Home Thoughts from Dubai – a critical perspective on life
Tip when visiting/moving to Dubai:
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Reflections from the week:
Ok, the decision has been made. There will be no ‘hooters’ in Dubai. No. This has nothing to do with my favourite topic – the Dubai traffic and driving patterns/habits. It is not an attempt to ‘silence’ my dear Indian friends – who were brought up believing the ‘button’ on the driving wheel in the car is as essential and should be used as frequently as the accelerator. No this ‘ban’ is of the ‘hospitality’ kind. For those of you not familiar with this American term/brand, it refers to the ‘mammary’ assets of women. The bigger I am told ,the more chance you have of ‘getting the job’ It is an American restaurant chain, that has successfully grown with the help of good looking young well endowed serving staff. Usually dressed ( probably overstates the truth ) ‘for the beach’. But anyhow enough of that at this hour of the morning. And enough of that type of thinking for Dubai. There will be NO HOOTERS in Dubai. Now what made the ‘applicant’ think he could sneak this under the licensing radar.
Some ‘hooters’ that appear to have been granted permission however are that awful mix of ‘stray cats’ – the Spice Girls. They are about to launch a ‘comeback’ ( can I start the ‘go-back’ group ) world tour. I saw their ‘comeback’ photo-shoot. Please somebody tell me this is not happening. The world is a difficult enough place.
One thing that IS happening Dubai’s new electronic road toll system. Salik meaning ‘clear’ or ‘free flow’, starts earning money from Sunday. Affectionately known locally as ‘Tom Salik’ ( remember Magnum ), it has been anything but smooth in the run up to its launch date. The distribution of the ‘tags’ has been a dogged with problems. Petrol stations/garages, the key distribution platform, have been embarrassingly under stocked. Perhaps the government did not expect people to buy !!! Intending users of this exciting new ‘tax’ have had to visit up to five or six garages before ‘hitting it lucky’. So from Sunday, the real fun begins.
One truly exciting event that does start on Sunday is the inaugural Etihad direct flight from Abu Dhabi to the worlds best city, Dublin !! I was lucky enough to be invited to the lavish press launch on Wednesday. Hosted in Abu Dhabi’s answer to the Burj al Arab ( we will let them continue to think that ), the Emirates Palace Hotel, it was a superb night. Run by a brash Victorian ( Australian variety ) – you might ask are there any other type of Victorian – this airline in my view will win many awards in the years ahead ( no, I am NOT getting paid for that comment !! ). Its range of new planes together with air-crew that appreciate the people in the seats actually pay their salaries, will make the trip home to Mum a much more pleasant, and frequent, experience. Well done Etihad. Poor Aer Lingus. Why don’t they just stick with the business model they copied from Ryanair. This is a PREMIUM route (wonder will the Aussie CEO at Etihad change this word. It means something completely different in OZ ). Not meant for aging planes. With 1970’s entertainment systems. And bitter grumpy aging staff. So you now have no excuse for not visiting Joanne and myself.
Another launch this week was the iPhone. Not sure what it means to my life. So lets just leave it there. So many ‘events’ but I do need to give you one more. A little ‘skirmish’ I am having may develop into a real battle. It is unfortunately against one of the Regions most successful and respected hotel brands. And one of my favourites.They appear to be heading for a ‘moral trapdoor’. There is a statement in the making. ‘We don’t want our staff being honest, if it costs the company financially or reputationally’. What a sad day that would be. So lets see if there is somebody in the senior executive ‘room’ who can put an impending injustice right. I have got to an age where ‘being human’ is more important than allowing injustice prevail. I always thought there was a ‘Jane Fonda’ in me !!
In my quieter and information gathering moments this week, I came across an article that suggested the number of people over 65 in Europe would grow by 40 million. With a birth rate of just 1.5 per woman ( its 2.2 in the US ), the labour force will decline by 21 million over this 25 years. With me so far ? Consequences ? Well lots. Adequacy of corporate pension fund financing. Drag on Government budgets with probable need to increase taxes. Greater demand for higher yielding investment products – to fund pensions for those not lucky enough to have ‘end salary’ employment contracts. This will put pressure on interest rates as governments and corporate have to ‘compete’ for available global liquidity. But lets not get into the heavy economics. If there are going to be so few ‘workers’ does that mean some of my favourite restaurants will become ‘self service’ !!!
In a ‘carry on’ to some concern I have started to ‘flag’ that the Dubai government may be overstretching and overpaying for overseas assets., this week Istithmar, one of the confusing array of Sheikh Mo investment companies, offered over $800 m for Barneys the US department store. This is the 30th overseas acquisition by Istithmar since inception 3 years ago. There is only a certain amount of money any business can generate without some enhancement of/change to the business model. I am increasingly confused as to what incremental value the heavily paid, and sometimes under experienced, executives of the Dubai can bring. Surely it would be better to develop a ‘core skill’ and then use that to acquire ‘scale’ throughout the globe. A new global victim will arise from this acquisition-fest. A thing or person called the ‘Dubai taxpayer’. The Freezone’s of Dubai will become even more sought after – they hold a Dubai government guarantee of NO taxes whatsoever for 50 years. Watch the price of property in these zones rise, as this reality slowly becomes apparent.
Finally This week saw profits from my various funds go through the Euro 12 million mark. Average 12 month returns are running at 43%. I will be updating my ‘funds performance link’ on the site next week but all have performed far stronger than expected. This week saw one Fund yield 132% in just 9 months. I am also grateful for the oversubscription to the Oceana Fund and given price movements over the past week the Fund is well on the way to achieving its Euro 1 million profit objective.
Finally finally that ‘other posh’, Paris Hilton ‘found God’ while she was in prison. I mean how credible is THAT !! The LAST place you would expect HIM to be would be THERE. Good old Larry King had some good ‘intellectual’ banter with her on Wednesday. She lost !!
Property corner:
Commercial property in Jumeirah Lakes at under AED 1,000 per sq ft is my ‘certainty’ this week. I have already made lots of money for Investors in this well located commercial/residential district. There is a growing awareness of its Freezone ( something I have been ‘drumming on’ about for the past 12 months) benefits. The only question I had, was why it took people so long to work it out. Well not any longer. Prices for office property being handed over this year , are now touching AED 1,600 per sq ft. Another ‘awakening’ for many is Jumeirah Lakes’ proximity to the Metro Line ( unlike Business Bay which is a ‘sweat bath’ away during the months May through to October ). Thankfully Home Thoughts readers were well ahead of the game. But I still think there is a strong investment play – if one can source the right product. Also worth looking at the Abu Dhabi commercial market again. An appraisal of the supply/demand risks makes this a safe bet.
What to avoid:
This weeks ‘Dog’ was easy to find. I did not need to go beyond the front door of the apartment. Picking up the Gulf News it did not take too long to ‘find’ Emaar’s ( one of the Regions four major Developers) new Marina Mall project. Looked great. Locationally perfect. Warming investment words. Marketing claims seemed ‘supportable’. And then, I got to the prices. Surely a typo. Surely some bad ‘proof reading’. AED 2,500 + per sq ft ? Surely not. Double the fair rate for the Marina ? But alas, no. The prices were right. My advice ? Go to the bank. Withdraw Euro 300,000 in cash ( this is just a game. I KNOW you cannot get that amount of money from your bank. …. Unless you live in Dubai ). Bring it home. Put it on table in the garden (reason for this will become obvious shortly !) . Divide it into two halves. Two bundles of Euro 150,000. One on the left of the table. The other on the right. Then go to the kitchen and get a box of matches. Return to the table. Strike a match and decide which bundle you should ‘set alight’. When all that fun is over.
Give me a call and I will buy you a nice one bed with a better position on the Marina than the one bed you could have bought in Marina Mall. Sad thing is that there are enough ‘dopes’ on this planet who have/will buy this over priced product. The average apartment price per sq ft for premium location properties in Dubai will be AED 1,300 by 2009. The Palm Islands will be your exception.
Fun corner:
You may have heard this one before but it is one of my favourites. A wife decides she would surprise her husband by bringing him to a very up market striptease restaurant/club for his birthday. As they arrived at the she was a bit surprised when the bouncer at the door says ‘How are ya John ?’ ‘Good thanks, Dave’. He turned to his wife and explained that he supports Everton and they meet at the grounds every other Saturday. As they are being seated the good looking hostess says to John, ‘do you want your usual seat love ?’. His wife looking uncomfortable asks ‘have you been here before ?’. ‘No Darling. That girl is in the golf club and is married to a mate of mine’. Then another hostess arrives with a pint of Carlsburg and asks what ‘his partner’ would like ?’. Very agitated his wife looks at him ‘how does she know you drink Carlsbug’. ‘Oh she works behind the bar at the squash club , Sweetie’. His wife was just settling into that answer when a gorgeous looking blonde dancer comes over and says ‘Hi Johnny. Want the usual ‘hot dog’ table dance ?’. At complete boiling point, John’s wife grabs her handbag and storms towards the exit. John sheepishly, if defiantly, follows and see’s her getting into a taxi. Before she can slam the door, he jumps in beside her. Thinking at turbo speed he tries desperately to explain how the stripper must have mistaken him for someone else. But his wife was having none of it. She screams at him. Calling him every name she can think of. Her lungs fully tested. Then she calms down a bit. He commences his ‘defense’ and just as he is making some negotiated progress the taxi driver turns around and says ‘Looks like you picked up a real bitch tonight, John’ !!!
Anybody got any other good one liners ? Here are a few examples.
Don’t drink and drive – you might hit a bump and spill it
Don’t drink and park – accidents cause people. Hic !!
If it doesn’t fit, force it.
If it breaks, it needed to be replaced in the first place.
Reality is a figment of your imagination.
Life is just one of those things
Don’t use force ; use a bigger hammer.
Make WAR, not SEX, its safer !!
You know its going to be a bad day, when you jump out of bed and miss the floor.
I can handle pain until it hurts.
Nothing is illegal until you get caught.
Or how about famous last words. ‘Don’t worry, its not loaded’
So over to you for some more suggestions.
Final joke for this week…..
A priest was being honoured at his retirement dinner after 25 years in the Parish. A leading Senator and member of the congregation was chosen to make the presentation and give a little speech at the dinner. He was delayed, so the priest decided to say a few words of his own while everybody waited. ‘I got my first impression of the parish from the first confession I heard here. I thought I had been assigned to a terrible terrible place. The very first person who entered my confessional told me he had stolen a television and when questioned by the police, was able to lie his way out of it. He went on to confess stealing money from his parents, embezzling from his employer, had an affair with his bosses wife, taken illegal drugs, cheated his way through college and gave VD to his sister’ I was naturally appalled. But as the days went on I knew that my people were not all like this person and I had, indeed, come to a fine parish full of good and loving people. ….’ Just as the priest was coming to the end of his talk, the Republican Senator arrived full of apologies at being late. He immediately attempted to make up lost ground and immediately took the microphone to make give his presentation in praise of the retiring priest ‘I will never forget the first day our parish priest arrived’ started the politician ‘In fact, I had the honour of being the first person to go to him in confession’ !!!!! Moral of story ? Never Never be late
Currency corner:
So the Fed did as expected and US rates remained at 5.25%. The 3 and 5 year rates also remained firm as the Fed warned that there was insufficient evidence that inflation was no longer a fear. And so the US$, initially weak, rebounded slightly against the Euro and other currencies. A weaker GDP result for May seemed to be ignored by the market. As has the growing sub prime housing problem. With two of the largest US investment banks now having to prop up a couple of the ailing hedge fund ‘subsidiaries’, this problem could continue to grow.
All I will flag for you is that history shows that the event that has the greatest impact on currency and equity markets is a shock or major event within the ‘financial system’. Chapter one of any book on economics will explain to you the fundamental necessity of a healthy ( and safe ) financial system for any economy to flourish. Without the free flow of money to the ‘wealth and economic creators of society’ the outcome is stagnation and ultimately disaster. If the US banking system is forced into multi billion dollar ‘write offs’ this ultimately flows through to the amount and ‘freeness’ of cash available to the wealth creating sector.
All the other currencies that I cover in this Corner, are going through a boring spell. Some upward swing in Kiwi growth has however raised the possibility of a further upward move in interest rates – with a consequent impact on the currency. The yen had a better week, as dealers viewing it as a one way bet, were threatened by the federal authorities that ‘speculation’ against the currency could be punished. But medium term I think the currency is due for further weakness.
Equity corner:
For those of you who have followed my Wimpey and Taylor Woodrow tips over the past couple of weeks, are unfortunately ‘suffering’. But our day will come. The value fundamentals, despite problems within the UK and US housing markets, remain and indeed improve with every penny that is knocked off the current prices. So please stick with them. We are only a week away from the merger being completed and 10 weeks away from them being a FTSE 100 constituent. So sorry for the short term pain but these stocks are now providing you with a dividend yield of 4% AND at the current p/e you will receive TWELVE per cent per annum – full investment gets repaid over 7.9 years. And these valuation numbers are before the merger cost synergies. So stick with them – and if you can afford to double up. I did say last week that we may need to stay with these stocks for up to 10 weeks.