Home Thoughts from Dubai : You get the truth, in a way that nobody else gets it.
Tip when visiting/moving to Dubai:
Current hotel prices in Dubai risk destroying the Dubai story. In the less rich world Dubai is now becoming too expensive for most. And Dubai has too many hotels.
Reflections from the week:
So how do you feel getting out of bed these mornings ? Nauseous ? Drained ? Depressed ? Well you could be pregnant. Or more likely you are just living life as it is in the latter months of 2008. A world where people’s property (no matter where in the world), pensions, shares/share options, investment products etc are all looking a ‘whiter shade of red’ . Even having cash only gives you a yield approaching what one of my aunts gave me for my Confirmation ( a Christian ‘thing’ for some of my Muslim readers. You get a smack across the face and are told not to drink alcohol !!) - nothing. So all the wealth creating tools that so many of us grew up with are no longer behaving the way they are supposed to. And then there are those who do not have to get out of bed early – as their employer no longer exists or no longer wants you to exist. Yes no longer ‘interesting times’. Now we are in dark and ugly times. So much pain. And now the infection has entered Dubai – secretively ‘swimming’ ashore in the dark of night. And as many of the generously paid/rewarded estate agents awoke after another champagne evening in the ‘Disney world of the young’, they saw a changed world. Almost as though somebody had transported them in their sleep to some crueller place. A place where the champagne tax free lifestyle was a museum product. And so a new world, which includes many redundancies, began the streets, and bars of Dubai are full of dazed and confused twenty-somethings. The Armageddon had silently arrived.
Yet so much of this can be reversed with some intelligent ‘management’ from Government. They can start by directly approaching the banks registered locally to a) stop arbitrarily increasing interest rates – when rates are going the opposite direction around the world b) spreading panic into the already fragile market by refusing to lend to any expatriate who works with a property (or related) company – I don’t wish to interfere with each banks credit management, but announcing this has to be one of THE MOST INSANE actions, on the planet, in 2008 c) the banks also need to be ‘supportive’ not ‘destructive’. And all this CAN be achieved in a ‘risk orderly’ way. So Sheikh Mo, maybe it is time to ‘give me a shot’. Maybe this is why ‘my calling’ took me to Dubai. What is happening at the moment is similar to you giving your ‘flu-hit’ mother cyanide rather than Lemsip. I know how to administer the correct medicine.
Well, despite the ugly world that is out there, I got up this morning. Earlier than my body wanted. But I know how Friday is for you. And so as I struggle to think what to say to you, I reflect on the week ahead. Three bedrooms in the apartment. And commitments given to friends that required five. Yeah another diary ‘cock up’. I do wish they would accelerate the research on ‘age correcting drugs’. But in addition to the social responsibilities associated with these ‘live in’ visitors, there is another army that will require at a minimum, a coffee. Despite the gloomier Dubai skyline, the tourists are still coming. And on the subject of ‘age drugs’, did you read that they now have a ‘jab’ that halts Alzheimers. Now show me WHERE I can get this potentially wonderful addition to my next 30 years. Thirty years where I will know what I am getting up early on Friday mornings for !!! Instead of crawling out of bed, wandering to the living room. Then the kitchen. A quick look at the computer. Scratching my head before returning to bed still confused as to WHY !! So bring on this drug that creates amyloid proteins attached to empty virus cells. Your immune system then has to produce ‘bullets’ that destroys this amyloid. For those of you without a deep understanding of medicine, it is the amyloid protein that interrupts the flow of ‘memory’. And your immune system does not know this is happening. So takes no action. Now where was I !!!
Oh yeah good morning everybody. Did you know what is officially THE MOST dangerous sport/activity in the Obama controlled USA ? Well let me save some of your precious Friday time. You will not get the right answer, even if you go into ‘coffee overdose’. It is, wait for it, CHEERLEADING. There I told you. Give us an ‘S’. Give us an ‘U’. Give us an ‘R’ etc. Yes I was SURprised too. But as many as 35,000 injuries a year come from this ‘sideline entertainment’. And as many as 400,000 expensive lawsuits are wandering through the American legal system, awaiting settlement. Think about how the arthritis these long-legged beauties will have in their older years !!
There are lots of rumours being spread around Dubai at the moment. Uncertain times is fertile ground for such a pastime. Dubai’s borrowing levels has been regularly covered in HT. Indeed I first drew attention to it 15 months ago. Well the current credit markets conditions have heightened attention on how much Dubai has borrowed. And so the pessimists develop into ‘herds’ and make calls for the demise of Dubai. Forget it. Abu Dhabi will provide whatever support Dubai needs. And I mean WHATEVER. Abu Dhabi is one of the wealthiest ‘countries’ in the world. It will extract ‘its price’ from Dubai, but the support will be given. That’s what the 1971 Confederation (which created the UAE) demands. But don’t castigate Dubai’s Government. Much of this debt is infrastructure based. Roads, de-salination plants, a Metro, electrical capacity, air/sea ports etc. ALL this requires money ‘up front’ and the payback is ‘later’. Dubai will have significant future cash inflows. And it still has ‘tax’ as a possibility. But in these difficult times it needs to ensure that it does not drive the people who make Dubai what it is. The LOCALS need to understand that without expats, there is no future for the Emirate. So can somebody please tell the government people who control visa and company registrations that it is NOT acceptable to retard the procedures. Can somebody start to control inflation – the $ has strengthened 21% against the Euro over the past 6 months. So why do we not see it in the shopping basket. Can somebody drive some sense into those that who set the ‘visa rules’ – they will drive people away rather than attract business and people. And why does it make sense that ONLY UAE lawyers can represent you in court. And why do LOCALS start their careers as MANAGERS. There are so many parts that still work. So lets hold the picture together through these difficult times.
One such decision that needs correction is the one that squeezes single people out of living in villa’s. These people usually live 10 to a room and this accommodation is critical to how the economy works. There is NO accommodation alternative that is priced to house these people. I have no problem with them being evicted if there were appropriate alternatives. But no ‘the Authorities’ are gradually evicting them. Many are now sleeping on the beach. What a mess. And nobody seems prepared to acknowledge or tackle it. Even the newspapers are noticeably silent. Even our more conservative Abu Dhabi (which also has a housing shortage) does NOT have this rule. The mess is of course passed onto the employers of these ‘unfortunates’, with the attendant damage being done to business costs. So where is the Government Knight.
On the subject of ‘Saviours’ I have recently found myself as a type of ‘Corporate Life-Guard’. Many friends (and others) from home (being Ireland) seem to have my number and see me as having some magical cures for their corporate or personal woes. While I am obviously sympathetic and, where possible, supportive I am not properly manufacturer for all this responsibility. The thoughts of me sprinting up and down the ‘beach of life’ like some David Hasslehoff in Baywatch is one that I am sure even you would find difficult to imagine. While I don’t mind jumping into deep water, my body and mind are not as ‘tuned’ as they were in my ‘Grease’ days !!
And in light of what I have said in the paragraphs above, remember that Dubai does NOT have the capital that so many of you see as a ‘meal ticket’. And the money they do have is either for ‘internal consumption’ or for global brands that make good financial sense. Every morning the ‘car parks’ of Dubai and Abu Dhabi are full with ‘hopefuls’. You need to have a real quality case to even get in the doors.
A few ‘shorts’ for you. A crane fell over on Sheikh Zayed Road this week. What time of day ? Well what would you expect. It was ‘peak morning traffic time’. Are Damac now finally about to declare bankruptcy ? Or are we going to have an ‘Arab solution’ ? Is Noor Islamic Bank in financial trouble ? If not, then KILL the rumour. Is the Jumeirah Hotel Group about to be partly bought by the Abu Dhabi Royal Family ? And what about Emirates Airlines ? And Nakheel ? Oh stop it. All rumour !!! A Dutch expert on global road deaths has identified the UAE as one of the worlds ‘hot spots’. Now there is a surprise !! Two of Dubai’s public parks now have wi-fi internet connectivity. And it is for free. Get a tan. Smell the grass. Use the park-bench as you ‘desk’ and just get away from all the worlds problems.
It never ceases to confuse me on how the Irish are prepared to steal from each other. A good old (in sense of time past) friend sent me an email during the week asking about a project in the Dubai Waterfront. Without wanting to apportion blame lets just say that the ZeroFiveZero project is only worth AED 1,250 per sq ft in the current market. Where is Joe Duffy when you need him !!!
Finally I loved the typically Italian way Silvio Berlusconi responded to Barack Obama being appointed the next US President. He amiably called the first African-American president-elect in United States history “young, handsome and suntanned.” I wonder if we could get Barack to respond with his own personal description of Silvio. Hopefully he would avoid words such as ‘fat, ugly, bald and corrupt !!
Finally finally every resident of the UAE must hold a new identity card by the start of 2009. These cards currently being issued by the Government. Is there any problem with this process. Well maybe !! There are 4.5 million residents of the UAE. Current weekly processing 8,000. Now by my maths that means the start date SHOULD be 2019. Not 2009. Any comment ??
Property corner:
Any recovery in the current property correction in Dubai is going to be totally dependent on equity markets in the Regions that are most important to the Emirate. Accordingly if you want to be ‘ahead of the game’ have a daily look at the stock markets in the GCC (which I now believe are over-sold. They have been punished for lack of ‘honesty and transparancy’ in addition to economic factors), India, Pakistan (unfortunately a basket case that cannot now be financially rescued because the rest of the world is also poor), Russia, Iran and China. If we can get these markets to first, stabilise and then gradually move into a slow growth mode, we are on the recovery road for Dubai property. Abu Dhabi will also be affected but it does not have the insane levels of stock that infects Dubai and it is the CAPITAL of the UAE – and the barrels of money helps. But within this gloomy outlook, opportunities arise. Over the past week I have been heavily promoting the Palm Jebel Ali Garden Homes. I don’t care what happens in the rest of the market, but these units will, on a 12/18 month view, be total bargains. A 5,000 sq ft detached villa with its own private swimming pool and beachfront on the Abu Dhabi/Dubai border just 10 kilometers from the airport at a total cost of Euro 850,000. That is Euro 170 per sq ft. Yeah I believe that represents real value every day of the week.
Pig Corner:
The Dubai property market is, at the moment, in a very illiquid condition. There are so many people running for cash. This in turn is causing price depression. For anybody who has a property investment here don’t expect to be able to exit over the next 12 months – at least. For those not in Dubai or Abu Dhabi expect a lot of blood ‘in the post’. There will be NO way out other than taking your initial investment and halving it. For those in Abu Dhabi, I think it will be 6 to 12 months before we see some profit. But at least for many it will be a profit ……………… assuming you did not pay over AED 1,700 per sq ft. Above that you may as well be in Ras al Khaimah. As for Dubai you better hope you are in the waterfront regions or the Financial Services Centre or a business district (at under AED 1,700 per sq ft) or any other district at under AED 800 per sq ft. These are the ‘prices of the future Folkd’. And for any of you greedy stupid landlords out there you can expect office rents of AED 140 for Business Bay and AED 95 per sq ft for Jumeirah Lakes etc. DIFC will be AED 220 per sq ft. A bit dramatic I believe but this is how property markets react when in correction mode. So go to bed and wake up next October.
Fun corner:
A guy walks into a bar and says to the bartender, “I want a 12-year-old scotch, and don’t try to fool me because I can tell the difference.” The bartender is skeptical and decides to try to trick the man with a 5-year-old scotch. The man takes a sip, scowls, and says, “Hey bartender! This crap is 5-year-old scotch.I told you that I wanted a 12-year-old.” The bartender won’t give up and tries once more, this time with an 8-year-old scotch. The man takes a sip, grimaces, and says, “Bartender, I do not want 8-year-old scotch like this filth. Give me a 12-year-old scotch or I’ll leave!” Impressed, the bartender gives him the 12-year-old scotch on the house. The man takes a sip and sighs, “Ah, now that’s the real thing.” A disgusting, ugly, grimy, stinking drunk has been watching all this with great interest. He stumbles over and sets a glass down in front of the man and says, “Hey, I think that’s really far out what you can do. Try this one.” The man takes a sip and immediately spits out the liquid and cries, “Yechhh! This stuff tastes like piss!” The drunk’s eyes light up and he says, “So how old am I?”
An Australian is sitting at a bar in New York City and looks at his watch several times in the space of a few minutes. The woman sitting nearby notices this and asks, “Is your date running late?” “No,” he replies, “I have this state-of-the-art watch. I was just testing it.” The intrigued woman says, “A state-of-the-art watch? What’s so special about it?” The Aussie explains, “It uses alpha waves to talk to me telepathically.” The lady says, “What’s it telling you now?” “Well, it says you’re not wearing any panties.” The woman giggles and replies, “Well it must be broken because I am wearing panties!'’ The Aussie smirks, taps his watch and says, “Bloody things running about an hour fast, can I buy you a drink?
Three Italian nuns die and go to heaven. At the Pearly Gates, they are met by St. Peter. He says, ‘Sisters, you all led such exemplary lives that the Lord is granting you six months to go back to earth and be anyone you wish to be the first nun says, ‘I want to be Angelina Jolie ;’ And * poof* she’s gone. The second says, ‘I want to be Madonna and *poof* she’s gone. The third says, ‘I want to be Sara Pipalini..’ St. Peter looks perplexed. ‘Who?’ he ask ‘Sara Pipalini;’ replies the nun. St. Peter shakes his head and says, ‘I’m sorry, but that name just doesn’t Ring a ! bell.’ The nun then takes a newspaper out of her habit and hands it to St. Peter.St. Peter reads the paper and starts laughing. He hands it back to her and says. ‘No sister, the paper says it was the ‘ Sahara Pipeline’ that was laid by 1,400 men in 6 months.’
REMEMBER THIS AT CHRISTMAS TIME According to the Alaska Department of Fish and Game, while both male and female reindeer grow antlers in the summer each year, male reindeer drop their antlers at the beginning of winter, usually late November to mid-December. Female reindeer retain their antlers till after they give birth in the spring. Therefore, according to EVERY historical rendition depicting Santa’s reindeer, EVERY single one of them, from Rudolph to Blitzen, had to be a girl. We should’ve known… ONLY women would be able to drag a fat-ass man in a red velvet suit all around the world in one night and not get lost.
An interview with an 80-year-old woman The local news station was interviewing an 80-year-old lady because she had just gotten married — for the fourth time. The interviewer asked her questions about her life, about what it felt like to be marrying again at 80, and then about her new husband’s occupation. “He’s a funeral director,” she answered. “Interesting,” the newsman thought. He then asked her if she wouldn’t mind telling him a little about her first three husbands and what they did for a living. She paused for a few moments, needing time to reflect on all those years. After a short time, a smile came to her face and she answered proudly, explaining that she’d first married a banker when she was in her early 20’s, then a circus ringmaster when in her 40’s, later on a preacher when in her 60’s, and now in her 80’s, a funeral director. The interviewer looked at her, quite astonished, and asked why she had married four men with such diverse careers. She smiled and explained, “I married one for the money, two for the show, three to get ready, and four to go.”
And oldie and, for some, nasty one !!!
A woman was shopping at her local supermarket where she selected: • A Litre of 2% milk, • A carton of eggs, • A Litre of orange juice, • A head of lettuce, • A can of coffee, • And one pack of bacon. As she was unloading her items on the conveyor belt to check out, a drunk standing behind her watched as she placed the items in front of the cashier. While the cashier was ringing up her purchases, the drunk calmly stated,”You must be single.” The woman was a bit startled by this proclamation, but she was intrigued by the derelict’s intuition, since she was indeed single. She looked at her six items on the belt and saw nothing particularly unusual about her selections that could have tipped off the drunk to her marital status. Curiosity getting the better of her, she said “Well, you know what, you’re absolutely correct. But how on earth did you know that?” The drunk replied, “‘Cause you’re ugly. ”
Currency corner:
Not much to say to you this week. Yes I know it was a hugely volatile week but the US$ is ending the week against the Euro very much as it started. Even though it tried to skip through 1.25 on Tuesday, the realisation that the US is still struggling to ‘save it banking system’ and now its ‘Auto industry’ (which is directly and indirectly responsible for up to 2.5 million jobs) needs upwards of $ 100 billion. So the currency, correctly, adjusted. The real ‘currency dog’ of the week was Sterling. What embarrassing lows does this previously proud currency have to fall to before investors (and economists) believe it is good value. But how people ‘ran’ from the currency this week was totally shocking. Is the UK really in this much a mess. Well, yes. And so as it heads for 85 against the weak Euro, we await the interest rate reduction, that caused some of this currency weakness, of up to another 100 basis points. Another currency prediction ‘in the bag’. But I think we are now close to the level at which the currency will win support. So buy against the Euro at 88.
Equity corner:
What a great exciting week. Up’s and down’s are now part of the expected daily/weekly pattern. At least last weeks tip – British Telecom – showed a 10% gain. In just a week. There is further upside, but it will, in the short term, be more index led. The stock markets at the moment are being controlled by large Funds and ‘derivative products’ are still playing a huge role. While we have moved from the ‘financial story’ (and Paulson this week hit us with a surprise) to the ‘recession one’, there is a big ‘side show’ where the Funds can move the market in minutes. So us ‘retail’ investors need to be very very careful. This week however I recommend you buy British Land (at 5.20) – it has fallen 18% this week alone and is due a ‘corrective’ bounce – and Barclays, where the challenge to the Middle Eastern investment gathers momentum. Barclays are only 1.60 Sterling.