Second Quarter 2002 Review: Freehold ownership spurs fresh activity in property market

The second quarter of 2002 was animated with the opening up of Dubai's real estate to expatriates on a freehold basis. With that one decision by the highest authorities in the emirate, a whole new script has come into being, which will throw up manifest possibilities for the property market.

The overwhelming response generated by this announcement among expatriates was reflected in demand for the Emaar and Palm projects.

April

Dubai will establish three gold refineries and a metals and commodities centre that will provide a full range of facilities for trading in gold, diamonds and key commodities like tea and sugar. The announcement was made by General Sheikh Mohammed bin Rashid Al Maktoum, Dubai Crown Prince and UAE Defence Minister. Through the establishment of Dubai Metals and Commodities Centre (DMCC), the emirate aims at acquiring 50 per cent of the annual 2,300 to 2400 tonnes global gold production, during the coming years.

The operational strategy for the Dubai International Financial Centre (DIFC) is being mapped by an elite team of advisors drawn from eminent bankers from the world's leading financial institutions. Members of the team - like the advisory board - are highly respected experts in their fields.

Once the Regulatory Council is in place, the operational structure of the DIFC would be almost complete - with three arms becoming functional. These are the Board of Directors, the Advisory Board and the Regulatory Council.

The Emirates Group shrugged off the ill winds of September 11 2001 and crisis at SriLankan airline to declare a Dh603 million net profit for the financial year 2001-2002. This works out to a 13 per cent rise from last year's Dh531.3 million. The record results follow the previous November's announcement of a $15 billion fleet expansion programme.

The local manufacturing sector received a timely fillip with the project promoters finally giving approval to set up a $120 million aluminium foil plant in Dubai. The presence of France's Pechiney - one of the biggest names in the industry - in the venture along side Dubai Investments provides clout to the project.

Dubai is expected to spend $817 million on infrastructure development alone over a three-year period beginning 2002.

The emirate set up a new - Dubai Authority for Investment and Development - entity to oversee inward investments into Dubai and to promote it in overseas markets. The downturn in global equity markets and uncertainties on the economic front had led to active speculation that a lot of Middle East wealth held abroad were looking for credible channels to get back into the region.

The need to create a reinsurance company with shareholding divided among the six Gulf states was taken up at a key meeting of the insurance industry. The call assumes significance in the heavy losses sustained by the global insurance sector in the wake of the September 11 events in the U.S. in 2001. Creating a GCC-owned reinsurer would also aid regional insurers access to reinsurance support, especially after the scaling down of exposure to the Middle East by the international majors.

The insurance meeting also took up another potent issue - that of the need to create a GCC War Risk Fund. In the context of developments in later months with regard to Iraq, the need to take up the creation of such a fund is of ever more importance.

Thuraya, fresh from the success of growing acceptance of its services and gains in new subscribers, confirmed plans for a second satellite. It is also on schedule to attain its revenue and profitability targets, officials added.

Dubai International Airport emerged tops in the Middle East for cargo handled. Between January and November, the airport oversaw volumes of 574,520 tonnes, according to a report by Airports Council International. Dubai also held the 26th spot globally as per the same report.

The results provide further impetus to the on-going mega expansion of the airport, which was used by nearly 3.8 million passengers during the first quarter.

On the banking front, 2001 profits for Abu Dhabi Commer-cial Bank weighed in with Dh615 million, the highest recorded by any bank in the UAE for 2001.

Julphar made a further advance in its efforts to develop the local pharmaceutical manufacturing sector with the commissioning of its sixth plant, in Ras Al Khaimah. His Highness Sheikh Saqr bin Mohammed Al Qasimi, Member of the Supreme Council and Ruler of Ras Al Khaimah, yesterday officially opened the plant, Julphar VI.

National Bank of Dubai is in line to raise paid-up capital from Dh864.518 million to Dh1080.64 million with a bonus issue of one share for four. The increase in capital will make NBD the second largest capitalised bank in the UAE, the first being the Abu Dhabi Commercial Bank (ADCB) with a paid-up capital of Dh1.25 billion.

Following the setting up of free zones for the textile and autoparts trade, Dubai will further develop the area in and around Al Awir for other industries. The announcement of the free zones has elicited highly encouraging response from the concerned trading sectors, with over 100 signing up for the autoparts grouping.

Boosted by record earnings on its mobile phone and Internet operations, Etisalat came out with a Dh2.5 billion net profit for 2001. At the same time, its traditional fixed line services recorded steady gains. Total assets as of end 2001 was a monumental Dh16 billion.

The UAE Ministry of Petroleum and Mineral Resources announced conduct of a survey in Fujairah to assess the presence of any hydrocarbons. "A British geology survey contractor is doing comprehensive ground and airborne geological and geophysical surveys with the aim to understand the geological and tectonic nature of this emirate and to assess the availability of mineral deposits, underground water accumulations and hydrocarbon resources," said Saeed Ismael Al Khouri, assistant undersecretary for administrative and financial affairs at the ministry. This project is expected to be completed in 2006.

The UAE brought out new rules governing the listing of foreign companies seeking to trade their shares in the local stock market. Dealers waxed optimism about the move, suggesting that it would trigger capital inflow.

Issued by Sheikh Fahim bin Sultan Al Qasimi, Minister of Economy and Commerce, the rules stipulate such companies must have a minimum capital of Dh40 million, must have made sufficient profits over two years and have no restrictions on their shares.

In a new development, the Dubai Airport Free Zone Authority (Dafza) does away with the system of charging fixed rate for leasing out land. Instead rates are negotiable for companies intending to open shop in Dafza. The move is to bring down the existing lease rate of Dh10 and woo world class companies into Dafza. Already, the free zone offers a 15-year renewable lease with an undertaking against imposition of any new taxes or any other financial burdens during this period.

May

UAE President His Highness Sheikh Zayed bin Sultan Al Nahyan gave the green light for local customs authorities to open up the market for Iraqi products by ratifying a landmark free trade accord signed by the two countries in November 2001. Under the pact, Iraq's first with an Arab nation since it came under UN sanctions in 1991, customs tariffs and other barriers for commercial exchange between the two countries were lifted and a ministerial panel has been formed to ensure its implementation.

The UAE has been removed from the U.S. Special 301 Watchlist - but Israel and the European Union stay on t