Mega-mall opens with high hopes

I went to cover the opening of the highly-anticipated Dubai Mall this week — one of the largest malls in the world.  I have to admit, while I was a bit distracted by everything going on in the final days of the US elections, it was a lot of fun.  The highlight for most visitors is the aquarium — the largest in the world!!! There were divers inside the tanks feeding the shark as the media walked through.  We were literally dropping our noteboks and work cameras to pose next to the tanks.  However, for me and the 2 dozen-or-so Americans I spoke to on opening day, the highlight, by far, was Taco Bell – the first ever to open in the Middle East!!!  Nothing like some tacos and a little mystery meat to make you feel at home.

Here is an audio slideshow I did from the event with photos by my pal Nicole Hill.  

Click here: Opening Day at the Dubai Mall

(the audio quality is unfortunately not great, but you get the point.

And here are some photos I snapped with my personal camera.  

 

Inside the Dubai Mall aquarium tube

 

me - a bit captivated with the fish inside the Dubai Mall aquarium tube

 

Inside the mall itself - note the not-so-subtle reminder that you are in the UAE

 

From the outside, Dubai Mall with Burj Dubai, the world

Political Storm Finds a Columbia Professor

As a former student of Rashid Khalidi, I can say with confidence that the accusations by Sarah Palin and John McCain of the professor’s “radical” associations to the PLO are absolutely outrageous and infuriating.  The fact that they would dedicate so much time to such a trivial (and false) subject just days before the election, when the country’s economy is tanking and its troops are dying, confirms in my mind the fact that a McCain/Palin ticket will only lead our country into further catastrophe.  There are plenty of people around the world who regard advisors to the Bush administration as also having links to a “terrorist organization.” What they have done to Dr Khalidi is, in my opinion, defamatory and I really hope that Americans recognize that.  

Political Storm Finds a Columbia Professor

By MARC SANTORA and ELISSA GOOTMAN

Published: October 30, 2008

Rashid Khalidi had been bracing for the storm for months, friends said

Since an April news report detailing his relationship with Senator Barack Obama, Mr. Khalidi, a Middle East scholar and passionate defender ofPalestinian rights, had waited to see himself caricatured by Republicans as part of a rogues’ gallery of Obama associates, which has come to include the Rev. Jeremiah A. Wright Jr. andWilliam C. Ayers, a former member of the Weather Underground.

He was surprised, the friends said, that so little criticism came — until this last frenzied week before the election, when Senator John McCain cited the April article in The Los Angeles Times about a dinner Mr. Obama attended in Mr. Khalidi’s honor in 2003, and questioned Mr. Obama’s commitment to Israel.

In recent days, Republican partisans have accused Mr. Khalidi, a professor at Columbia University since 2003, of everything from anti-Semitism to baby-sitting for Mr. Obama’s children.

For Columbia, the firestorm is the latest episode in a string of messy, public controversies regarding Middle East politics. In 2004, pro-Palestinian professors were accused of intimidating Jewish students. Mr. Khalidi was not one of those teachers, but he was barred the next year from lecturing New York City public school teachers for having used the words “racist” and “apartheid” in discussions of Israel.

“It just seems really ironic to me that Rashid would be singled out as a figure in the trumped-up controversy,” Alan Brinkley, Columbia’s provost and a friend of Mr. Khalidi’s since 1985, said in a telephone interview Thursday. “In a field that is often politicized, he is respected by people on the right as well as the left.”

Ariel Beery, a former Columbia student leader who was involved in a pro-Israel group’s film about the 2004 controversy, said Mr. Khalidi was different from those accused of intimidation.

“In terms of his role as a professor, he was excellent,” Mr. Beery said Thursday in a telephone interview from Israel, where he lives. “He was provoking, he always allowed for different opinions, he had an open zone where people could voice their disagreement.”

Mr. Beery did criticize Mr. Khalidi’s leadership of the Middle East Institute at Columbia, saying it was “highly politicized” and “not promoting a diverse view of the Middle East.”

Mr. Khalidi, who is on sabbatical, declined to comment.

Mr. Khalidi, the Edward Said professor of Arab studies at Columbia, was born in Manhattan in 1948. His father, a Palestinian Muslim born in Jerusalem, worked for theUnited Nations, and his mother, a Lebanese-American Christian, was an interior decorator. He graduated from the United Nations International School and earned his bachelor’s degree from Yale in 1970 and a doctorate from Oxford University in 1974.

He taught at universities in Lebanon until the mid-’80s, and some critics accuse him of having been a spokesman for the Palestine Liberation Organization. Mr. Khalidi has denied working for the group, and says he was consulted as an expert by reporters seeking to understand it.

He was an adviser to the Palestinian delegation during Middle East peace talks from 1991 to 1993. From 1987 until 2003, he was a professor at the University of Chicago, where he became friends with Mr. Obama.

At Mr. Khalidi’s farewell party in 2003, according to the Los Angeles Times article, Mr. Obama fondly recalled their many conversations, saying they provided “consistent reminders to me of my own blind spots and my own biases.” But Mr. Khalidi told Harper’s Magazine that a report in National Review Online that he had baby-sat for Mr. Obama’s children was nonsense.

Daniel Pipes, who directs the conservative Middle East Forum, said: “If one’s talking about American political life, he’s at the extremes, at the margins. If one’s talking about the field of Middle East studies, he’s in the middle of it. But the field itself is dominated by professors who do not permit other points of view.”

In 2005, after a New York Sun article highlighted some of Mr. Khalidi’s statements, the New York City schools chancellor, Joel I. Klein, barred Mr. Khalidi from a teacher-training course. In an interview with The New York Times, Mr. Khalidi said then that he “may have used the word ‘racist’ about Israeli policies,” and acknowledged saying in a speech that if the movement of Palestinians continued to be restricted, “it would develop into worse than the apartheid system.”

Addressing an accusation that he had endorsed the killing of Israeli soldiers as legitimate “resistance” to occupation, he said: “Under international law, resistance to occupation is legitimate. I didn’t endorse killing Israeli soldiers. These people will take anything out of context. Anyone who knows me knows the last thing I am is extreme. I’ve called suicide bombings a war crime. I’m a ferocious critic of Arafat.”

Rabbi J. Rolando Matalon of Congregation B’nai Jeshurun, a liberal synagogue on the Upper West Side, said he has known Mr. Khalidi for years and called the allegations “completely absurd and uncalled for and malicious.”

Referring to comments he had seen on blogs and television, he said, “In no way has he ever indicated that he favors the destruction or disappearance of Israel,” and added, “He has always been consistently in favor of dialogue and common ground.”

At Columbia, Mr. Khalidi is known as a gregarious scholar who takes a special interest in students, often meeting them for lunch near campus and hosting dinners featuring Palestinian food cooked by his wife, Mona, an assistant dean at the university. After he came under attack this week, students created a Facebook group called “I stand by Rashid Khalidi,” with 205 members by Thursday night.

“He makes history entertaining,” said Maher Awartani, 24, an Arab student leader who has taken his class. “It’s like a grandfather telling his grandson a story of what happened.”

Mr. Awartani criticized not just the McCain campaign but also the Obama campaign’s tepid response, saying, “It should have been like, yes, I know him, and I’d like to know more Middle East experts, because that’s an important thing when you’re making policies.”

Karen Zraick contributed reporting.

 

“Retail sales look very healthy”

I’ve been a bit quiet lately watching this financial monster unfold, and this seemingly endless US election campaign wrap up.  It is both an exciting and exhausting time to be a reporter in New York.  I will be back very soon.  In the meantime, I published this article today on the impact of the financial crisis in the retail sector in both the US and the Gulf. Always happy to hear your thoughts.  -vms

Vivian Salama

The National | October 21, 2008

The ups and downs of the markets are enough to make anyone invest in a crash helmet. A day of market euphoria is now often tailgated by one of nail-biting anxiety. 

However, beyond the day-to-day angst witnessed everywhere from New York to Dubai to Tokyo, the ultimate indication that the world’s number one economy may be slipping into recession came last week with news of the latest US retail sales, which offer the best indication of household demand.

Sales at US chain stores rose by a mere one per cent last month, making it the weakest sales growth of any September since 2001, when the industry was in a recession and absorbing the shock of the 9/11 attacks. Also earlier this month, MasterCard SpendingPulse, which measures US retail sales, said a steep drop in consumer spending sent its specialty retail sales index down 7.7 per cent in September compared with one year ago.

Many experts say there are more tough times still ahead for the US.

“We expect October sales to post a sluggish increase of about 1.5 to 2.5 per cent, as there is considerable uncertainty about the economy,” said Michael P Niemira, the chief economist and director of research for the International Council of Shopping Centres (ICSC).

Nearly 10,000km and a world away from Wall Street, the UAE is among the handful of countries bucking the current crisis with its love of high fashion, fast cars and shiny jewellery. Everything from car sales to computer sales and mall revenues is growing in double digits and expected to continue this way for months and possibly years to come.

“Consumption contributes a large part to the GDP and it is essential,” said Mary Nicola, an economist with Standard Chartered Bank. “In the past few years, most of the strength for western companies was driven by their growth in the emerging markets – it is a way to diversify assets.”

Worth about Dh367 billion (US$100bn), the retail sector serves as a major driving force behind the economies of the GCC and has become the second-largest non-oil industry in the region. It is forecast to grow to Dh1.8 trillion by 2010 according to Retail International, a Middle East consultancy firm. Retail spending in the UAE alone is projected to reach Dh37.4bn a year by the end of the decade.

However, a walk through any of the country’s malls reveals that the western business world may not be so far away after all. American and European stores such as Saks Fifth Avenue, Debenhams, Versace and Bloomingdales continue to pop up at shopping centres across the country, sending subtle reminders of the international crisis at hand, despite continued prosperity here in the region.

For instance, US sales at Saks Inc, which owns Saks Fifth Avenue stores, decreased 10.9 per cent for the five weeks ending on Oct 4. All the while, Saks Fifth Avenue has continued its expansion throughout the GCC, with the latest location due to open in the Dubai Marina. Similarly, Bloomingdales will make its debut in the region with the opening of the massive Dubai Mall next week, just as its American counterpart announced it is slashing prices by as much as 60 per cent on various items in an effort to lure buyers back into stores.

In today’s global economy, some experts believe it is foolish to take such news with stride. 

“Nobody likes uncertainty, so obviously it is going to have an impact on any kind of business, including retail businesses,” said Naeem Ghafoor, the chief executive of Skyline Retail Services Consultancy. “Luckily, our whole credit system works differently here in that we are a more cash-oriented part of the world than the US.”

Ajay Dayal, the general manager of retail and marketing for Easa Saleh Al Gurg, the holding company with brand names including United Colors of Benetton and Siemens appliances, said the UAE must now play the “wait and watch game”.

“I think we are over the first hump,” he said. “I get the feeling that sentiments will not get hurt because the government has come in so strongly and supported the banks and made sure liquidity is continued.”

Since the beginning of October, all seven Gulf bourses have fallen sharply. Dubai suffered the most, falling 22 per cent; Abu Dhabi was down 13 per cent and Saudi Arabia, Qatar and Oman were all down by 15 per cent. Still, many believe this is merely in reaction to the global market climate and is in no way an indication of the region’s economic stability. 

Moreover, the strong purchasing power in the region, it is believed, will continue to fuel growth in the retail sector. Figures released this week by the Ministry of Economy revealed that private spending, which includes household expenditure on food, rent, education and other goods and services soared by nearly 18 per cent to an all-time high of Dh290bn last year.

“Retail sales look very healthy in the region at the moment and we haven’t seen any drop-off like you see in the US and Europe,” said Shahram Shamsaee, the senior vice president of retail for MAF Shopping Malls. “Here, access to credit is a lot stricter, there are a lot more restrictions on borrowing and you have to be employed to be able to borrow.”

Others attribute the region’s stability to the franchise business model, which requires international companies to partner up with local holding companies. There are several benefits to franchising a business, say industry leaders. The biggest draw is it generates income, and it fuels business growth with minimal risk and minimal capital investment. It also increases the potential for market penetration while minimising operation costs and expenses.

“It is a way to diversify your assets and minimise exposure essentially,” said Ms Nicola. “US and European assets aren’t doing so well nowadays, so they turn to partner up with businesses here so that they maintain their chances for growth.”

In fact, the Gulf has become an oasis from the global economic downturn that has seen millions of cash-strapped consumers in the West cutting back on spending, with many brands turning to the GCC as a means to survive tougher times.

Figures released by the regional car industry estimate that the combined market for cars and light lorries in the GCC will increase about 10 per cent to 1.2 million vehicles this year. 

General Motors America reported losses of $8.5bn in revenues in the second quarter of this year compared with the same period last year, while in the Middle East, Africa and Latin America, the company increased second quarter sales by $1.7bn.

Luxury brands have done even better. Lexus UAE reported a 50 per cent increase in year-on-year sales for the first half of this year, while Lexus sales in the US were down by 15 per cent for the same period.

Far from feeling the pinch at the pump, drivers in the Gulf enjoy subsidised petrol, making heavy-duty 4×4s a common sight on the UAE’s roads.

Similarly, in the Middle East the PC maker Dell posted 55 per cent growth in unit sales in the second quarter compared to the same period last year, according to company figures based on International Data Corporation information, whereas in the US, Dell sales grew by a mere 5.8 per cent. Acer, the world’s number three PC maker, reported regional sales were up more than 54 per cent in the first quarter, while sales slumped 20 per cent in the US for the same period.

While Emiratis actively contributed to retail sales, the buying power of the country’s expatriate residents – who make up more than 80 per cent of the population – was the major source of success, a study by the Delhi-based RNCOS found. 

Tourism is also a massive factor stimulating growth, with the UAE expecting more than 11 million tourists annually by 2010. However, with dire economic conditions in Europe and North America, many travellers are likely to stay closer to home. Last month, ABTA, a leading UK travel organisation, warned that the UAE must do more to develop its budget hotel sector or risk losing tourists to cheaper destinations.

“There may be a drop in pure tourist traffic because people coming from the West may feel a bit threatened, but we have to wait to see how the winter season is impacted,” said Mr Dayal. “Let’s wait and see – it shouldn’t be too bad.”

Dubai’s non-oil trade jumps 54 per cent

Vivian Salama

The National

September 7. 2008 6:20PM GMT

DUBAI // Non-oil foreign trade surged by 54 per cent in the first half of the year in Dubai as the emirate continues to diversify away from its dependence on fossil fuel and transform itself into an economic hub.

Dubai recorded a massive jump of Dh104.4 billion (US$28.4bn) in non-oil foreign trade compared with the same period last year, to reach Dh296.6b, according to a report released by Dubai World’s contracts and statistics department, which is commissioned by the Government to compile the trade figures. 

The department said exports recorded significant growth, expanding by Dh7.5bn, or 59 per cent, in the first half of the year to Dh20.1bn. Re-exports registered similar gains, jumping 58 per cent to Dh70.3bn. 

Saeed al Qaizi, the director of procurement for the department, said Dubai had established itself as a trading hub for investments in various industries. 

“Excellent development of infrastructure and reinforcement of its competitive potentials have helped Dubai to become an attractive economic hub,” said Mr Qaizi. Abu Dhabi also showed significant gains in the first half of the year, growing by 28.4 per cent to Dh46.64bn. Non-oil trade is a central cornerstone to the UAE’s economy as it seeks to move away from its oil dependency.

“What you are seeing is growing trade of capital goods as the UAE diversifies and they expand their different industries,” explained Mary Nicola, an economist with Standard Chartered Bank. 

“One of the chief areas of trade is capital transfer and knowledge transfer, and that is where Asia comes to play.”

Ms Nicola said the UAE did not run the risk of a deficit with a trade surplus of close to 20 per cent. However, she said an increasing GDP per capita was accompanied by an increase in reliance on consumer goods, particularly in the UAE, where consumption levels were high. 

“There will be an increased reliance on other countries, particularly for consumer goods – not only for food but even clothes, cars and consumer goods like electronics,” she said. 

“As people get richer, they want to spend more, so you will see more imports from other countries… with food being the main issue here.”

India topped the list of Dubai’s main trading partners in the import, export and re-export sectors during the period. 
In imports, bilateral trade volume grew by 49.6 per cent, reaching Dh24.1bn against Dh16.1bn in the first half of last year. 

“Trade relations have been doing very well and India’s direct contacts with the UAE, and particularly Dubai, go back centuries,” said Venu Rajamony, India’s consul general in Dubai. “We have been one of the number one trading partners [with Dubai] for a long time, and we are happy to maintain that position.”

Dominating the list of imports from India are gems and jewellery, vegetables, fruits, spices, engineering goods, tea, meat, rice, textiles, marine products, machinery and plastic products. 

Rice trade has been an issue of contention between India and the UAE in recent months, since India decided to ban the export of all non-basmati rice in an effort to alleviate soaring food prices and potential shortages at home.

Mr Rajamony said he understood his government was considering lifting the ban on one type of rice, but “nothing has been decided yet as far as I know”.

China was Dubai’s second-biggest trading partner, reaching Dh23.8bn and up 29.9 per cent compared with the same period last year. The US maintained third place with Dh16.4bn worth of imports during the period.

India also topped trading partners in exports at Dh8.3bn during the first six months of the year, a growth rate of 44.4 per cent. 

Mr Rajamony said the Indian government hoped the two countries would engage in greater trade in the engineering and agriculture sectors. 

Switzerland was the second-largest recipient of Dubai exports at Dh1.5bn, growing by a staggering 6,040 per cent since the first half of last year. 
The Jebel Ali Free Zone has also jumped significantly from 16th place to third, with exports reaching Dh800 million.

India once again topped the list of re-export partners, at Dh21.9bn, followed by Iran at Dh10.2bn and Switzerland with Dh4.8bn.

vsalama@thenational.ae

Consumers facing a taxing time

Vivian Salama

The National | August 20. 2008 

For many, the adage “a penny saved is a penny earned” is nothing more than wishful thinking. Food prices are up, rents are going through the roof, and salaries are not keeping up with inflation.

Hundreds of thousands of people from around the world who have flocked to the UAE in search of prosperity find themselves cutting costs and struggling to stay afloat. And on top of all that, the one thing the country’s residents have collectively celebrated – a tax-free society – could soon become a thing of the past, as early as 2010.

The issue of whether or not to implement a value-added tax (VAT) in the UAE has sparked its fair share of support and criticism, particularly in the past six months as the inflation rate has risen above 11 per cent and is forecast to keep climbing.

“Now is not the right time to seriously discuss introducing a VAT,” said Robert Ziegler, the vice president of the management consultancy AT Kearney in the Middle East. “A lot of people realise there are a lot of fees that essentially translate into taxes here, but there is also a big psychological factor to the idea of the UAE being ‘tax-free’.”

VAT is an indirect levy and taxes individuals at each stage of production and distribution, from food producers and clothing manufacturers, all the way down the supply chain to the end user – as opposed to a retail sales tax that is collected solely at the point of final purchase.

VAT is a key component in the tax system of about 130 countries, generating a total of more than US$18 trillion (Dh66tn) in global tax revenues, according to a report by the Tax Policy Centre. On average, it accounts for 25 per cent of national governments’ revenues. Like the UAE, the US is one of a handful of non-VAT countries.

Although the standard rate of VAT is 17.5 per cent in the UK, the average rate worldwide is approximately 20 per cent. Some countries such as Denmark, Norway or Sweden have a rate as high as 25 per cent.

The proposal on the table here is not nearly as high – an issue that will delight the 80 per cent of the population made up of expatriates who have come here to live and work on a tax-free basis. According to Ahmad Butti Ahmad, the director general of Dubai Customs, the agency behind the eventual introduction of VAT, proposals submitted to the UAE’s federal authorities suggest anywhere from a three to five per cent tax as a starting point. Ideally, it would serve a number of purposes. Principally, it would compensate for the import tariffs lost to any future free trade agreements, whether with the EU, China, India or the US, although no agreements have been signed with these countries so far. A VAT levy would also boost Government coffers, money that could be spent on welfare.

Click here to read more

Counting the rising cost

Vivian Salama

The National: July 29. 2008

The world’s insatiable appetite for oil has hit UAE shoppers in their stomachs as well as their wallets with spiralling food costs. And the problem appears to be growing.

Consumers are paying more for everything from a bag of rice to a carton of eggs, simply because it takes oil to run farm machines, power the processing and packaging factories and fuel all modes of transport. 

“Food prices are directly correlated to oil prices,” explains Marios Maratheftis, the head of research for Standard Chartered Bank. “We can’t sell US$140 barrels of oil then expect food prices to go lower.”

In recent months higher oil prices have manifested themselves locally in the form of higher commodities prices, the pain of which is passed on to consumers. 

As the most demanded staple food, rice has soared to unprecedented levels, with global prices up from $650 (Dh2,386) per tonne to a 25-year high of $1,000 in just the first three months of this year. A decision by India’s government to halt exports of non-basmati rice – in an effort to curb prices and avoid domestic shortages – has exacerbated the situation here, driving prices even higher. India’s move has been widely criticised by UAE retailers whose businesses thrive on sales of the grain.

“We have a lot of Indian people here who want to eat their rice, even if the price of basmati rice keeps getting more expensive,” says Burham Turkmani, the general manager of Al Rabiah Trading in Dubai. 

Khaled Zanul Abid, the manager of Talal Supermarket in Jebel Ali, agrees. “I am Indian, so I know how my customers feel. They like to eat certain kinds of rice from India. But they have to eat, even if the price gets very high,” he says. “Everything is becoming so expensive for the people now.”

Food inflation is foremost among concerns of the federal government, which reported a 11.1 per cent jump in inflation last year. Although inflation has largely been driven upwards by rents, food, beverages and tobacco accounted for 11 per cent of the rise and are believed to contribute as much as 30 per cent to overall GCC inflationary pressures. According to the Emirates Consumer Protection Society, domestic food inflation could rise as high as 40 per cent this year.

Experts say cheap ingredients are being passed off as 

“Inflation will not go away,” warns Andy Barnett, a professor of economics at the American University of Sharjah (AUS). 

“Problems will continue indefinitely until people give up and let the underlying adjustment that’s taking place take hold.”

Various measures – some more controversial than others – have been taken to ensure that the situation does not spiral out of control. The initial response was price caps. Earlier this year the Government signed agreements with various domestic retailers including Baniyas Co-operative Society, Carrefour, Union Co-operative Society and LuLu hypermarkets for implementing price caps on items such as chicken, rice, flour and eggs in an effort to combat rising prices set by suppliers. In April, the Government announced it was stockpiling more than a dozen “essential” food items to reduce the likelihood of food shortages, often a backlash after price caps. One month later, officials with the Economy Ministry announced that 15 items – including dry and condensed milk, frozen and canned vegetables, baby food, chicken, edible oil, rice, flour, fish, meat and tea – were to be placed on a free import list in a bid to contain inflation.

“Price caps should be on the suppliers, not the retailers,” says David Berrick, the retail general manager of Abela Supermarkets, which has a domestic headquarters in Abu Dhabi. “They’re implementing these policies on just 16 or 20 commodities. What about the other 20,000 products in our supermarket? We can lower our prices and use the marketing tool of ‘everyday low prices’, but if supplier costs go up, we have no choice but to raise prices.”

Click here to read more….

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.

Cairo property has a traffic jam

Vivian Salama

The National | July 09, 2008 7:53PM UAE

Photo by Victoria Hazou

CAIRO // Egypt’s property developers say that higher market prices, brought on by an influx of Gulf-based developers and soaring construction costs, have caused a slowdown in the industry. 

Analysts estimate that only two to three per cent of Egyptians can afford the properties, priced at more than 1 million Egyptian pounds (Dh687,000), that are springing up across the country.

“This is a poor country – the people have it tough as it is,” said Hatem Issa, the general manager of Iqarat Misr, a Cairo-based property investment company. “The Gulf developers who come here work in dollars. This is a pound-driven market, so it naturally drove prices up.”

In recent years Egypt has been the emerging market of choice for many Gulf-based developers, since it offers a large domestic market with low input costs. Industry estimates place the value of Gulf investment in the Egyptian property sector in excess of $885 million per year and growing.

“Initially the effect is that [Gulf companies] instilled a level of optimism and excitement because they came in and paid a lot of money for raw land,” said Tarek Shahin, a property and construction analyst with Beltone Financial in Cairo. “They are willing to pay historically high prices for land because they think that much money can be derived from the Egyptian public.”

The most populous country in the Arab world, Egypt is home to nearly 80 million people. Ninety-six per cent of them live on only four per cent of the land, due to the sprawling deserts both East and West of the Nile.

Industry forecasts suggest a demand for 600,000 units a year in Egypt, although Mr Issa says the figure is unrealistic.

According to the UN, the urban population is expanding at a rate of 1.7 per cent a year, triggering the dispersal of Cairo’s city dwellers to outlying areas.

Intensive urbanisation projects have resulted in major developments around the capital, including Sixth of October City, New Cairo and Katameya Heights. Developers estimate that about 85 per cent of the upmarket properties built in recent years are owned by Egyptians and Egyptian expatriates. 

However, according to Mr Issa, prices are soaring at unprecedented rates, creating panic within the industry. In Sept 2006, Iqarat Misr sold villas in Sixth of October City for 800,000 pounds; today the same houses sell for 1.8m pounds.

“If the situation was moving step by step then it’s one thing, but it’s happening bam, bam, bam; not expected at all,” said Mr Issa. “If we had time to reformat our strategies and re-evaluate our costs then it might be better, but it’s happened so fast and nobody knows what tomorrow will bring.”

The impact of the Gulf-based developers’ positioning in the market is exacerbated by soaring costs. The price of steel reinforcement bars, which make up approximately 20 per cent of the total cost of construction, has risen threefold since 2006.

Despite the concerns of local developers, billboards around the capital demonstrate the ubiquity of their UAE-based counterparts. Emaar Misr has invested Dh20.33 billion in Egypt, including a Dh7.7bn development in Uptown Cairo and the Dh2.57bn Cairo Gate, a commercial and residential development.

The company will soon start a project in Marassi, an upmarket residential and tourism community built around an area of seven square kilometres at Sidi Abdel Rahman. The company paid Dh642.8m for the undeveloped land in an auction two years ago. Emaar Misr also plans to build a self-contained residential community close to the Smart Village on the Cairo-Alexandria Desert Road.

Also last year, Damac Properties announced a number of ambitious projects in Egypt, including Park Avenue, a mixed-use centre of four million square metres. It plans to build the New Cairo project, which will comprise residential and commercial properties, over an area of 6.3 million square metres.

Al Futtaim Group also recently began work on Cairo Festival City, an indoor-outdoor shopping and entertainment centre of 154,000 square metres, similar to its namesake in Dubai.

Mr Shahin said that the greatest problem brought on by luxury developments from the Gulf was a mismatch in the country’s property offerings. “Affordability is going to be an issue but the fact is, people will always need to buy a home so the question now is who will offer a project where they sell more affordable housing?”

vsalama@thenational.ae

UAE in Farm Talks with Egypt for Food Supply

Photo by Victoria Hazou

by Vivian Salama

The National

CAIRO // The UAE is pursuing investments in farmland and other agricultural business projects in Egypt in an effort to secure strategic food reserves. 

The Egyptian minister of foreign trade and industry, Rachid Mohammed Rachid, confirmed that his government was in talks with Abu Dhabi to embark on bilateral agricultural investment projects.

“There are some projects we are negotiating with the UAE related to food security for the UAE, and possibly third countries,” said Mr Rachid. “At the same time, the UAE is willing to help from an investment point of view, because it became a viable investment proposition to put more money into food, especially agriculture and agribusiness, and there are a number of projects we are currently negotiating.”

Mr Rachid said the proposed projects ranged from farmland investment and development to setting up infrastructure for agribusiness and food processing. He is scheduled to travel to Abu Dhabi tomorrow for further discussions with Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi. .

While an Egypt-UAE agricultural alliance could prove to be vital in helping to protect UAE residents against crippling export bans, record-high commodity prices and potential food shortages, it would also be of equal benefit to Egypt.

Mr Rachid said his country was looking to boost its annual agribusiness investments from about four billion Egyptian pounds (Dh2.75bn) to the rate of about 25bn pounds per year for the next 10 years. Details for any UAE-Egypt initiatives have yet to be finalised.

Egypt, the world’s fourth-largest exporter of rice, is set to produce 4.6 million metric tons this year. A total of 3.2 million metric tons were estimated for local consumption, while 1.4 million were available for exports. It is also a significant producer of wheat, corn, sugarcane, fruit and vegetables, and fodder. With almost 80 million residents, Egypt has the highest population of any country in the Arab world.

In an effort to preserve local supplies, the Egyptian government has implemented a controversial ban on rice exports, which Mr Rachid said could last until April next year. Earlier this year, Egypt, like many countries worldwide, was the scene of violent social unrest over rising food prices.

“We are not happy having the ban in place, but obviously we are not in a position to pass these high prices to Egyptian consumers,” Mr Rachid said. “Egyptians are paying double the price for wheat, three times the price for corn – animal feed is up by three to four times.”

Various factors including limited water and agricultural land force countries in the GCC to rely almost entirely on imported food items. The UAE imports nearly 85 per cent of its food, worth an estimated Dh11bn annually.

UAE inflation accelerated to a 20-year high of 11.4 per cent last year – its highest level in 20 years – with food, beverage and tobacco accounting for 11 per cent of that hike. The situation is just as grim in Egypt. Inflation rates rose to 19.7 per cent in May, the highest since the government began regularly releasing records to the public, in 1998. Official statistics show that food and beverage prices in Egypt rose by 27 per cent in the year ended in May.

The Egyptian government has long implemented subsidies on various basic goods, with state subsidies for basic food products estimated at more than 21.5bn pounds, compared to 10bn pounds last year, an increase of 115 per cent, the Ministry of Finance reported. Mr Rachid said it was his government’s intention to transform the subsidy system from a commodity- to a cash-based system, a move expected to shave 30 to 40 per cent off government expenditure.

“What we have seen in the last 18 months is a global crisis at a magnitude that we have not seen in the last 25 to 30 years,” Mr Rachid said. “The normal conditions that normal Egyptians have to cope with is horrendous.”

The partnership with Egypt is the latest effort by the Government to establish strategic food reserves outside the UAE’s borders. Earlier this year, the Abu Dhabi Government finalised a scheme to buy 29,400 hectares of farmland in Northern Sudan, a project set to commence by the end of this year. The farm, located in the town of Abu Hamed in the state of Nahr an Nil, which borders Egypt, will be used primarily for the cultivation of alfalfa, a plant used to make food and animal feed. Government officials have confirmed that Pakistan was also on their radar for farmland investments, although no official proposals have been made public.

Photo by Victoria Hazou

Dubai the best place on earth???

Switching gears a bit, a friend of mine sent me the following email and I thought it was hilarious, especially seeing as my sun glasses fogged up today when I stepped out of my car and into the steamy summer heat. It is H-O-T here.  Every time I comment on the heat to one of the Emirati locals, he looks at me with pity as though to say “aren’t you cute – you call this heat.”  I’m screwed.  Today’s temps, a toasty 98F (39C)…. child’s play next to the 104F degree weather I “enjoyed” in Muscat, Oman last week!!  The air is MOIST – humidity levels are around a million.  It’s going to be a long, painful summer.  

———

This following extract is taken from a New Yorker who moved to Dubai recently…

April 30th:
Just got transferred to work and live in beautiful Dubai , UAE!
WOW!!!
Now this is a city that knows how to live!!! Beautiful sunny days  and warm balmy evenings. It’s like New York City minus all the crooks, murderers, and drunks. What a place! I watched the sunset from a deck chair on my beautiful bedroom verandah. It was beautiful. I’ve finally  found my home. I love it here  

May 13th:
Really heating up. Got to 95 degrees today. Not a problem. Live in an air- conditioned home, drive an air-conditioned car, and  everything is fully air-conditioned. What pleasure to see the sun everyday like this. I’m turning into a sun worshiper.

May 30th:
Had the backyard landscaped with tropical plants today around our lovely pool. Lots of palms and rocks. What a breeze to maintain. No more mowing lawn for me. Another scorcher today, but I love it  here.
Heat is no problem at all.

June 10th:
The temperature hasn’t been below 95 all week even during the night. How do people get used to this kind of heat? At least today it’s  kind of windy though. But getting used to the heat is taking longer than I expected.

July 15th:
Fell asleep by the pool. Got 3rd degree burns over 90% of my body.
Missed 5 days of work. What a dumb thing to do in this lovely city. I learned my lesson though. Got to respect th ol’ sun in a climate like this.

July 20th:
Kitty (our cat) sneaked into the car when I left for the office. By the time I got to the hot car for my lunch break, Kitty had died and swollen up to the size of a shopping bag and stank up the $60,000 Audi. I told the kids that she ran away. The car now smells like Wiskettes and cat sh*t. I learned my lesson though. No more pets in this heat.

July 25th:
The wind sucks. It feels like a giant f**king hair dryer in here!!!  And it’s hot as hell. The home air-conditioner died. The f**king AC repairman charged 500 Dirhams just to drive over and tell me it  was broken in f**king Hindu English or some language that I couldn’t understand.

July 30th:

Air conditioner still broken Been sleeping outside by the pool for 3 nights now because it is 7000 f**king degrees inside. Bloody 2,000,000 Dirhams house and we can’t even go inside. Why did I ever come here?

F**k the sun. F**k the wind. F**k the freakin’ ocean.  

August 4th:
It’s 114 f**king degrees today. Finally got the ol’ air-conditioner fixed. It cost 2,000 fucking Dirhams and got the temperature down to 25, but the f**king humidity makes the house feel 30 f**king Dubai degrees. Stupid terrorist repairman. I hate this stupid f**king place.

August 8th:
If another local wiseass cracks, ‘Hot enough for you today?’ I’m going to f**king whack him all the way back to his goddamn desert. F**king Dubai; by the time I get to work with all that f**king traffic and heat, the car’s radiator is boiling over, my clothes are soaking wet, and I smell like a baked cat!!!

August 9th:

Tried to run some errands today because it is f**king Friday.  Wore shorts and sat on the black leather seats in my Audi. The seat was so f**king hot I thought my ass was on fire. I lost 2 layers of flesh and all the hair on the back of my legs and my ass. Now my car smells like burnt hair, fried ass, and a baked cat.

August 10th:
The weather report might as well be a recording. Hot, humid and f**king sunny. It’s been too hot to do anything for 2 damn months and the weatherman dude wearing the white tablecloth on TV says it might really warm up next week. Does it ever rain in this damn f**king place? What is next, a hell freezing over wave?  

August 14th:
WELCOME TO HELL!!! Temperature got to 120 today. Now the air-conditioner’s gone in my Audi. The Audi serviceman said, ‘Hot enough for you today?’ F**k him and f**k Audi. My wife had to spend the 7,000 Dirham to bail my ass out of jail for assaulting that stupid bastard. What kind of a sick demented idiot would want to live in this s**t hole?

August 15th:

F**k this place. I’m off back to New York!!!