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Sunday, 26 April 2009

Dubai's Deyaar to Set Up Distressed Property Fund

Deyaar Development PJSC said it would set up a 500 million dirham ($137 million) fund to buy back distressed property sold to investors who can no longer pay for their purchases.

Markus Giebel, the chief executive of the big Dubai-based property developer, said the company will seed the fund with AED100 million, and seek investors for the remainder of the capital, which he says Deyaar has almost finished raising.

The fund will offer to buy up distressed properties from investors who have defaulted on their real-estate purchase agreements with Deyaar. But instead of selling the property off in today's distressed market, Deyaar plans to hold onto the units and offer them for rent, providing cash flow for the company. When property prices recover in Dubai, the fund will then sell the units off again, he said.

Mr. Giebel said the fund's returns are modeled on a forecast recovery of Dubai's property market in three to four years time. In recent months, Dubai property prices have tanked, some falling more than 50% amid today's global economic downturn, a glut of supply and tight local lending requirements.END

UAE's MAG says in talks to buy Continental plant

United Arab Emirates-based industrial and property group MAG said on Sunday it was in "initial" talks with Continental AG to buy a factory in France but it was too early to talk about striking a deal.

"The MAG Group confirms that it is currently in contact with official authorities in France and with Continental regarding the possible sale of the plant in Clairoix," MAG said in a statement.

"Discussions are in the initial phase ... further meetings and in-depth studies should be conducted on the industrial, economic and financial plans to enable MAG Group to bring together the different elements to take a position on this opportunity," said MAG, which is headquartered in the emirate of Sharjah.

Abu Dhabi glamour circuit taking shape

The Mole sent a team to Abu Dhabi this week to check out the site for the city's inaugural Grand Prix.

The GP in the United Arab Emirates is replacing Brazil as the season finale and takes place on 1 November.

The 5.5km Yas Marina Circuit should certainly be eye-catching as it is being constructed just off the coast on Yas Island.

Global swings to Q4 loss, says no debt deal

Kuwait's Global Investment House (GLOB.KW) swung to a loss in the fourth quarter and said it would take longer to reschedule its debt.

Reuters calculated it had a 360.5 million dinar ($1.36 billion) net loss in the fourth quarter versus a 29.47 million dinars net profit in fourth quarter 2007.

Reuters calculated the fourth-quarter net loss based on a net profit in the first nine months of 102.9 million dinars.

Dubai considers dates for second US$10 billion bond

Dubai is considering at least two dates this year to issue another US$10 billion of bonds, a government executive said on Sunday, as the emirate seeks to raise more funds to support state-linked companies.

Dubai launched a US$20 billion bond programme in February and issued the first half to the United Arab Emirates central bank.

It has since given more than US$5 billion in loans to firms struggling to meet debt and other financial obligations amid a real estate downturn, Nasser al-Shaikh, director-general at Dubai department of finance, said in a radio interview last week.

UAE Central Bank Governor Attends IMF/World Bank Meetings in Washington

UAE Central Bank Governor, Sultan bin Nasser Al-Suwaidi, recently visited Washington, DC, where he attended the International Monetary Fund (IMF)/World Bank Group spring meeting.

At the IMF/World Bank meeting, the UAE Central Bank Governor called on IMF members to adopt long-term policies that will help prevent future economic downturns of this scope and magnitude, and to "move decisively on ratifying agreements for a new income model." The IMF/World Bank Group meeting is attended by senior policymakers from 185 countries, whose collective goal is to secure financial stability, facilitate international trade and promote sustainable economic growth.

In a statement issued at the meeting, Al-Suwaidi said that countries in the Middle East region had not been spared the impact of the global financial crisis. However, he noted that "financial buffers accumulated during the boom years, as well as much strengthened policy and macroeconomic frameworks" in the UAE and many Arab countries "allows the scope for supportive policies to cushion the impact of the crisis." "Countries with pegged exchange rates have additionally benefited from the continued monetary easing in the US, further reinforcing the stabilizing role of the exchange rate peg in oil producing economies," added Al-Suwaidi.

UAE group ends bid to buy share in US Textron

Talks between a group of UAE businesses, plus a Kuwaiti company, to buy US aircraft manufacturer Textron Inc have called to a halt, according to Kuwait newspaper.

A report in the national daily Al Watan, citing anonymous people, said the deal had been called off on the back of concerns of a political outcry about a non-US group owning a large share of the firm.

Other issues such as more undeclared losses at Textron and the group's lack of technical know-how to separate Textron’s civilian and military operations within three years as had been planned, were also cited as reasons for the deal collapse the Kuwait newspaper said.

Has the UAE witnessed the "Green Shoots" of transparency, in the past week?

(Hopefully this, my second attempt at commentary, will be formatted correctly. My error, previously, was not accepting the automatic guidance of Blogger!)

It has been interesting following the fortunes of two US politicians: Governor Kaine travelled to Dubai, via Israel, and has been applauded by friend and foe alike; whereas Mayor Fenty travelled to Dubai, and attended the Ladies Tennis Tournament, which an Israeli Passport Holder was not granted a visa to compete in.

As the Washington Post highlights: Governor Kaine publically disclosed his plans, including the subsidised cost of travel, ahead of departing; whereas Mayor Fenty, whose trip was also subsidised, specifically by The Government of UAE, appeared to depart furtively and gave no coherent explanation when questioned after the event!

A difference in communication styles, with entirely different results, congratulations for Governor Kaine, chastisement for Mayor Fenty!

Here in the UAE, Finsbury's recent appointment appears to be bearing fruit, Nasser Al Shaikh spoke very fluently on Tuesday about the Dubai Government Bond and I have not heard one critical comment about his, relative for the region, candour.

Taking the Mayor Fenty role, in Dubai, is Nakheel which hides behind the mask of "supplier confidentiality", so I am reliant on my own contacts who confirm Nakheel are processing payments, but only at a rate of 75%, over an unquantified period of time. (If anybody from Nakheel reads this blog, do feel free to post a comment, none of which are moderated or deleted.)

So "green shoots" of transparency are appearing in Dubai, but this past week certainly surprised many, when the Federal Capital of UAE, Abu Dhabi, moved well ahead in the transparency "green shoot" stakes.

Mubadala issued an 84 page document, detailing the 2008 performance of its activities, where are those commentators who were critical of Sovereign Wealth Funds non-disclosure only 15 months ago, when I researched this article?

Possibly other GCC Institutions will follow Abu Dhabi's lead in disclosure,but such expectations must be tempered by the fact there is no statutory obligation to undertake such disclosure, which underlines the ground breaking nature of Mubadala's 2008 Accounts.

As there are Fenty's and Kaine's everywhere, so it proves to be the case for Abu Dhabi, but as I state quite clearly this is not a social commentary blog and would direct you here.

UAE, Malaysian, Indian, Chinese investors interested in Iran

The managing director of the Persian Gulf Mines and Metals Special Economic Zone, Hormozgan Province, has said that the United Arab Emirates, Malaysia, India, and China are interested in investing in the zone.

Bahman Ayar Rezaii said on Saturday in Bandar Abbas that based on a plan the zone will be turned into a hub of industry and energy with annually 10 million tons of steel, 500,000 tons of aluminum, and 3000 MW of electricity production capacities.

He went on to say that $500 million has been invested in the zone in the last Iranian calendar year (ended March 20), predicting the figure would touch $700 million in the current (Iranian) year. Industrial goods and minerals are currently exported to Pakistan, Taiwan, Japan, and the United Arab Emirates, he noted.

Is Nakheel not paying?

A report in the UK-based magazine New Civil Engineer quotes analysts as saying that real estate developer Nakheel has not paid debts amounting to more than $290 million. The money is owed to engineering companies in the UK such as Atkins, Mouchel, Scott Wilson and WSP.

Nakheel has declined to comment, saying only that it “doesn’t disclose confidential information about supplier contracts.”

Earlier this month, Atkins revealed that delays in payment for its Middle-Eastern projects had forced the company to use around $36 million of its own cash to keep operations running over the past three months. “We expect that cash collection will remain challenging for at least the next few months,” the company said.

Kuwait bank sells investment in Reliance Petroleum

Global Investment House KSCC, a Kuwait-based investment bank, said its private equity unit has sold its investment in India's Reliance Petroleum Ltd.

Global Capital Management, the private equity group of Global Investment House, was one of the 10 largest investors in the unit of India's most valuable company, it said in an e-mailed statement.

"We have been liquidating our position in tranches to optimise our returns," Shailesh Dash, managing partner at Global Capital Management, said the statement. "We have achieved an internal rate of return of more than 70 per cent on this transaction."

Bahrain says financial sector well-poised to weather crisis

Bahrain's banks and financial services industry have weathered the global financial crisis well and are poised to return to a strong growth trajectory this year, according to top government and central bank officials.

Speaking at a media event organised by BNP Paribas, on the sidelines of the Bahrain Grand Prix 2009, Shaikh Mohammad Bin Eisa Al Khalifa, CEO of the Bahrain Economic Development Board, said Bahrain always believed in gradual and steady development of its financial sector and thus its exposure to the global crisis was within manageable limits.

"We have always seen growth in the financial sector as something that should be gradual and steady.

Sabic's turnover falls by more than half

The turnover of Saudi Basic Industries Corp (Sabic) fell by more than half in the first quarter, while sales costs fell by 38.2 per cent, according to financial statements.

Sabic's turnover stood at 19.82 billion riyals ($5.29 billion) in the three months to March 31, down from 39.98 billion riyals in 2007.

This is the first time that Sabic disclosed turnover figures.

Qatar Emir eyes Porsche stake

The Emir of Qatar plans to buy a stake in Porsche, possibly shoring up the German sports-car maker's strained finances, a German magazine reported.

The Emir has informed Porsche of his interest, Focus magazine reported in an excerpt of an article to be published on Monday.

Porsche declined to comment. Officials in Qatar were not immediately available for comment.

Iran holds back on gas to UAE

Iran will not start delivering natural gas to the UAE until the price has been “corrected” in a contract with Crescent Petroleum, Oil Minister Gholamhossein Nozari said on Saturday.

The National Iranian Oil Company (NIOC) and UAE-based Crescent agreed on a deal in 2001 to deliver natural gas from Iran’s offshore Salman field to the UAE to meet the neighbouring Gulf country’s growing energy demand.

But the agreement was stalled over demands by Iran for a “fair” gas price.

Asked when the issue would be resolved, Mr Nozari told a news conference, reiterating Tehran’s official line: “Not until the price issue, as the focal point of the contract, is corrected will we begin to export any gas.”

Political hot air evaporates the region’s natural gas hopes

The Middle East’s chances of one day selling pipeline gas to Europe are fading as the strategic Nabucco project remains stuck in a web of political brinkmanship.

Construction of the proposed €7.9 billion (Dh38.43bn) Turkey-to-Austria link, which would provide a vital conduit for Caspian and Middle-Eastern gas to reach markets in Europe, is supposed to start in 2011, after the project partners make a final investment decision next year.

But scepticism abounds that the targets will be met due to wavering EU support for the pipeline, Turkish efforts to use it as a political bargaining chip, the shifting landscape of Central Asian relations with Russia, and long delays likely in the development of significant gas exports from Iraq and Iran.

Analysts query IMF gloom

The latest world economic outlook from the IMF paints a bleak picture of global prospects, one that brings it in line with the gloomiest predictions that for months have been emanating from private-sector economists.

The fund now predicts a global economic contraction of 1.3 per cent.

But the IMF’s prognosis for this region marks a particularly sharp contrast with its last forecast, sparking some economists to question whether the organisation, based in Washington, is now erring on the side of an increasingly popular pessimism.

Saudi auditor seeks king’s help to boost fiscal accountability

The country’s top anti-corruption agency sought the king’s intervention last week in recovering public funds from other state agencies, saying that it required his continuous support to carry out its duties in “an unbiased and objective manner”.

The head of the general auditing bureau, Osama Faqeeh, told King Abdullah during a meeting on April 19 that the expansion in government expenditures on development projects and large-scale investment programmes across the country requires more co-operation among government agencies.

Saudi Arabia announced during a G20 summit in London this month that it was embarking on a plan to spend US$400 billion (Dh1.46 trillion) on infrastructure projects during the next five years.