2020
There are still pockets in Dubai which can be developed under better urbanisation plan rather than pushing the
boundaries of the city to bring balance between demand and supply,
"In order to re-establish balance between demand and supply, I would also encourage not to push the boundaries
of the cities. Within the city, there are pockets where there can be development coming, instead of creating
developments 30 km away from Dubai and spread it out. We have got to urbanise the city better itself. That is
where I hope Dubai will create regulations and focus on new development going forwards," said Thierry Delvaux,
CEO for Middle East and Africa at real estate consultancy JLL.
"There needs to be more regulations how much space can be developed every year on the market if we want to
reestablish this balance between demand and supply," he said while speaking on the sidelines of a JLL conference
on Tuesday.
Delvaux said despite the reports of slowing economy and poor market, the demand for real estate is good in
Dubai.
"If you ask a player like Emaar, they are very satisfied with the occupancy and selling rates. If you look at the office
market, it is good as well. The only issue we are facing is that of enormous supply. There is more supply coming
on to this market than most of the key markets in…