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Monday, September 28, 2009

Abu Dhabi Challenges Global Credit Crunch

Abu Dhabi, UAE, 24 September, 2009-(ME NewsWire): The emirate of Abu Dhabi retained its strong economic position despite the economic crisis that hit world-over throughout last year. The emirate's entire production and development wheel continued turning in spite of the current global credit crunch, thanks to the wise policies adopted by its leadership, led by the Executive Council, under the chairmanship of H.H General Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, Deputy Supreme Commander of the UAE Armed Forces and as stipulated by the Emirate's strategy "Plan Abu Dhabi 2030" and "Economic Vision 2030".
A number of international economic and financial research organizations issued reports and studies indicating that the emirate's entire economic sectors were growing persistently in spite of the on-going economic downturn.
"The Report: Abu Dhabi 2009", of the Oxford Business Group "OBG", said that the Emirate's government spending has risen by 12% to AED42.2 billion this year. The Emirate still enjoys a strong economic and credit position despite oil price plunging in the international markets, which is the main source of Emirate's income. The report also indicated that Abu Dhabi will be in a very strong position when the global market picks up, thanks to the ability of its government to continue to fund major infrastructure projects and keep its development strategy. This is evident in on-going works in a number of mega-projects in the emirate, such as 'Shaikh Zayed National Museum', 'Guggenheim Abu Dhabi Museum', the 'Louvre Abu Dhabi' and the 'Performing Arts Centre', all of which are located in the Cultural District of the Saadiyat Island. Also, the emirate is starting the initial studies for the Abu Dhabi Metro Project, investment in heavy industries with aim of diversifying the emirate's economy and the introduction of renewable energy sources as a substitute for oil and natural gas.
These achievements have their reflection on the emirate's employment market, as the online recruitment firm said that Abu Dhabi is leading the recovery from the economic downturn in Gulf careers and employment, now accounting for 23% of all advertised jobs in the GCC. The report added that over the first six months of this year the UAE capital's share of jobs advertised in the region grew by 9% compared to the same period of the last year, while other GCC countries experienced either drop or modest increase in the number of jobs advertised.
The report also indicated that the emirate has allocated 37% and 23% of its total spending for the social services and education, respectively, which are huge amounts compared to what is done by other countries.
The Government of Abu Dhabi has earlier injected AED120 billion in local banking sector to help it cope with the current global credit crunch.
Contact:Executive Council - Public RelationsTel: +971-2-668-8888Fax: +971-2-665-5850Email: pr@ecouncil.ae
© Press Release 2009

UAE Inflation edges up in July

Emirates Business 24-7, 26 September 2009Inflation in the UAE edged up in July but remained at one of its lowest levels following a sharp fall in rents and food prices, official figures show.The consumer price index (CPI) rose by about 0.39 per cent in July over the previous month despite a decline in seven groups making up the CPI, showed the figures by the Ministry of Economy.Inflation stood at only 0.03 per cent in June compared with the previous month while it averaged 2.96 per cent in the first seven months of 2009 compared with the same period of 2008, the figures showed.In July, there was an increase of 0.84 per cent in the food and beverage index and nearly 0.77 per cent rise in rents. There was also an increase of 1.92 per cent in home supply and 0.27 per cent in culture.The report showed there was a decline of 0.07 per cent in the liquor and tobacco index and 0.14 per cent in clothes and footwear, 1.10 per cent in health services, 0.46 per cent in transport, 0.01 per cent in communications, 0.26 per cent in restaurants and hotels, and 0.60 per cent in other groups. Education services remained unchanged during that month. Liquor and tobacco recorded the largest price rise in the first seven months of 2009, surging by 11.39 per cent. It was followed by education services, which increased by 9.27 per cent and transport services by 6.06 per cent. Only two groups in the CPI recorded a fall in the first seven months of this year, with cultural services and clothes and footwear dropping by 1.06 and 1.45 per cent respectively, according to the report.The UAE recorded its highest inflation rate of 12.3 per cent in 2008 because of a surge in local rents and food prices, higher global commodity prices, and a sharp increase in its import bill due to the weakening US dollar, to which the dirham and other Gulf currencies are pegged. Economists attributed the sharp slowdown in inflation this year to the strengthening dollar, falling prices of oil and other commodities, a correction in the local real estate sector, and waning domestic demand.In a recent study, Saudi American Bank said the UAE could have a brief period of deflation in some months this year before a recovery in domestic demand and higher import bills push the country back into price growth.Inflation rates have steadily increased over the past seven years mainly because of high rents and strong domestic demand triggered by the oil boom.From 2.9 per cent in 2002, the rate grew to 3.1 per cent in 2003, five per cent in 2003, 6.2 per cent in 2004, 9.3 per cent in 2006 and 11.1 per cent in 2007 before climbing to a record high last year.
By Nadim Kawach
© Emirates Business 24/7 2009

GCC Central banks hold on to their gold reserves

Emirates Business 24-7, 27 September 2009Central banks across the world held on to their gold reserves in the past quarter (July-September) as governments searched their way out of the economic depression, recent data released by the World Gold Council (WGC) showed.Even as the total volume of gold held by central banks remained almost constant, their value as a percentage of total assets held marginally declined in most of the cases, the WGC data highlighted. Two GCC countries -Saudi Arabia and Qatar - were mentioned on the list and they were shown to have maintained their gold reserves in the past three months. As per WGC's 'World official gold holdings' for September 2009, the US and Germany with 8,133.5 and 3,408.3 tonnes of reserves are the countries with the highest amount of gold reserves in the world. China, the world's largest gold producer, apparently slowed its gold accumulation spree. It holds 1,054 tonnes of gold, which is just 1.8 per cent of its total reserves.The WGC did not publish data regarding the UAE Central BankUAE Central Bank's gold reserve. WGC data shows that the country has stopped keeping its reserves in gold since 2003 onwards.Saudi Arabia and Qatar were shown were as having 12.3 and 2.3 per cent of their reserves in gold. The figure stood at 12.4 per cent and 3.7 per cent respectively for the two hydrocarbon rich countries in March 2009.While Germany was a prominent disposer of gold in the last quarter, France the other major European economy accumulated gold in the last quarter. The two European nations recently recorded an above-zero spike in growth rate. While Germany disposed 4.3 tonnes of gold in the last quarter, France amassed 5.6 tonnes of the yellow metal. WGC CEO Aram Shishmanian earlier said the GCC central banks are looking forward to improving their gold reserves. "Central banks with low reserves of gold are looking forward to increasing their reserves. They are trying to analyse what the right balance should be. They are getting aggressive," he had said.The bullion has seesawed between $900 an ounce and $1,020 this year having touched the upper mark recently. The yellow metal traded at about $991.70 an ounce yesterday. It is expected to find support at $975 an ounce before commencing an upward journey again.Jeffrey Rhodes, Chief Exec utive of Intel Commodities, said that the bullion is expected to touch a "new high" beyond $1,100 an ounce by the end of 2009.
By Shashank Shekhar
© Emirates Business 24/7 2009

Dubai best positioned for long term investment

Monday, Sep 28, 2009
Gulf News
Dubai: Abu Dhabi, Dubai, Cairo and Casablanca are the best positioned within the MENA region to attract long-term capital over the next few years, says a recent industry report.
The ability to attract long-term investors and investments will be key to market success, said a recent report by Jones Lang LaSalle.
In more mature economies, long-term investors account for 80 per cent of large real estate investment transactions.
"This transition will require a paradigm shift from the previous reliance on short-term strategies and rapid implementation to an increased focus on the creation of quality real estate assets that will be attractive to both occupiers and long-term real estate investors," noted the report.
Many long-term investors have put off investing in Dubai, especially in the past due to the frantic activity of short-term speculators and developers that buoyed the market for so long.
This essentially led to the current sluggish market activity and reduced sales.
"In the rush to build and sell real estate assets, markets across the MENA region have largely overlooked the requirement to attract more stable, long term investors and end users over the last decade," said the report.
When many investors left the marketplace and took their money with them, this contributed to the decline in property prices and rents which fell 25 to 50 per cent in some markets across the region.
While 2009 has been a year of correction, in the eyes of many industry experts, markets in the region are expected to stabilise in 2010 and finally recover in 2011, according to Jones Lang LaSalle.
And signs of a more stable property market are already becoming visible in Dubai with developers and investors having learned harsh lessons from past experiences.
"There has been some long-term investment from local and GCC family groups. What has been missing is investment from western style institutional investors - this will come but has not been much in evidence to date," Craig Plumb, head of research, MENA, Jones Lang LaSalle, told Gulf News.
Dubai, the hardest hit real estate market, Abu Dhabi, Cairo and Casablanca topped the table in the region as being best positioned to attract long term capital due to three major elements - investment environment competitiveness such as infrastructure and ease of investment, real estate market conditions, including stability of pricing, transparency and liquidity and finally, the availability of investable products like stable rental income and potential for capital growth.
"The key markets for investments are Dubai and Abu Dhabi with a caveat on Abu Dhabi that there is a change in the investment area. The types of occupiers [in Dubai and Abu Dhabi] are the ones international investors are looking for," said Nicholas Maclean, managing director of CB Richard Ellis Middle East region.
Maclean said while Dubai and Abu Dhabi are definitely key areas for long term investors, Cairo and Casablanca are "not in the same league" as the UAE, although Cairo is likely to offer more opportunities as it develops further.
A possible vehicle to stimulate investment in the sector might be Real Estate Investment Trusts (REITs) and Dubai is poised to see strengthened activity in this area in the future.
"REITs would indeed be a good vehicle and we expect to see more products being structured in this manner in the future," Plumb added. REITs have not been so widely used in this region historically due to legislation and restrictive regulations.
Another way to encourage long term investment is to federalise the current laws so that all the emirates can operate under one set of regulations and not have to make retrospective changes, Maclean added.
The most significant challenge right now, however, is the issue of potential oversupply. Vacancies in the office market are around 25 per cent and the average hotel occupancy rate is around 65 per cent, said the report. The oversupply situation creates additional downward pressure on prices and rental levels in the short term.
By Suzanne Fenton, Staff Reporter
© Gulf News 2009. All rights reserved.

Financial sector hiring to surge 20% this quarter

Emirates Business 24-7, 28 September 2009

Recruitment for the financial sector has started picking up in the region and estimates point to a 17 to 20 per cent increase this quarter compared to the previous three months.

Industry executives said companies, particularly international ones, are expected to allocate higher budgets towards recruitment and training of their staff in 2010.

As economic sentiment gets positive, the financial sector, which saw heavy lay-offs during the onset of the crisis, is preparing to seize business opportunities by hiring the right kind of people. However, the current focus is on hiring specialists and high-calibre staff who will help generate revenues and, in most cases, fill the positions that are left vacant.

Robert Half UAE, a recruitment company that has published its Salary Guide UAE 2009-2010, said demand for finance and accounting specialists in the UAE continued, whereas there was a drop in demand for support functions such as human resources and IT.

Placement consultants and analysts said it is an opportune time to hire staff at "realistic salaries". As per estimates there has been a 20 per cent decline in salaries this year and, with manpower available at lower costs, the analysts advise that organisations should not delay hiring further if they are to take advantage of the economy picking up.

The financial sector, including banks and asset management firms, took a beating during the economic crisis and saw massive job cuts globally. A report by Economic Co-operation and Development (OECD) said 15 million job cuts took place between end of 2007 and July 2009. The International Labour Organisation (ILO) estimated global unemployment rate to increase to 7.1 per cent and 51 million jobs to be lost in 2009 compared to six per cent in 2008 and 5.7 per cent in 2007.

Of the total job losses, the financial sector contributed a major share.

However, the past three months have reported relative stability in job cuts globally and, if placement consultants are to go by, positive sentiment has started showing results in jobs markets.

In a survey of 1,500 people conducted by Naukri?, more than 60 per cent of respondents said that had started to hire again.

"Companies have definitely started hiring now. Our survey showed that more than 60 per cent are recruiting people again. Jobs on our website have increased. Now, post Ramadan, there is an increase in activity," Rahul Khar, Zonal Manager of, told Emirates Business.

After the job cuts, uncertainty about improvement in economic conditions has seen companies adopting a wait and watch policy. However, the same appears to be giving way to hope about betterment resulting in a focus on seizing the opportunities that businesses foresee in near future, the consultants said.

James Sayer, Senior Manager at Robert Half UAE, said: "Finance and accounting has fared better than other sectors due to the need to having strong F&A functions during a downturn, with a real focus on treasury, financial control and accounts payable positions."

Nofel Izz, Director,, said: "Jobs in the financial sectors are showing more stability now than in March and April of 2009. The increase would be approximately 17 per cent in this quarter as compared to the previous quarter."

Charles Francis, Partner with GCC Partners, said: "In the past three weeks we have seen people starting to put plans into action. We have been hired for consultancy, received mandates to hire new staff and train new staff. The time has come not just to talk about it but actually start putting some of these things into action.

"Besides, the markets are looking better. Across the world, markets are rallying, there is confidence. They are looking ahead rather than just looking over the shoulder. The financial sector is positive. It has become a lot busier. Asset management firms are looking to hire analysts, brokerages are in need of brokers - everywhere they are hiring."

Large corporates, said consultants, are expected to allocate a higher share of their budgets for the next year towards recruitment and hiring.

"Bigger companies are doing their annual budgets. As they prepare their budgets for 2010 at the end of Q3 and in Q4, we are expecting them to be more comfortable allocating towards recruitment, training and consultancy," added Francis.

Christo Daniels, General Manager, iQselection, said: "It is busier now compared to the past quarter. Unlike a few weeks ago when people were shying from making decisions, they are now doing so. Activity post-Ramadan has picked up and the lead time between placing a job vacancy and filling a post is becoming shorter."

For fresh recruitments, firms are looking at "the best candidates" who can help generate revenues instead of hiring in large numbers. In addition, training existing staff is also high on agenda.

"What happened in the past is that they hired across the board and in large volumes, whereas now they are much more selective. They are combining consultancy and recruitment. Looking for people who are more experienced and high calibre, rather than hiring in large numbers.

"Companies have already finished job cuts. They are now looking at generating revenues and the staff they add would help them attain that goal. They are looking at specific areas and are much more selective in re-hiring. As they realise this, they are also opting for consultants who can help them frame plans in this field," said Francis of GCC Partners.

"Employers prefer hiring candidates who are more UAE-based than overseas, or at least if the person is available in the region would stand a better chance. They are also looking for brand names when it comes to hiring someone in the financial industry, so if your company is listed on Nasdaq, you will probably have a better chance at a finance job in Dubai than others," said Izz.

An increase in allocation towards training too is being seen, the consultants said. "Firms are training the staff in cases where they feel the need. The staff in this region is very eager to have training and expand their skills set. Training has been high on the agenda particularly in the past year. As things start to get better, managements are doing training much more than they did last year," said Francis.

"In some cases there is 100 per cent increase in training budgets, many companies told us this is the first time they are going for it. They are realising the value addition."

Analysts said firms which are hiring at the moment are able to save as candidates are available for "realistic" salaries. "Companies are hiring individuals but the pay scales are 20 per cent lower than what they used be in 2007," said Izz.

Robert half said top UAE performers include managing directors in financial services with more than 15 years' experience, who can expect annual salaries in excess of $350,000 (Dh1.28 million); and chief financial officers of similar standing, who take home packages of between $250,000 and $400,000. For those with less than two years' experience under their belts, the allure of banking is still clear, with junior private bankers starting on $100,000 per annum.

Lower salaries make it beneficial for firms to fill vacant positions, the consultancy said. "Right now is a good opportunity to hire people on realistic salaries. People just want to stay here. Maybe 12 months from now would be a different picture," said Francis.

The consultants said there are companies that are still waiting for things to improve further and not hiring but these stand a risk of losing the talent pool already available in the country and may face tougher competition in days ahead, or even lose some opportunities that have started to arise.

"Some companies are being a little slower and losing. The worry is that if they lose another six months, the talent pool may be scarcer. There is a mixed talent pool here in the region. Globally, large companies are hiring and people are moving to places where they are getting jobs. If regional companies wait till next year the competition will be greater, they might have to spend more on salaries. Even as the region attracts people due to the tax regime, people are currently more concerned about having a job. So they are leaving due to opportunities abroad," Francis said.

By Shveta Pathak

Retailers target GCC to set up home

28 September 2009
Home furnishings and accessories retailers are targeting the GCC in their expansion plans, attracted by the region's untapped potential and increased bargaining power for massive rental spaces.

The American home furnishings chain, Ethan Allen, is the latest retailer to announce plans to open about 15 stores across the GCC over the next five years.

It follows the Swedish retail giant IKEA, which earlier this month said it would open its largest store in the Middle East on Abu Dhabi's Yas Island by the end of this year. Siddarth Bhide, the operations and project manager for IKEA in the UAE, said the company was now eyeing new stores in Oman and Qatar.

"Everybody is aware of the Qatar economy in terms of potential and we want to get into that market as soon as we can," he said.

While IKEA sales in the UAE are on par with last year, a slowdown from the double-digit growth rate most retailers saw last year, the region still has untapped potential, Mr Bhide said.

"We look at the market with a long-term view," he added.

"I think there is still a lot of investment in these markets, in real estate and infrastructure in Qatar and Abu Dhabi and Dubai also."

Ethan Allen recently opened its flagship 1,170-square-metres design centre in Dubai Mall and was setting its sights on Abu Dhabi, Damascus and Doha, said Farooq Kathwari, its chairman and president."We're looking at every major city in the Middle East," he said, adding that Ethan Allen had 290 stores, 40 of which were outside North America. Mr Kathwari said the company's interior design service, free with purchase, would give it an edge over the competition.

"The most important part of our offering is our interior design service," he said. "Coming to Dubai without that service would not have been the right thing to do. We would then be basically offering a great programme, but still competing as a commodity.

"Dubai is important because it is in the crossroads between many different places, from South Asia to Europe, to all of the Middle East. Positioning us here gives us an opportunity to expand the projection of our brand."

Consumers in the UAE have cut back on discretionary purchases this year and retailers have seen sales dip by as much as 30 to 40 per cent compared with last year. Despite a slowdown in the local property sector, a number of other home retailers are expanding within or entering the GCC market in the coming months.

The high-end home retailer Williams-Sonoma will open four stores in Dubai and Kuwait by next year in partnership with MH Alshaya Group, the Middle East's largest retail group.

Index Living Mall opened a 50,000 sq ft outlet in Dubai last month, its first outside Thailand, and has plans for stores in Abu Dhabi, Bahrain and Qatar over the next three to five years, said Pisith Patamasatayasonthi, the retailer's president and chief executive.

He acknowledged these were tough economic times but believed this worked in favour of new entrants to the market in terms of availability and the price of new retail space.

"Right now, it is easy to choose the best locations," he said. "Bargaining power is at its best.

"Since Index Living Mall needs a big space, a good location is not easy to find." Robert Ziegler, the vice president of the management consultancy AT Kearney in Dubai, said opportunities for retail still existed in Abu Dhabi, but less so in Dubai.

"There is a slowdown in the market," he said. "I'm not sure it makes sense to reserve capacities unless you're a latecomer and you haven't been in the market before."

However, Laurent-Patrick Gally, a retail analyst with Shuaa Capital in Dubai, said some people were holding on to their properties and might be inclined to renovate their homes.

"You may still have some areas where there is some opportunity for interior decoration," he said.

"In a globally slowing environment, maybe pricing is more acceptable now than a few months back."

By Armina Ligaya

© The National 2009