Archive for the ‘Regional News’ Category

The emirate continues its broad expansion into the global airlines market as strong petroleum prices boost its purchasing power. In all, $25B was laid down for major orders for the ME as the region continues to grow its network of airway carriers. See the Reuters report (7/14).

Dubai, one of the seven emirates in the UAE, has a population of 1.6M. However, its government is willing to bet big – $82B big – that its geographic location and timing are right to build the world’s largest airport. Doug McVitie of consultancy Arran Aerospace: “The Middle East is taking over the aerospace industry and Dubai is at the heart of it.” According to consultancy McKinsey, the Gulf economies need to create more than 4 million jobs over the next decade for its citizens. More than 350,000 new jobs could come from the aviation sector by 2015. Read this informative article by MarketWatch.com.

The sheikh ruler of Dubai, Sheikh Mohammed Bin Rashid al-Maktoum, promised (6/23) to build a new $60B city complete with 800 million square feet including residential, commercial, educational and tourism components. To be developed by Dubai Properties, the Eric Kuhne-inspired desert city promises rising opportunities in these sectors as well as materials, utilities, and services.

The Wall Street Journal recently published “Celebrity Endorsers Help Lure the Rich to Dubai: Brad Pitt Will Design Five-Star Hotel, Resort; Even B-List Makes It.” Beyond the talk of celebrities and buried in the latter portion of the article is the following:

“That said [in light of the threat of a Las Vegas-style property bust and recent scandals involving emirate real estate players ], there are few signs that investors are shying away from the region’s real-estate market. According to Dubai-based research firm Proleads, about $2.4 trillion in real-estate projects are currently under construction in the oil-rich Gulf Cooperation Council region, which includes Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman. Dubai alone, the second-largest emirate in the U.A.E., after Abu Dhabi, expects $50 billion in real-estate investment by 2010.” (Emphasis added)

Gulfnews.com reports (5/30) that New York City real estate investors hope to recreate the kinds of gains realized by Asian and Middle East SWFs during their recent investment period in New York City’s big banks following the subprime losses by investing in ME real estate on the cheap. The GM Building in NYC is in play among ME investors. American RE investors are hoping to nab opportunities in the ME to counter the tumultuous returns in American RE markets.

India’s fourth largest software firm confirms anticipation (5/30) of inking deals in Asia and the Middle East in the next quarter. “The outlook for deal closures is very positive in the Middle East and positive in Australia,” Virender Aggarwal, the director for Asia Pacific, Middle East, India and Africa, told Reuters in an interview on Friday.

Germany-based Allianz Global, one of the world’s five largest asset managers with $1.4T under management, has indicated (5/28) it will open its ME office in Bahrain, and that it intends to open two Sharia-compliant equity funds for the region. The firm sees ME as a growing extension of its successes in Europe, Asia, and the US. Read the Gulf Daily News article.

Key takeaways from the RGE Monitor’s recent coverage (5/14) of the Middle East:

“The IMF’s latest regional outlook for the Middle East – released on Monday – suggests that high oil prices will continue to fuel both government spending and private sector investment – making the Middle East the only region likely to maintain its 2007 growth rate (of about 6%).” [Emphasis added]

On the flip side is inflationary pressures and the negative implications of having a pegged currency. RGE notes that “GCC countries have ruled out exiting their pegs or revaluing for now, preferring instead to cushion their population from food inflation through price caps, rent controls and wage hikes.”

Nevertheless, while GCC countries are spending more domestically, “much of the windfall from oil is being saved abroad.” Most noticeable and controversial are Sovereign Wealth Funds (SWF). RGE’s Rachel Ziemba notes the pause in dollar diversification to exploit the dollar weakness and snapping up of distressed assets.

Meanwhile, as the debate over supply/demand of oil continues, the reality is that regional growth is sustainable and trade opportunities are abundant.