Bloomberg reported that Emaar Properties PJSC, the UAE’s largest developer is still collecting installments and fines from about 400 buyers for two non-existent towers called 29 Boulevard. According to Mehdi Nosratlu, who heads a group of investors negotiating with Emaar, most of them have paid 30-65 percent of the average purchase price of about half a million USD on this 45-storey twin towers. Proleads, a Dubai-based market researcher estimates builders in the emirate have delayed or cancelled projects worth about $330bn.

In addition to Emaar, several others including Union Properties and Nakheel are entangled in similar issues with their buyers. Sources say there are plenty of cases pending in law court related to real estate disputes. One of the recent decrees by Dubai government orders that property developers whose projects never got off the ground due to their “failure or negligence” are not allowed to keep any funds prepaid by individual investors.

The new laws carved out for this special purpose from hardly three years of Dubai realty contractual laws is believed to protect customer rights. Major feature is that it will help purchasers who entered boom-time sales contracts with developers, but came up empty-handed awaiting real estate projects that never started.

Sadly, during the realty windfall, many have entered into contracts without proper scrutiny of the deal providing undue advantages to the builders. Prima facie, it is not clear that the new laws will have any positive impact on those entered into deals in a hasty manner.

Deutsche Bank’s proprietary price index, which covers 13 main locations in Dubai, indicated that average housing prices for apartments declined 1.1 percent on a month-on-month basis, while villas slipped 1.7 percent on similar scale in March. Dubai’s real estate market saw a freefall for 18 months with property prices falling over 50 percent from their mid-2008 highs.

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The food imports have considerably risen in the last few years in view of the increase in population as well as water scarcity and hostile land conditions. The UAE and Saudi Arabia are already developing arable lands and food processing units in several Asian and African countries in a bid to overcome the snowballing global food shortages.

Harish Rupani, managing director of Equinox Trading, a food products trading company, told the Gulf News that growing food locally was not a viable option for the UAE as it costed three or four times more to grow local crops than it did to import. Dubai, the UAE’s commercial hub is one of the largest re-exporting centres in the world, and it traded in 2008 about $1.2bn worth of food-related items.

In the recent estimates by the Business Monitor International (BMI) indicate that food expenditure in the UAE reached $6.7bn in 2009. And it has been forecasted that it would grow by close to 3 percent in the current year.

The heavy dependence by the GCC on food imports also makes it the most vulnerable to not only price variations but also to increasingly changing food policies of the exporting countries such as blanket ban on exports of certain food commodities which are scarce in those markets.

The Standard Chartered’s most recent food report claims food prices are at a historic high and rising, around 80 percent higher than the low mid-2002 levels. Rupani said that prices of sugar and rice had tripled over the past five years.

The BMI is understood to have learned that the UAE government is making numerous efforts to increase the number of food processing plants in the country. The government has invested about $1.4bn into the food sector since 1994, and there are 150 food processing plants operational in the UAE today.

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The projects in the pipeline and in progress range from city trams to heavier freight routes. From the sponsorship line-up including IBM and Sharp during the ongoing MENA Rail 2009 conference in Dubai made it apparent that besides railway companies there are many in the fray vying to have a piece of the mega Gulf railway pie.

Various companies that provide rail-related products and services have opened offices across the Gulf region to utilize business opportunities and market their wares. Invensys, a UK based company that provides industrial automation, rail transportation and controls is one such company that has set up office in Dubai to augment its regional visibility.

Ala Ghanem, the regional director of business development at Invensys opined the Gulf was the most promising region at the moment for railway and related businesses. He acknowledged that there were not only many projects coming up but also were massive ones that no one in this field could afford to sideline.

The foremost project is the first proposed route of 1,970km long running through Kuwait, Saudi Arabia, and Bahrain over Qatar, and crossing the relevant stretches of water by bridge and continuing to UAE and Oman. The second will cover 1,984km from Kuwait to Saudi Arabia before passing through UAE and ending in Oman. The ultimate goal of this project is to link the whole of Middle East with each every country of the region. Once completed it is likely to have 16 lanes and an approximate length of 19,000km.

Other projects such as $4.2bn worth Dubai metro system, Abu Dhabi’s freight rail network, 130km of metro lines and a 340km tram system, 580km of high-speed rail to Al Ain, Dubai and Al Gharbia and Bahrain’s $8.13bn rail line with six lanes stretching 184km are few of those projects attracting many from this field.

According to Unife, a European rail consortium the global market is worth $167bn (Dh608.81bn) a year, and the Middle East and Africa account for just about $5.5bn. Michael Clausecker, the director general of Unife asserted that though it would not be the largest market, but it was one with substantial opportunities and substantial growth potential.
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Some of the experts argued that the six Gulf nations had planned their 2009-10 budget maintaining oil prices at an average of $45-55 a barrel, therefore, taking into account the month-long stable oil prices at $50/barrel would in fact record marginal surplus rather than deficit budgets. Although EIB had warned of a deficit budget, they had ruled any possibility of 1990’s situation that inflicted heavy debt and low assets among the GCC member states. The reason cited is that they had accumulated huge financial reserves since last five years owing to a steady increase in oil prices, and particularly the first quarter of last year when the prices skyrocketed to reach the all time high of $147/barrel.

In 2008, though GCC member states estimated a budget surplus of $32bn, they amassed about $190bn surplus since the oil prices averaged at $95/barrel throughout last fiscal. Experts pointed out that if at all any member in the GCC to fall short of a surplus would be Saudi Arabia, because it produces almost a third of the total output of the region to make it the biggest loser or gainer while the prices fluctuate. As an OPEC member, Saudi Arabia along with other members had cut oil production several times since last November to halt the slide in oil prices, and the current production stand at 8.2mn barrel/day from last year’s high of more than 9mn bpd.

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Industry observers said though the intra-day trade saw marginal dip in oil prices, however early next month would see further slide before OPEC’s likely production cut on March 15. Nevertheless, they further predicted that the traders were expecting an increase in demand by April in view of lower stockpiles to spark off demand, and a gradual price rise would follow until it stabilized at $60 per barrel by September this year.

Due to the sliding oil prices, most of the companies are reluctant to increase their inventory expecting the prices to fall further and avoid losses. But by April, the depleting stockpiles are likely to prompt the buyers to increase their inventory, and the trend is expected to push oil prices up despite receding global demand.

In its latest monthly report on Wednesday, the Paris-based IEA stated the forecast for global oil demand was revised down by 570 kb/d to 84.7 mb/d in 2009 (-1.1 percent or -1.0 mb/d year-on-year) after the IMF again slashed its GDP growth prognosis to half a percent. The worsening global slowdown was blamed to be the reason for them to crimp the oil guidance further, the report added.

According to sources, the US crude oil inventory unexpectedly fell by close to 2mn barrels.
However, the lower demand due to the US economic crisis has weighed down against their reduced supplies severely. Similarly, the reports from China, the second largest oil consumer after the US have also shown the crude imports dropping by 8 percent, a lowest level in 15 months despite showing marginal increase in domestic demand.

The diminishing demand for naphtha, a by-product of crude which is primarily used as a feedstock for the production of plastic and synthetic fibres has also contributed to the price fall. The IEA warned the lower oil prices were forcing many companies to postpone or cancel many exploration and production projects which would ultimately make a huge dent in supplies when the global economy turned around. Nonetheless, analysts deduce that reaching the high of $147 per barrel once again is most unlikely as governments and companies are investing more on renewable energy sources owing to the fears of higher oil prices and climate change.

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