UAE cities at odds over lifestyle, ties to Iran

from the IHT today.  Interesting – i was just discussing this with a friend today!  Who’s to say that small and overly pretentious countries with strong ties to the United States are not at risk of getting onto the bad side of defiant neighbors given the evolving world order?

Associated Press

DUBAI, United Arab Emirates: Abu Dhabi and Dubai have been rivals for decades, one building world-class museums as fast as the other has been throwing up skyscrapers.

But the healthy competition that’s helped transform them into two of the Middle East’s most vibrant and bustling cities has soured as they grow increasingly divided over their relations with two other rivals — Iran and the United States.

At first, the differences were cultural. Dubai’s sprawling beaches, American-style theme parks and over-the-top shopping malls clash with the more prim sophistication of Abu Dhabi, which is building a symphony orchestra and branches of the Guggenheim and Louvre museums.

But now Dubai’s soaring commercial growth, liberal Western outlook — and massive trade with Iran — are becoming a liability for U.S.-friendly Abu Dhabi.

With half the population and glitz of Dubai, Abu Dhabi is the richest emirate and capital of the seven that make up the United Arab Emirates. As the world’s fourth largest exporter of oil, Abu Dhabi is also the main provider for the rest of the semi-independent states, including Dubai.

That gives Abu Dhabi the political capital to assert its authority and rein in Dubai’s at times murky commercial dealings with Iran.

The UAE and other Sunni-ruled Arab states are suspicious of Shiite Iran, just a boat ride across the Gulf from Dubai. They share the West’s concern over Iran’s nuclear program and fear Tehran’s growing ability to empower Shiites across the region, especially in Iraq.

Iran and the UAE have diplomatic ties and both benefit from their booming commerce. Thousands of Iranian business are based in Dubai, which also hosts the Arab world’s largest Iranian expat community.

With U.S. sanctions against Iran already in place and Washington threatening new penalties for Tehran’s failure to curb uranium enrichment, Dubai is finding it more difficult to defend its lucrative commercial dealingswith Iran’s ruling elite.

The UAE has been a loyal ally in America’s war on terror. The U.S. has been allowed to operate in an airbase in the outskirts of Abu Dhabi and its warships regularly dock in Dubai’s ports.

But Iranian investment in Dubai — about US$14 billion each year — buoys a robust development plan largely financed with foreign cash. The trade is also huge boost to Tehran’s confidence that it can survive Western-imposed sanctions.

“Iran is not suffering from sanctions if it can still bring things through Dubai,” said Jean-François Seznec, a Gulf specialist at Georgetown University.

Last year, the Bush administration asked Abu Dhabi to crack down on companies suspected of smuggling equipment to Iran to build explosive devices killing American soldiers in Iraq and Afghanistan. The White House also expressed concerns about shipments to Iranian front companies operating in Dubai.

Within days, the UAE president announced a law that allows authorities to “ban or restrict imports, exports or passthrough shipments for reasons of health, safety, environmental concerns, national security or foreign affairs.”

Authorities announced the closure of some companies, but it isn’t clear how thoroughly the law has been enforced. Analysts say Dubai has largely ignored America’s pressure to curb trade with Iran.

By continuing with business as usual, “Dubai has been jeopardizing Abu Dhabi’s relationship with Washington,” said Christopher Davidson, a UAE specialist and a lecturer at the U.K.’s Durham University.

Plus, Dubai’s permissive ways to accommodate Western residents and tourists — by circumventing alcohol restrictions and other rules in the conservative Muslim country — have made the city-state a “liability for the federation, with its behavior,” Davidson said.

So Abu Dhabi has stepped up its pressure, starting with delicate issues Dubai has trouble defending — nudity and excessive booze. Last month, Dubai obliged when Abu Dhabi questioned its neighbor’s Islamic credentials.

Police detained almost 80 people over in a crackdown on public drinking, topless sunbathing and nudity on public beaches. Undercover policemen also rounded up 17 foreign men authorities accused of being gay.

Dubai’s acting police chief vowed to detain all those suspected of acts “deemed offensive, immoral or disrespectful.”

But limiting Iranian business in Dubai is a tougher task, with few rewards for Abu Dhabi, analysts say.

“Neither of them wants to be too close to the U.S. nor too distant from Iran,” said Abdulkhaleq Abdullah, political science professor at Emirates University.

The balancing act associated with trying to accommodate the U.S. and Iran has enabled Dubai and Abu Dhabi to “play good cop, bad cop,” Seznec said.

But he said it was also possible Abu Dhabi doesn’t truly want Dubai to stop being “the main transport hub for Iran.”

The UAE capital looks after the interests of other Gulf states, who fear a U.S. recession and high inflation because their currencies are pegged to the dollar, Seznec said.

“And a bankrupt Iran is simply not in the Gulf’s interest,” he said.

Abu Dhabi and Dubai among world’s most pricey cities

Vivian Salama

The National: July 26. 2008 4:26PM GM

ABU DHABI // Abu Dhabi and Dubai remain among the world’s most expensive cities, though at a lower ranking than last year, a new cost-of-living survey has revealed.

This year Dubai ranks as the 52nd most expensive city, down from 32nd place last year, while the capital is number 62, down from 45th, according to Mercer, the international human resources company that conducts the annual survey. The cities rank second and third in the Middle East respectively, behind Tel Aviv, which ranked 14th. Conversely, a number of European cities have risen in the ranks and dominate the top of the list.

Yvonne Traber, a principal and research manager at Mercer, attributed much of the change to exchange rate fluctuations. “Current market conditions have led to the further weakening of the US dollar which, coupled with the strengthening of the Euro and many other currencies, has caused significant changes in this year’s rankings,” she said.

The survey, covering 143 cities in six continents, is designed to help multinational companies and governments determine compensation allowances for their expatriate employees. It charts the cost of more than 200 everyday items, from clothing and footwear, to groceries, personal care needs, transport costs and dining out, as well as the cost of renting a high quality two-bedroom furnished flat.

The cost of living in many European cities has grown more rapidly than in Abu Dhabi and Dubai because, in addition to inflation, the cost of goods is denominated in euros, which have strengthened against the dollar.

On the other hand, soaring oil prices and the rapid growth of GCC economies has fuelled inflation in the Middle East this year at a faster rate than in Europe and the US.

UAE inflation accelerated to a 20-year high of 11.4 per cent last year and will rise slightly to 11.8 per cent this year, a Reuters poll last month showed. Food, beverage and tobacco accounted for 11 per cent of that rise and, according to the Emirates Consumer Protection Society, a division of the UAE Ministry of Economy, food inflation could rise as high as 40 per cent this year.

“The saying goes that Emirates Hills is now more expensive than Beverly Hills,” said Mary Nicola, an economist with Standard Chartered Bank in Dubai. “Day-to-day expenses in terms of groceries and such have become more expensive here.” 

Soaring rent prices have also become a burden for UAE residents. A report released by the Abu Dhabi Department of Planning and Economy (DPE) estimated that rents during the first quarter alone increased by 18 per cent.

A recent survey found that rents in the capital had risen by an average of 49 per cent since June of last year and, in some cases, almost doubled since the beginning of the year despite a Government cap of five per cent. The survey by Asteco, a UAE property services company, found that rent for two-bedroom apartments in the Muroor and Tourist Club areas increased by 80 per cent or more in the 12 months from last June.

The annual rent for two-bedroom apartments ranged from Dh180,000 (US$49,000) to Dh194,400 in Hamdan Street, on the Corniche, in the Tourist Club area, Salam Street, Muroor and Khalifa Street. The average rent for one-bedroom apartments throughout the city ranged from Dh110,000 to more than Dh140,000, depending on the quality and location of the unit, the survey found.

In comparison, the UK estate agent Foxtons is offering two-bedroom flats in the fashionable districts of Kensington or Notting Hill for £2,167 (Dh15,843) a month, or Dh190,838 a year. A similar two-bedroom apartment in the Financial District of New York was advertised by the CitiHabitats agency for $4,350 (Dh15,977) a month, or Dh192,000 a year.

Ms Traber said that multinational companies were attracted to countries with a high rate of economic growth. “Companies may assign high priority to expansion in these economies but may have to deal with inflationary pressures due to competition for expatriate-level housing and other services,” she noted.

Ms Nicola said inflation would have an impact on attracting new people to the GCC. 

“Businesses trying to set up shop and attract new talent have to fork out more money,” she said.

Worldwide, Moscow ranked as the world’s most expensive city for the second year running, followed by Tokyo, and London. The only US city in the top 50 is New York, which is down from 15th place last year to 22nd this year, due to the weakness of the dollar.

Abu Dhabi buys Chrysler building

My favorite building in my hometown of New York City has been gobbled up by the wealthy Sheikhs of Abu Dhabi.  It seems that given the current economic environment in the United States, the country has no choice but to hold a bit of a garage sale!!!  For God sake, even Budweiser - “America’s Beer” – was just sold to the Belgians.  

 

Abu Dhabi Buys 90% Stake in Chrysler Building

By CHARLES V. BAGLI

The New York Times

 

The government of Abu Dhabi bought a 90 percent stake in the Chrysler Building on Tuesday for $800 million from German real estate investors and Tishman Speyer.

But while it might seem that the buyer, the Abu Dhabi Investment Council, got a controlling interest in the Art Deco tower, a landmark, for that kind of money, that was not the case.

Despite having only a 10 percent holding, Tishman Speyer Properties will continue to control the property and manage it, much as it has since 1997, because it controls the land beneath the 77-story tower, with its trademark stainless steel crown, gargoyles and elevator cabs that evoke the chrome-laden autos of the 1930s.

Tishman Speyer Properties and the Abu Dhabi Investment Council, an arm of the Gulf emirate government, which tends to shun publicity, did not return calls requesting comment.

Teresa Miller, a spokeswoman for Prudential Real Estate Investors, which managed the German fund, confirmed on Wednesday that “we no longer own a 75 percent stake in the Chrysler Building.”

Ms. Miller declined to disclose the fund’s sale price. But real estate executives who were told about the transaction said that Tishman Speyer sold the investment council an additional 15 percent, and that the total price was $800 million. The investment council is also negotiating to buy the retail space in the seven-story glass Trylons, or pavilion, that Tishman Speyer built next to the Chrysler Building.

Tishman Speyer and its partner, Travelers Group, bought the Chrysler Building, at 42nd Street and Lexington Avenue, and the adjoining Kent Building in 1997 for about $220 million from a consortium of banks and the estate of Jack Kent Cooke.

Jerry I. Speyer, the chairman of Tishman Speyer, outmaneuvered competing bidders for the property by pre-emptively securing a 150-year lease with Cooper Union, which owns the land underneath the tower.

The tower was built in 1930 by Walter P. Chrysler, the automaker, and was briefly the tallest building in New York, losing out months later to the Empire State Building.

The Chrysler Building’s lobby featured African marble and chrome, and the Sky Club on the 66th floor offered spectacular views.

But by the 1970s, the building was badly in need of refurbishing.

Tishman Speyer poured $100 million into a three-year renovation, which included erecting a retail pavilion on East 42nd Street under three glass pyramids between the Chrysler Building and the 32-story Kent Building, which was not included in the sale.

Less than four years later, Travelers sold its 75 percent stake for $300 million to the German real estate fund, TMW. “Tishman Speyer will maintain a controlling interest and full decision-making authority” over the building, Mr. Speyer said at the time.

Prudential later acquired TMW and sold its share of the Chrysler Building on Tuesday. Such funds generally buy assets for five to seven years and are not interested in being long-term owners of real estate.

Ms. Miller of Prudential Real Estate said that the fund had earned a 20 percent annual return on its investment in the Chrysler Building, the last property in that fund to be sold before it closes.

Last year, TMW and Tishman Speyer sold 666 Fifth Avenue, a 1.5-million-square-foot office tower, for $1.8 billion. They had bought it in 2000 for $518 million from Sumitomo Realty, a Japanese company that acquired the building in 1988 for $488.6 million.

Japanese companies and institutions flooded into New York during the 1980s real estate boom, with Mitsubishi Estate’s purchase of Rockefeller Center touching off an outcry over foreign control of American property.

The Japanese lost a fortune after property values plunged by 50 percent during a recession in the early 1990s.

Since 2000, German groups have been vying with Middle Eastern interests to be the top foreign investors in New York office towers, apartment buildings and hotels, according to Real Capital Analytics, a research firm. Together, they have accounted for $22 billion of the $30.2 billion invested by foreign entities over the past seven years.

In 2001, German investors accounted for virtually all of the foreign investment in New York. But with prices escalating sharply in 2007, Middle Eastern interests spent $4.4 billion for New York property, compared with the Germans’ $1.8 billion.

Still, with American companies like BlackRock and Apollo raising huge amounts of money from individual investors and institutions around the world, it has become difficult to determine the national origin of investment groups today, said Dan Fasulo, a managing director of Real Capital Analytics.

 

 

UAE reaps farmland in Sudan

by Vivian Salama

The National

ABU DHABI // A scheme has been sealed to buy farmland in Sudan and grow crops that will be used to build up the UAE’s strategic food reserves, with the first fields cultivated towards the end of the year, officials from both countries say.

Crops would be planted on a farm of about 70,000 feddans (29,400 hectares) in Northern Sudan. While the deal will undoubtedly provide a much-needed boost to Sudan’s economy, Abu Dhabi officials say their strategy is to shield UAE residents against record high commodity prices, crippling export bans by supplier nations and potential food shortages.

“Within a short time, it will be very hard to secure these kinds of crops worldwide,” said Mohammed al Suwaidi, the acting director general of the Abu Dhabi Fund for Development (ADFD), the government branch heading the project. “Even if you have the money to buy it, you won’t be able to find it.” 

Officials said it was too early to disclose the value of the deal. Only 16 per cent of the nearly 100 million hectares of land in Sudan has been used for farming, according to Sudanese officials. Crippled by poor infrastructure and technology, the government of Africa’s largest country is hoping to exploit this resource as a means of attracting investment.

“Sudan is looking for investors because we are lacking in infrastructure and proper financing, so we give the land at a very low price to attract investors,” said Nurel Huda Fath al Aliem sid Ahmed, the economic adviser at the Sudanese Embassy in Abu Dhabi. “Sudan will give free water, cheap land, exemptions from customs duties and from all the fees that might restrict investment.”

The farm, located in the town of Abu Hamed in the northern Sudanese state of Nahr an Nil, will be used primarily for the cultivation of alfalfa. According to Mr Suwaidi, the price of alfalfa has increased by almost 50 per cent since last year. Officials say that soil studies are under way to determine whether the land will also yield substantial amounts of corn, rice, peanuts and potatoes.

The UAE imports nearly 85 per cent of its food, worth an estimated Dh11.01 billion (US$40bn) annually.

Escalating inflation has driven the Ministry of Economy to consider alternative sources of food to boost supplies, while cutting costs. Co-operative societies have been urged to form partnerships with food producing countries, enabling them to buy produce at source. 

The Ministry of Social Affairs has also recommended that local co-operatives lease farms from similar organisations in countries such as India and Brazil, which would significantly reduce the chain between farmer and retailer.

The Ministry of Economy is considering the purchase of farmland in Pakistan worth US$500 million (Dh1.8bn), as part of a strategy to lower food import costs. Similar farming schemes are under consideration by the ADFD, although no other deals have been finalised. 

A number of GCC states had expressed interest in cultivating Sudanese land, however only the UAE had finalised negotiations, said Dr Ahmed, adding that the Saudi Arabian private sector is also pursuing farmland investments.

“About 300,000 feddans have been bought by Saudi companies but they have not begun to cultivate,” he said. Feddans are the unit of measurement used in Sudan and some other Arab speaking countries.

The Sudanese official said that while talks with the GCC have got off to a good start, his government hopes that these investments will grow in time.

“Seventy thousand feddans is really nothing when you think of how much land we can offer and how much money these governments can spend,” Dr Ahmed said. “We hope to receive investments for one million feddans, not only 70,000.”

The Abu Hamed farm is one of several investment projects headed by the ADFD in Sudan. The Government recently pledged Dh275m to finance dams in the African nation. Mr Suwaidi said the first Dh184m loan would be used to complete the Marawi Dam in Northern Sudan, which the ADFD had previously helped finance with a Dh551m extension.

Dr Ahmed said that such projects were vital to Sudan’s prosperity. “We are really depending on governments here to help us to build our infrastructure, whether paving the roads, or greater construction or better electricity,” he said.

vsalama@thenational.ae

Abu Dhabi poised for shopping boom

By Vivian Salama

The National

Abu Dhabi’s retail industry could soon yield higher sales per capita than Dubai, with spending power in the emirate expected to surpass Dh7.34 billion (US$2bn) by next year, according to research by the property consultant, Colliers International. 

“The outlook for Abu Dhabi is bullish,” John Davis, the chief executive of Colliers, said yesterday at the Middle East Council of Shopping Centre’s (MECSC) annual convention.

Retail sales in Abu Dhabi must increase by 19 per cent for it to sustain its performance per capita, while sales in Dubai must grow at the rate of 35 per cent to achieve the same performance, partly due to the growth in tourist numbers.

Mr Davis said the gross leasable area (GLA) for retail space in the capital was expected to grow by 122 per cent within two years.

Malls account for almost 60 per cent of Abu Dhabi’s total retail GLA, with non-mall GLA representing less than 300,000 square metres. According to the Colliers data, the occupancy rate at malls across Abu Dhabi averages about 90 per cent, while the shopping centres in Dubai are all nearly full.

Several factors are expected to lure more brand names to Abu Dhabi in the coming years. Retailers pay considerably lower rents in the capital, with the average annual cost ranging from Dh3,486 to Dh5,505 per square metre at prime shopping centres such as Marina Mall, Abu Dhabi Mall and Al Wahda Mall. In Dubai, at Mall of the Emirates, Ibn Battuta Mall and Burjuman, rents range from Dh4,404 to Dh6,606.

“The spending power of the Abu Dhabi nationals is obviously very, very high, Mr Davis said. “You’ve also got companies like Etihad, for example, which are really working to bring people from around the world directly to Abu Dhabi, so that will have a positive impact on the retail sector as well.”

The major players in Abu Dhabi’s retail property sector, including Aldar and the National Investment Corporation (NIC), are actively pursuing ambitious new projects throughout the emirate. Several new malls will be opened in the capital in the next few years, including Dalma Mall, scheduled to open next year, as well as the Central Market, Deerfields, and phase III of Marina Mall, all scheduled for 2010.

vsalama@thenational.ae

Aldar starts work on mall for Al Ruwais

by Vivian Salama

The National

 

DUBAI // The developer Aldar has begun work on the first major shopping centre to be built in the remote industrial town of Al Ruwais. 

The new mall, located 220 kilometres west of Abu Dhabi near the Saudi Arabian border, will serve as a community centre, providing a range of activities for residents who now have to drive long distances for shopping and leisure facilities. 

“People in Al Ruwais have to jump in a car, pack the family up, take a picnic and go on a long drive just to shop – it’s a day’s journey,” said Fred Douglas, the leasing director for Aldar. “Why should these people be denied a fully enclosed, air-conditioned shopping mall – the things that people in Abu Dhabi and Dubai have and take for granted every day?”

The 30,000-square-metre centre will feature a still-unnamed hypermarket, a wide range of retail shops and a Warner Brothers cinema. Aldar is currently reclaiming land at the site and is expected to start the leasing phase within weeks. 

Aldar officials expect the population of Al Ruwais to grow from 16,000 to 20,000 by the mall’s scheduled completion date of 2010. 

By factoring in communities around Al Ruwais, they believe the new shopping centre will serve as many as 40,000 people, many of them expatriates working in the oil industry.

According to Phillip Vaughan, the director of retail development for Aldar, the company is the UAE’s only real estate developer actively pursuing projects in outlying areas of Abu Dhabi. 

Aldar has no plans to expand to the other emirates, but it does plan to open shopping centres in other towns.

“There is potential for further facilities and amenities in due course, but if you consider the point of oversupply, Al Ruwais really only needs one strategic retail offer, and that’s what’s being supplied,” Mr Vaughan said.

Aldar already has a number of schemes under construction in Abu Dhabi city, including the five-hectare Central Market and the Dh1.2 billion (US$327 million) Noor Al Ain development, which will complement the existing Al Jimi Mall. 

Both are scheduled for completion in 2010.

The Adventure Begins…

Hey folks – for those who follow my blog, you may be wondering why I haven’t written in a while.  I just moved to the UAE to report for a new start-up newspaper based here which is positioned to be an international competitor to some of the major newspapers of the world.  The staff is extraordinary and I am really excited to join the project.

 

As always, I will post my articles here on the site, but I will also do my best to share some of the anecdotes from my travels.  I have been taking photos as well, but until I settle in, Internet access is not always available.  Thank goodness for Starbucks!  In the meantime, here’s a quick story from day 1: 

 

Went to lunch with 5 colleagues – we opted to eat Afghani food.  The seating area was downstairs and there were plenty of seats, but they took us to an upstairs room and closed the curtains on us completely.  One of my colleagues asked to open the curtains… which is when the waiter subtly pointed to me and my other female colleague and simple said “no.”

Too bad, really.  Some of the men in this restaurant were just stunning – I would have liked nothing more than to photograph them.  Alas, I ain’t in Kansas no more.