Al Jazeera to go public in 2012…along with other Qatari Corporations
Al Jazeera has rapidly become the Middle East’s most high-profile broadcaster, so it is no surprise to learn that the corporation could soon go public. According to a senior Qatari executive, the emirate could soon offload stakes to state-owned entities as soon as next year.
Speaking to the press, Olivier Gueris, Chief Operating Officer at Qatar Exchange was quoted as saying: “Al Jazeera would like to list next year subject to regulatory approvals and market conditions. They (Al Jazeera) have a strong desire to go for an IPO and list the company at Qatar Exchange.”
While Al Jazeera was not available for comment, the same senior Qatari source hinted other state entities may soon also be selling its capital to the public – namely Qatar Airway. The ever-growing airline is rumoured to start selling some of its capital to the public next year, but this will be “dictated by market conditions around the world.”
Economic volatility in the region has always been responsible for the minimal flow of IPOs with Mazaya Qatar Real Estate Development being the last primary offering in January 2010, however things could be about to change.
Bolstered by a number of financial firms based in Qatar’s offshore banking free zone, Qatar’s Financial Centre could soon iron out existing issues between themselves and the Qatar Financial Markets Authority. As a result, QInvest, Qatar’s largest investment bank, has said it would consider an IPO on Qatar Exchange.
“Local currency sovereign bonds will start listing after the new year, with treasury bills probably before that” Gueris was quoted as saying. While a market for local currency debt has been planned for a long time, the Qatari government has been issuing riyal-denominated bonds to banks as part of a plan to establish a yield curve for future issuance.
Meanwhile, rules governing a stock exchange for small and medium-sized businesses have been completed and are awaiting the sign-off of the Qatari regulator. Gueris said “It’s the regulator’s decision so it’s hard for me to say when they will do it but there’s strong interest from the highest authorities in Qatar so the regulator will have to make a decision sooner rather than later.”
It sounds like the future is bright for Qatari investment, it’s just a case of waiting for existing barriers to be overcome.
Kingdom Tower: Topping the Tallest Skyscraper in the World
Since the Burj Khalifa opened in Dubai, the Emirate has held the title of ‘tallest building in the world’. Towering high above the ever growing Dubai cityscape, it has stood as a testament to the innovation and rapid growth that the UAE is projecting to the world.
However that time is set to come to an end with construction starting, come January, on a new contender to the title – Kingdom Tower: an epic 1km high super skyscraper.
Located in the Saudi city of Jeddah, Kingdom Tower is projected to cost $1.2 billion.
Designed by Chicago-based Adrian Smith & Gordon Gill Architecture, the tower is set to not only eclipse the Burj Khalifa, but rejuvenate the Kingdom’s image in the eyes of the world.
Prince Alwaleed Bin Talal, chairman of Kingdom Holding Company – the investment firm behind the project – told Arabian Business in August that the super skyscraper would be “transformational. These are the kind of projects l like to do… these big projects need vision, strength and guts to do.”
Saudi Binladin Group won the deal to construct the tower in August, and have quite a lot of experience in the construction of super skyscrapers as founding partner Adrian Smith was also the architect behind the 828m-tall Burj Khalifa.
Smith added that the firm had learnt many lessons from designing the Burj Khalifa, and the new structure would be based on the stepped or tapered tower design.?? Located in the first phase of Kingdom City, a 5.3m mixed-use development north of Jeddah, which overlooks the Red Sea and Obhur Creek, the Kingdom Tower will epitomize luxury in the country.
As well as containing the world’s highest observation deck on the 157th level and multiple apartments and offices, it will also feature a Four Seasons hotel. Of course, Dubai is still aiming high: the Pentominium, which is currently under construction in Dubai, is expected to be 516 m (1,693 ft) tall and, when completed, will be the tallest all-residential building in the world.
Parts of The World to Float?
Several years ago, The World Island Development Project symbolised everything about Dubai – grandeur, luxury, epic scale and that sense of the bizarre. However global financial struggles saw many developers fail to finish construction on the artificial archipelago.
Now those investors that purchased an area of water along with their islands have an easier alternative than starting construction there: they can create a “self-sustainable” floating island.
The idea was pitched by Dutch Dockland, the company who first won the competition to build Nakheel’s Floating Proverb. This ambitious project will have 89 floating islands around Palm Jebel Ali which spell out an Arabic poem “Ome” when read from the air and is reportedly still in development.
“We are seriously looking at launching a floating island on The World. And we are in talks with some private investors” Paul van de Camp, Chief Executive Officer, Dutch Dockland recently told Emirates24|7.
Instead of the investors pouring more money into making the artificial islands ready for construction, Dutch Dockland believes that a “self-supportable” floating island that can be constructed in combination with the already existing landmass makes a much more feasible solution.
“As all the equipment is within the island and is therefore completely self supporting; the owners do not have to depend on getting any infrastructure ready.”
The floating islands would also be zero footprint projects with the Dutch company developing similar concepts such as a floating Olympic village and a stadium. These have already been pitched to the Qatari government for their future World Cup and Olympic bids.
Dutch Docklands are also working on an ambitious project in the Maldives that has generated a lot of speculation in certain circles – a floating health club that contains an 18-hole golf course, hotel and private villas.
Desertec: MENA’s a €400 billion green initiative (with some help from Europe)
The Middle East and renewable energy have a difficult relationship. After all, if your economy is primarily built on the sale of oil and gas, why would you jeopardise that? In recent years however, the region has slowly shifted from fossil fuels to alternative sources.
The likes of Kuwait have been investing in alternative energies and the UAE has put billions into ground-breaking developments like Masdar City, Abu Dhabi’s zero-carbon metropolis. Despite heavy oil reserves, the countries have realised the need to diversify as oil supplies will only last for so long.
This week, the region saw another green investment with a German-led initiative announcing the construction of a €400 billion vast network of solar and wind farms across North Africa and the Middle East to provide 15 percent of Europe’s electricity supply by 2050.
The Desertec Initiative has been making headlines with the planned project focusing on an epic 500MW solar farm that would generate a hefty percentage of Europe’s energy needs. While its location has remained up in the air, it has now been decided that Morocco will host the solar initiative.
The Desertec Industrial Initiative (DII), a coalition of companies including E.ON, Siemens, Munich Re and Deutsche Bank, announced at its annual conference that “all systems are go in Morocco”, with construction of the first phase of the solar farm scheduled to start next year.
Once constructed, the solar farm will harness the sun’s energy with parabolic mirrors to generate heat for conventional steam turbines, as opposed to the photovoltaic cells used in the UK.
The 12 km2 Moroccan solar farm will, said Paul van Son, Dii’s CEO, be a “reference project” to prove to investors and policy makers in both Europe and the Middle East / North Africa (MENA) region that the Desertec vision is not a dream-like mirage, but one that can be a major source of renewable electricity in the decades ahead.
He added that it was a win-win situation for both Europe and MENA as the region would be able to diversify its power exports, while Europe would receive clean and green energy.
The recent Arab spring has also seen many governments embrace alternative sources of power with the Tunisian government talking about building a solar farm. Algeria are also said to be interested. If it is a success, then expect Libya, Egypt, Turkey, Syria and Saudi Arabia to all join the solar power grid.
Middle East Airlines See Over 9% Growth In September
The GCC, and the UAE in general, have invested heavily in air travel in order to continue to bring more and more business to the region. It appears to be working as more people are travelling to the UAE with Middle East airlines reporting a 9.1 percent growth in passenger demand in September.
With numerous governments investing heavily in the air industry, this news from the International Air Transport Association (IATA) will come as a relief, as will the increase in cargo volumes (which of course leads to a stronger economy). While air cargo has contracted around the world, the Middle East has actually seen volumes grow by 4.2 percent. The only blemish is that the region’s carriers saw lower passenger growth than Latin America and Europe last month, although still outperformed the global average.
Currently the global average of passenger growth is 5.6 percent, but the Middle East’s 9.1 percent growth is astounding, though not surprising. The region has rapidly become one of the fastest growing markets for air travel in the world, so it’s no surprise to learn that the region’s airlines are doing well. Qatar Airways, one of the world’s few profitable airlines, recently announced it was to add five new routes to its global network, taking the airline’s tally to 100 cities.
Likewise the GCC has talked up plans to invest over $140 billion into the industry. It seems that while the rest of the world’s airlines suffer, with passenger load numbers lower than the year before, the Middle East’s are literally taking off.
In fact, the GCC have said that over the next few years passenger numbers will grow annually by 10 percent, resulting in the region needing spare capacity at its airports. Current capacity utilisation in the GCC stands at more than 115 percent with Bahrain having the most severe case of under-capacity.
However mass infrastructure investment in the region is set to change that – Dubai International Airport, for example, has seen construction work in order to raise its capacity from 22 million passengers a year to 60 million with an expectation of a further increase to 90 million by 2020.
IATA is still being cautious saying that despite stronger than expected growth in passenger markets during September, the industry is bracing for more difficult times ahead.
Maybe, but it seems that the Middle East will be fine.
The Power of Power: GCC Energy and Water Projects Worth US$ 31.9 Billion
The GCC, in particular Abu Dhabi, have spent the past several years heavily investing in energy projects and water infrastructure for two key reasons:
1. Not all of the region’s countries enjoy rich oil reserves;
2. If you live in the desert, water is rather crucial.
However, it seems the plans have now borne fruit with the Director General of Abu Dhabi Water and Electricity Authority announcing that the GCC projects are now valued at US$31.9 billion. Speaking ahead of the Power + Water Middle East Exhibition and Leaders’ Forum, Al-Nuaimi revealed that there are now 44 power and water projects in the GCC that are currently underway or due to begin in 2012. Unsurprisingly, the UAE leads the pack with 11 projects valued at US$10 billion, including the US$800 million Hassyan 1 Independent Power Plant.
The oil rich Saudi Arabia also has 11 new projects underway or due to start in 2012, valued at US$8.6 billion, while Kuwait has ten valued at US$3.4 billion. While not all of these utilise renewable energy sources, it has shown that the GCC has realised the importance in diversifying its energy exports.
“The latest developments in the power and water sectors of the GCC countries underline the fact that the region is not only one of the fastest growing but also holds the most potential of global electricity markets” said Anita Mathews, Exhibition Director for Power + Water Middle East in a statement.
She continues:
“The power sector in the GCC region has seen exponential growth ranging from 10 to 15 per cent annually in many of its member states, with demand for electrical power to triple over the next 25 years. Similarly, the water industry is expected to be worth US$ 70 billion over the next ten years. Power + Water Middle East will also continue to grow significantly as the region’s leading event in the power generation and water industries.”
The question is how sustainable are these power facilities? While the UAE has recognised the potential of renewable energy sources, Saudi Arabia has always held firm against renewable energy, opting instead to spend US$170 billion over the next five years on energy and oil refining efforts. This is all despite green technologies doing well in terms of market shares.
Middle East Awarded Construction Contracts Worth US$140bn
After several years of abandoned projects, delays and cancelled construction schemes, it is refreshing to read that, according to Deloitte, approximately US 140bn worth of engineering and construction contracts have been either awarded by National Oil Companies (NOCs) or are planned throughout the Middle East in 2011.
In a white paper titled “Show me the Money: Opportunities for Private Sector Investment in the Oil and Gas Sector”, it details how energy resources and construction projects in the Middle East are on the rise.
Thanks to changes in market practices, upstream oil and gas developments are now accessible to the private sector, which has meant an increase in investment and accessibility to specialist technologies and practices.
This has also meant Saudi Arabia, who is dependent on foreign partners for gas extraction, can now develop it’s own regional supply. This lessens foreign dependence and allows countries to reclaim their natural reserves.
Kenneth McKellar, partner and Energy and Resources leader at Deloitte in the Middle East, said of such developments:
“In common with other GCC NOC’s, the Kingdom entered into joint ventures and contracts with International Oil Companies (IOCs) to access the technology and transferable skills necessary to enable optimal use of their natural resources.”
i.e. Why pay someone to do this when we can now do it ourselves?
With the Middle East petrochemical capacity growing by 3.7% over the past decade, it has coped with the global financial crisis much better than its American and European counters, many of whom have had to cut production and close plants.
However it appears this is just the start of a regional boom with the white paper stating that over the next five years, “the region will witness strong growth in hydrocarbon production as the world’s dependence on fossil fuels continues.”
Dubai unveils 2020 Master Plan for Land Usage
Dubai has unveiled a master plan on how land will be used in the future.
Speaking to Emirates 24/7, Director-General of Dubai Municipality Hussain Nasser Lootah said that the new plan will clearly demarcate usage of land in the emirate.
“It is a master plan for the city of Dubai. We have to know what we are going to do and what is our requirement for these lands and how we need to develop it” Lootah stated.
He continues:
“This master plan has taken all the aspects – residential, industrial, commercial, schools, hospital and even infrastructure – into consideration. We have taken it to the Executive Council and they approved it. We are leading the project and are cooperating and coordinating with government organisations and private developers.”
Among the new legislation is a rule that means no one will be able to build residential high-rises on land that has been allocated for some other use.
Although Dubai is famed for its tall and impressive structures, the new rule means that any such projects will have to go through the proper channels. As Lootah says, “You can’t come to an area and say I want to make a high-rise building since the land use has been identified.”
The Director General added that Dubai was not just a real estate city and it was not right for people to concentrate only on real estate. He stated:
“Real estate is part of the city. We are developing, Dewa is developing big projects, RTA has completed the Metro and so many roads. We too have completed a huge sewage plant. We are building new public gardens and launching so many other projects. So it is not just real estate.”
Lootah is right in that respect. Dubai has done everything it can to diversify itself, be it as an energy power, a business hub or a tourist centre. The credit crunch showed many countries that simply relying on one aspect of the economy could have devastating effects and it is good to see Dubai learning from the mistakes of the past, even if that does mean we may not see an epic apartment buildings in the near future.
How the Dubai Metro is creating Property Hot-spots
There are a number of things that can cause land prices to soar – gold deposits, oil reserves and the creation of public transport links. The latter is the reason why property rentals in and around the new Dubai metro stations are 10-20% more expensive than anywhere else, creating highly competitive hot spots all around the city.
Construction in Dubai has been increased in recent months since the debit crisis was resolved, but the Dubai metro has become a new factor in the region’s property market. According to Asteco, one of the UAE’s largest real estate companies, tenants are prepared to pay up to 20% more for the privilege of living close to a metro station. It is easy to see why – it is convenient and ensures land value.
“The Dubai Metro has added a whole new market dynamic and as the network is rolled out across the Emirate, the rental disparity will become even more pronounced than it is already” said Asteco CEO Elaine Jones.
It is no different in other countries. In cities such as New York, Paris and London, there is evidence that prices for properties near underground and metro lines are higher than those than are not. Homes in the centre of London that are within five minutes of a Tube station are up to 21% more expensive than those that are not.
Interestingly prices only grow up once the station is finished, not when the project is announced. Clearly investors don’t trust builders’ estimates and time projections.
Currently in Dubai, properties in and around the metro lease for between AED60,000 to AED65,000 per annum. Properties further away can go for AED50,000 to AED55,000. All of this has led to increased interest in properties in and around the new Green Line which opens next month. After all, the 23km line has 18 stations along it, many of which cover popular tourist destination and residential areas.
If you are looking for a potential investment, then look no further especially if you are thinking of starting up a company. “It must also be favourable for companies to be close to metro stations” added Jones. “The benefits of cost and convenience would be considerable for low and middle income workers.”
Ruler of Dubai to Inaugurate Metro Green Line in September
The construction of the Dubai Metro has been ongoing for a number of years; however the network’s Green Line has always been repeatedly delayed. All that is going to change though as HH Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, has announced he will launch the official operation of the Dubai Metro Green Line on 9 September 2011.
The Green Line will stretch 23 km and comprises 18 stations in addition to the two transfer stations; Union and Khalid bin Al Waleed Stations shared with the Red Line. By opening the Green Line, Sheikh bin Rashid Al Maktoum will be marking the biggest vital transport project ever undertaken across the region.
With the Green and Red Lines intersecting, Dubai commuters will be able to change lines at the Union Station; which is the biggest underground metro station in the world, and at Khalid bin Al Waleed Station.
Speaking about the inauguration, Mattar Al Tayer, Chairman of the Board and Executive Director of the RTA, said:
“The completion of the vital Dubai Metro project culminates the continual support and attention of HH Sheikh Mohammed bin Rashid Al Maktoum, Vice-President & Prime Minister of the UAE and Ruler of Dubai to uplift the infrastructure of Dubai Emirate. It epitomizes the RTA Strategic Plan, which is aligned with the Dubai Strategic Plan 2015 (Infrastructure Sector), aimed at providing integrated roads & transit systems ensuring smooth mobility and highest safety levels to all network users.”
“The project completion is also a result of the persistent follow-up of HH Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council, and His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai; who were the first to witness several constructional & operational works achieved throughout the Dubai Metro drive.”
With the Dubai Metro already helping the emirate to reduce road traffic, it is expected that the opening of the Green Line will increase the number of metro riders. It is also expected to increase traffic to commercial, government and residential areas, improving the overall economy.
There are still plans to open two more stations on the line, Al Jadaf and Creek Stations, but in a statement Al Tayer said that the RTA opted to hold the opening due to the non-completion of property projects to be served by these two stations and the lack of passengers that would use them.