Home Thoughts From Dubai

Tip when visiting/moving to Dubai:

The new hotel in the Burj Dubai area is supposedly just wonderful. Worth a visit. I will be there shortly and will confirm. But in the meantimme you can visit The Address.

Reflections from the week:

Where should I start this week. Another 7 days closer Christmas. Another 7 days elapsed in the race to have my new UAE identity card application processed. Just 32 left. And 22 of these disappear when I take out my Christmas hols and the National holidays in UAE (4 working days). The National Identity Card applicationn and processing procedure is ,to me, is a farse. It (the process and frustration) will give you a complete understanding of ‘Local’ thinking. What Dubai and AD now need to realise is that there will be a net exodus from the Region over the next 18 months unless some of the (lifestyle and working) appeal of the early part of the decade are restored. Redundancy numbers are growing, the Region is 25% more expensive for tourists from Euro and Sterling zone countries, restaurants are now amongst the more expensive in the world, labour/immigration visa application/processing has the same appeal as sticking a blunt knife in your stomach and the list goes on. Sometimes I wonder if Sheikh Mohammad really knows what his people are doing to his dream. And the airports with nearly 200 million annual processing capacity (when complete) will become like stadia on nights where there is ‘no game ’. Already hotels across Dubai are facing their lowest occupancy levels ever experienced. The members of the recently formed Committee to address the problems in the financial and construction space should perhaps not go home. There is a tourist and redundancy problem that needs the benefit of their wisdom. Shame that the Committee has no international, non Arab, representation. After all WHY would that be needed ? Or have they not realised here that all the housing, hotels, airport/airline investment, infrastructure spend etc will be wasted if foreigners are not prepared to spend their money or invest in the Region. But let me not bitch too much. The rest of the world is not exactly full of heavenly virgins either.

Now for some of the good of the Region. Apart from the ‘no tax’, virtually no crime, the weather and this list also has ‘some legs’. But from next week taxi’s in Dubai will not be charging passengers for Salik (the road toll system). A loss of revenue to the Government but a very intelligent change of heart by the Road Traffic Authority. But watch these taxi drivers. They are not beyond a ‘trick or two’. ‘Oh sur, I im su surry. I faggot tu poot salik churge un meter. You cun gieve eet tu me seperately’ !! Trust me, it will happen. Anyhow the Atlantis party has not been erased from our memories and the QE2 arrives. How ironic. One of the great symbols of British maritime superiority, now a museum piece – complete with its internal Mosque - in the waters of the Arab world. Within 18 months it will be another wonderful hotel option for visitors.

The increasing sports emphasis in the Region kicked off (literally) yesterday with the start of the 3 day Rugby 7’s. And there will be so much more (golf, tennis, horse racing etc ) in the months ahead as we move into the Regions cooler months. Ireland do not have a team in the rugby. Something to do with the difficulty the Irish (team’s) have in differentiating between holidays and the discipline expected when participating in an overseas travel event. Of course it is acceptable to be out late and drink heavily when you are on holidays. But if you were going to tackle the All Blacks or the ‘gazelles’ from Fiji the next day, you would probably have a different scale ‘diet and sleeping priority’. And so an Irish team has not turned up at this event since 4 (60% of the team) members of the 2006 team were seen ‘emptying their guts’ somewhere near the changing rooms after a convincing trouncing by some ‘unknowns’ from Africa. Don’t you just love the Irish sense of priority !!We have not had a team at the tournament since.

Hopefully the Irish sense of integrity and reliability is not lost in the current Irish meltdown. While the ‘Celtic Corpse’ continues to rot, the Irish Government needs to preserve the hard, and deserved, reputation of the Irish in overseas markets. This week the Tanaiste (deputy Prime Minister of Ireland) headed a trade mission to the UAE. She reiterated the Irish Governments commitment to opening an Embassy in the UAE. ‘Our word is unconditionally reliable’ were the words I heard her deliver. So please Tanaiste, start to deliver. On behalf of the enormous number of Irish companies that are seeking a ‘new beginning’ in the UAE, you have to act. On behalf of the international reputation of all of us who hold, with pride, the Irish passport. On behalf of a Government that seems to have little else to be proud of. As part of the re-building of an economy that badly needs foreign trade. The words are now 18 months stale. What is required now is action. In fairness to a Tanaiste who is under assault at home, she did a good job over her few days and I understand that Euro 40 million of new contracts were signed.

Another woman that should be happy with her week, is the new US Secretary of State, Hilary Clinton. And so the Clinton’s have a return ticket to the White House. I wonder if the ‘cigar room’ is still open. And let me give you a ‘hat trick’ of happy women.

You may recall the ‘sex on the beach’ story. Well this week the British slut had her 3 month prison sentence suspended. A very lenient judge decided that the couples commitment to get married, was sufficient grounds to let the couple go. Given that the couple only knew each other 5 hours when the ‘event’ happened, it goes to prove that you can ‘fall in love at first sight’ and get happily married. I wonder was the couple’s commitment to the court to ‘get married’ interpreted by the court to mean ‘to each other’ !!! But Dubai is better off without this woman. Her offence was more about abusing the police (including hitting one of them with her shoe) and calling one of them a ‘M**lim bas*ard’. She deserved to be put in jail for that alone. She is a disgrace to all the law abiding and friendly British that work and visit the UAE. Wonder what beach in the UK is ready for her ‘next act’. Interesting decision by the court though. Does that mean if you are married you CAN have sex on the beach. Wow !!!

One British guy who was not so lucky was 36 year old driver who went through a red light and killed two people. He was drunk. Why do people still drink and drive in this country. Zero tolerance means Zero. While you are likely to get away with drink-driving if you are not involved in an accident, the punishment should keep your brain focussed. This gentleman will regret that night when he returns home after his 12 month jail sentence and paying the Euro 100,000 blood money.

The tiredness of the Dubai Debt story is something I need to comment on. Dubai has borrowed, as every other nation in the world has, to finance much of its infrastructure program. So if a country wants to invest in/construct a new Metro/public transport, or airport, or de-salination plants, or energy capacity, or air planes, or roadways, or telecommunications etc , the money required needs to be in place up front. So bank lines and equity needs to be in place before there is ONE DIRHAM of payback. The revenue streams from this investment only flows when the project is complete. Given the scale of what Dubai wanted to achieve it is inevitable that its foreign debt would grow. The problem is that in this current ‘cruel world of credit’ anybody wanting to even ‘rollover’ legally binding commitments, are being made to suffer in terms of price and ‘material adverse change clausing’. And Dubai is no different. And Abu Dhabi WILL assist fully in ensuring one of its family is not humiliated by ‘Western Mercenaries and Capitalists’. After all once these projects are complete the revenue streams will rapidly reduce the levels of debt. And this week as if to prove a point $ 500 million of foreign debt this week. WITHOUT any help from Abu Dhabi. So please can you put those foreign journalists who want, and hope, the Dubai story is a broken dream, in a little coffin and drop them from a high building. Don’t you just hate guys who pump on about things that they research badly. But then that is typical of so many within the UK press. How many of them got degree’s will remain a puzzle that I am not prepared to waste time on.

And so to another puzzle (with a little sense of humour). Just for the record the UAE’s foreign assets are $600 billion (higher than those of Saudi Arabia). This is almost 10 times current TOTAL debt. And does NOT recognise the assets held in the GCC or oil reserves. Have you ever wondered how Stock Markets work ? Well here is a little story that may help your understanding It was autumn, and the Red Indians asked their New Chief if the winter was going to be cold or mild. Since he was a Red Indian chief in a modern society, he couldn’t tell what the weather was going to be. Nevertheless, to be on the safe side, he replied to his Tribe that the winter was indeed going to be cold and that the members of the village should collect wood to be prepared. But also being a practical leader, after several days he got an idea. He went to the phone booth, called the National Weather Service and asked ‘Is the coming winter going to be cold?’ ‘It looks like this winter is going to be quite cold indeed,’ the weather man responded. So the Chief went back to his people and told them to collect even more wood. The winter was definitely going to be cold. A week later, he called the National Weather Service again. ‘Is it going to be a very cold winter?’ ‘Yes,’ the man at National Weather Service again replied, ‘It’s definitely going to be a very cold winter.’ The Chief again went back to his people and ordered them to collect every scrap of wood they could find. Cold was the ‘definite theme’ of this winter. Two weeks later, he called the National Weather Service again. ‘Are you absolutely sure that the winter is going to be very cold?’ ‘Absolutely,’ The Man replied. ‘It’s going to be one of the coldest winters ever.’ ‘How can you be so sure?’ the Chief asked. The weatherman replied, ‘The Red Indians are collecting wood like Crazy.’ And that my friends is how Stock Markets work!!!

One legal oddity that I tripped over during the week, is an apparent anomaly in the driving penalty points system in the UAE. The system works on a 24 points and you ‘are out’ basis. There is one offence that immediately wins you this honour. If you ‘carry’ a false number plate on your car. Well I can’t disagree with that. Particularly in a Region that wishes to punish crime (or intended crime) in the most severe way. But as I went down the list I became more confused. The crime of ‘wearing’ a false number plate appears to be twice as bad as killing somebody while you are driving recklessly. Yes 12 points for the latter. So you can, through reckless driving, kill two innocent people before you find yourself in the same ‘box’ as somebody who has a wrong number plate. Ah well, like our dumb journalists, not worth spending too much time on it.

One sad event on our roads this week was the unfortunate death of one of the Al Tayer family. A very powerful, wealthy and nice local family. Mohammad was only 18. Although I only met him once, he seemed like a lovely kid. I offer my sympathies to his mum and dad.

One story that fascinates me at the moment is the number of large oil tankers that are getting hi-jacked on the seas by pirates. I truly believed that pirates were a ‘species’ from history. Story book stuff. They survived in an age where locating and ‘accessing’ them was impossible or difficult. But in the age of sophisticated tracking technology, the might of some many of the world’s airforce’s, the technology that allows you unmanned ‘flies’ to infiltrate enemy lines etc, how are some undereducated, drunk and underequipped Somali’s able to takeover a giant super-tanker that can at best travel at 25 kilometers per hour and not be ‘intercepted’ or ‘arrested’. While i can understand the difficulty in tracking Osama bin Laden through the complex cave-networks of Afghanistan, these guys are down there in the ‘open sea’s’. Surely this is a bit easier ? And with the ransom money at $150 million it would nearly be worth my time creating my own mercenary air force !!

Finally for all of you who have been fans of investment in India, this week has been a bad one. While India is seen as a powerful country with a well educated low cost labourforce, it is also a country of great poverty and its very complex political system has some serious volcano-lines. It is also a corrupt country with lots of alligators prepared to relieve you of some of your limbs. The investment dangers and the political complexity was graphically highlighted this week. F

inally finally some rumours for you. I know you like them. Well is it true that the Burj al Arab room occupancy rate will for the first time fall below 40% from the middle of January 2009 ? And that they will be setting up a restaurant reservation kiosk outside the hotel’s security gate ? Or that 50% of the staff in the Royal Meridien have been told that they can take two weeks off in January – because bookings are painfully low ? Or that the Trump Tower on the Palm Jumeirah is being cancelled or ‘reduced’ ? And who is going to tell Donald ? You are fired !!!

Property corner:

While some of you may find it difficult to understand that not all economies in the property world are in the same toilet as yours, there are and will continue to be safe and valuable investments oppoortunities in some parts of the planet. And while Dubai is unquestionably finding life a little more quiet, the desperation of some investors becomes the opportunity of others. History shows that there is more money to be made in bad times than in good. Wealth creation is all about where on the ‘curve’ you are buying and which direction the curve is going. The collapse in prices in some projects in Dubai has in my view opened up enormous value for investors. I have not recommended ‘direct’ property purchase investments in Dubai for nearly 18 months. I have not been happy with valuations and over-supply.

But recently I have become a ‘believer’ again. The Palm Jebel Ali is to me the only game in town and prices are now at such levels that I cannot see any downside. It may be difficult for people who have been savaged by property and equities in their home and foreign markets to have any confidence but this is the time to be brave. Against a virtually no downside, there is up to 200% return’s on the other side of this coin. Our global history will point to many many very wealthy families who have capitalised on the misfortunes of others. The UAE property market, at current ‘adjusted’ levels of pricing, presents such an opportunity. In an effort to allow as many people as possible to participate in this ‘resurrection’, I will over the next couple of weeks (even though it is Christmas), produce some investment options that include a ‘shared equity’ scheme, whereby an investor can have ownership and use (two weeks annually) of a villa in Dubai at an entry price as low as Sterling 29,000. My calculations point to a likely return on invested capital of up to 400%. A nice safe way to start the long journey of wealth re-building.

Dog Corner:

At the moment there is virtually NO interest in any Dubai (or UAE) property except for shoreline product. There is an uncomfortable 12 months ahead for many as they try to meet instalment payments that they had not expected with the realisation that their UAE property is unsalable. For many it might be less expensive to forget that you had started the investment journey at all, and leave the problem to the Developer. For those of you with property in the Northern Emirates (outside Dubai and Abu Dhabi) the picture is even more bleak. You may NEVER be able to sell – unless your stomach and head (and bank balance) have been prepared for a sizeable thumping. When I started Dog Corner, I expected to be able to write about one or maximum two projects per week/month that you should avoid.

Unfortunately somebody has opened the ‘dam’ and it is easier for me to pick out some safe bets for you rather than waste pages of comment on what to avoid. I will accordingly be putting more emphasis on Property Corner for the next few weeks. I will however alert you to particularly bad or expensive projects that come into focus. I will also advise of Developers that may be under some ‘cash stress’. And of rumours in the marketplace. Which leads me to advise that Damac will soon be in new ownership. How did they last so long !!!

Fun corner:

The following questions and answers were collected from last year’s Standard Grade exam results in Dundee. These are genuine responses from 16 year olds!

Q: Name the four seasons. A: Salt, pepper, mustard and vinegar.

Q: Explain one of the processes by which water can be made safe to drink.

A: Flirtation makes water safe to drink because it removes large pollutant like grit, sand, dead sheep and canoeists.

Q: How is dew formed? A: The sun shines down on the leaves and makes them perspire.

Q: What is a planet? A: A body of earth surrounded by sky.

Q: What causes the tides in the oceans? A: The tides are a fight between the Earth and the Moon. All water tends to flow towards the moon, because there is no water on the moon, and nature abhors a vacuum. I forget where the sun joins in this fight.

Q: What guarantees may a mortgage company insist on? A: If you are buying a house, they will insist you are well endowed.

Q: In a democratic society, how important are elections? A: Very important. Sex can only happen when a male gets an election.

Q: What are steroids? A: Things for keeping carpets still on the stairs.

Q: What happens to your body as you age? A: When you get old, so do your bowels and you get intercontinental.

Q: What happens to a boy when he reaches puberty? A: He says goodbye to his boyhood and looks forward to his adultery.

Q: Name a major disease associated with cigarettes. A: Premature death.

Q: What is artificial insemination? A: When the farmer does it to the bull instead of the cow.

Q: How can you delay milk turning sour? A: Keep it in the cow. [He got an A]

Q: How are the main parts of the body categorized? (e.g. abdomen) A: The body is consisted into three parts - the brainium, the borax the abdominal cavity. The branium contains the brain, the borax contains the heart and lungs, and the abdominal cavity contains the five bowels, A,E,I,O and U.

Q: What is the Fibula? A: A small lie.

Q: What does “varicose” mean? A: Nearby.

Q: What is the most common form of birth control? A: Most people prevent contraception by wearing a condominium.

Q: Give the meaning of the term “Caesarean Section.” A: The caesarean section is a district in Rome.

Q: What is a seizure? A: A Roman emperor.

Q: What is a terminal illness? A: When you are sick at the airport.

Q: Give an example of a fungus. What is a characteristic feature? A: Mushrooms. They always grow in damp places and they look like umbrellas.

Q: Use the word “judicious” in a sentence to show you understand its meaning. A: Hands that judicious can be soft as your face.

Q: What does the word “benign” mean? A: Benign is what you will be after you be eight.

Q: What is a turbine? A: Something an Arab or Seikh wears on his head.

They say that the old ones are best. And this one is particularly pertinent given how politicians around the world are responding to the global credit and economic crises. So here is a classic…….

 Brian Cowan (you can substitute any politician or incompetent corporate leader) was visiting a primary school and he visited one of the classes. They were in the middle of a discussion related to words and their meanings. The teacher asked Mr. Cowan if he would like to lead the discussion on the word ‘tragedy’. So the illustrious leader asked the class for an example of a ‘tragedy’. A little boy stood up and offered: ‘If my best friend, who lives on a farm, is playing in the field & a tractor runs over him and kills him,that would be a ‘tragedy.’ No, said Brian - that would be an accident.’ A little girl raised her hand: ‘If a school bus carrying fifty children drove over a cliff, killing everyone inside, that would be a tragedy’ I’m afraid not, explained Brian - that’s what we would call great loss The room went silent. No other children volunteered. Brian searched the room. ‘Isn’t there someone here who can give me an example of a tragedy?’ Finally, at the back of the room, little Johnny raised his hand… in a quiet voice he said: ‘If A plane carrying you and Mr. Lenihan was struck by a ‘friendly fire’ missile & blown to smithereens, that would be a tragedy.’ ‘Fantastic!’ exclaimed Brian. ‘That’s right. And can you tell me why that would be tragedy?’ ‘Well,’ says little Johnny ‘it has to be a tragedy, because it certainly wouldn’t be a great loss and it probably wouldn’t be a f*cking accident either!’

A man charges into a bank wearing a balaclava and wielding a handgun. He shouts ‘this is a raid - everybody get down on the floor!!’, and proceeds to empty the cash drawers. As he runs towards the door with the loot, a brave customer yanks off his balaclava. The robber immediately shoots the customer and shouts…. ‘Did anybody else here see my face?’ The robber notices another customer peering from behind a counter and promptly goes over and shoots him too. ‘Did anybody else see my face?’ he shouts again, waving his gun around. There is silence for a few seconds before a male voice is heard from a distant corner. ‘I think my missus caught a glimpse….’

Currency corner:

Not really much to report this week. Some weakening of the US$ against Sterling and Euro later in the week but no where near the volatility of recent months. A bit boring. And rather than ramble on with some words that just fill space, I will leave you with two thoughts. The US$ will resume its strength over the next few weeks and Sterling is now a ‘buy’.

Equity corner:

Unlike the currency markets, this week was like an ‘Atlantis Party’ across global equity bourses. The fireworks started right from the start of the week, with the Dow Jones showing a 10% rebound in the three days before the Thanksgiving holiday. Our tip of last week, BP, was up 13% in just 7 days. My tip this week, GlaxoSmithKline (GSK). They have been damaged by a move away from defensives to the stocks that have been most damaged by 2008 Bear Market. But GSK will recover and at 10.75 they represent excellent value. Even if the market reverts to more gloomy trading patterns. I don’t believe we should be too complacent about the recent strength. The world is still in or near total recession. The depth and length of it is what is now important. Corporate earnings will remain weak and in many cases disappointing. So there are many ‘downside’ risks. But for those who do not watch share prices by the minute or day, now is a good time to invest – on a 3 year perspective. The worst of the financial crisis is over and attention will now switch to economic and corporate earnings issues.