Good morning, friends. We have a mixed bag of news for you today, with plenty of investments in real estate and private credit leading the way — plus a bunch of forecasts for the airline industry as the IATA annual meeting draws to a close.

THE BIG STORY here at home is Adnoc Logistics & Services’ USD 1.04 bn acquisition of UK-based pool operator Navig8. Also worth your attention: Abu Dhabi Investment Authority’s latest private credit investment, which saw it anchor European asset manager Pemberton’s NAV financing strategy, as well as Emaar’s AED 1.5 bn plans to expand Dubai Mall.

WATCH THIS SPACE-

#1- Interest among real estate investors in Abu Dhabi, Sharjah, and Ras Al Khaimah’s property markets is picking up as property prices continue to soar in Dubai, partner and head of Mena research at real estate consultancy Knight Frank Faisal Durrani told Khaleej Times. Also helping spur interest are infrastructure investments and new development launches like Wynn Resorts’ plans to develop the first integrated gaming resort in the MENA region in Ras Al Khaimah at USD 3.9 bn.

Residential prices in Abu Dhabi have remained relatively flat over the past four years, Durrani says, adding that “this stability, combined with the fact that prices in Abu Dhabi are, on average, about a third cheaper than Dubai, […] has contributed to rising transactional activity,” with the emirate logging a 75% y-o-y surge in total transactions in 2023, against neighboring Dubai’s 38% y-o-y increase in the same period.

Stable prices in Abu Dhabi are also pushing tenants to ditch rentals for ownership of properties, according to Durrani. “International demand too has crept up, with the proportion of international buyers […] for Aldar’s home sales rising from 3% two years ago to 28% last year.”

ICYMI- We had detailed coverage of Knight Frank’s Destination Dubai report last month, which dives into investor sentiment for the three emirates among high net worth individuals.

#2- Emirates Airlines is reviewing its contingency plans after the April floods cost it AED 400 mn in damages and claims, Emirates chief Tim Clark told a media briefing at the International Air Transport Association (IATA) meeting in Dubai, according to the National. “We’ve got to be far more aggressive, if you can call it that, and if necessary, stop the operations and [grapple] with all the fallout,” he said. The airline needs to spend more on manpower, ground equipment, and training in order to be more prepared if a similar crisis happens again, Clark added.

#3- Etihad Airways is pushing forward with plans for its IPO on the ADX, with the company “working very hard to make it happen whenever it is the time,” Etihad CEO Antonoaldo Neves told Bloomberg in an interview (watch, runtime: 4:34). Etihad owners told Neves to run the company as if it were listed, he adds in the interview.

REMEMBER- ADQ is considering listing Etihad on the public market “as soon as this year,” with the specific timing and size of the offering still undecided. ADQ is eyeing going after both a traditional IPO and direct listing, and has tapped banks to advise on its planned IPO on the ADX. Etihad would be the first major Gulf carrier to trade publicly if the IPO goes through.

#4- ADGM to overhaul property regulations: The Abu Dhabi Global Market (ADGM) has proposed amendments and new rules to its real property regulatory framework in a recently published consultation paper (pdf). These regulatory updates aim to “address market needs and ensure [that ADGM] stays aligned with market developments,” the financial center said in a statement. ADGM has published the paper to gather feedback from all ADGM-based organizations and investors on the proposed regulations, with the deadline for submitting comments set for 19 June.

What is ADGM proposing?

  • Amending the real property regulations of 2015 to enhance tenant protection in short-term residential leases and close legislative gaps as it expands into Al Reem Island;
  • Establishing a new system for registering off-plan development projects;
  • Introducing a framework for registering off-plan and property professionals, including brokers, property managers, and valuers who operate within ADGM’s jurisdiction.

DATA POINTS-

The UAE and the GCC regions’ passenger traffic is poised to grow 4% y-o-y between now and the end of the decade, Wam cites regional Vice President for Africa and the Middle East at International Air Transport Association (IATA) Kamil Al Awadhi as saying. The projected growth is set to be driven by several upcoming projects in the region, including the expansion of Al Maktoum International Airport, the launch of a new airport in Kuwait, and forthcoming projects from Saudi Arabia.

The IATA expects Middle East airlines to rake in USD 3.8 bn in net income in 2024, up from the previously forecast USD 3.1 bn, the association said in its latest outlook report. The IATA attributed the upwards revision to the Mena region’s robust economies. While geopolitical risks could jeopardize Levant carriers’ growth, GCC airlines will remain “relatively less impacted unless tensions between Iran and Israel escalate.” Domestically, the UAE “continues to benefit from its attractiveness to both leisure and business travelers,” the IATA notes.

OIL WATCH-

#1- UAE oil output tops OPEC+ quota in May, Bloomberg survey shows: The UAE’s oil output reached 3.13 mn barrels per day (bbl / d) in May, exceeding its Opec+ designated production quota by some 218 mn barrels, a Bloomberg survey found. However, official data from the oil cartel shows that the UAE was compliant with its assigned quota. Opec+ collectively pumped 26.96 mn bbl / d throughout May, marking an uptick of 60k barrels from April.

REMEMBER – Opec+ agreed to extend most of their crude oil production cuts well into 3Q 2024, maintaining the current production cuts of 3.66 mn bb / d. The UAE was granted a higher production quota of 3.5 mn bbl / d in 2025, up from the current 2.9 mn.

ALSO- Opec+ may be hinting at a shift in its production policy as the fine print on its latest decision reveals it will gradually phase-out output cuts as early as October 2024, according to Bloomberg’s Javier Blas. This could either mean the group is reversing its course, growing eager to pump more oil into the market, or strategically shifting away from its USD 100-a-barrel oil target, Blas wrote.

Giving up the quest for “triple-digit prices” would not be a mistake, he added, saying that “somewhat lower prices could help it in the long-term: by easing global inflation and therefore prompting lower interest rates and higher economic growth in emerging economies; and by removing the implicit subsidy that OPEC+ was granting to its US shale rivals.”

There is no telling whether the market can digest more oil: Opec’s planned phase-out is sparking debate among pundits about whether market conditions are ready to absorb the group’s extra barrels, Bloomberg reports.

BACKGROUND- Opec+ extended crude oil production cuts during its meeting in Riyadh on Sunday. Production will remain unchanged until the end of this September, when the group will begin phasing out cuts over a 12-month period.

Oil prices fell over 3% yesterday to their lowest in close to four months as traders reacted to the Opec+ meeting.

HAPPENING TODAY-

#1- Dubai Chamber to head to Senegal, Morocco: The Dubai International Chamber will kick off a trade mission to Senegal and Morocco from 3 to 7 June as part of its African roadshow aimed at promoting and expanding Dubai-based companies’ foothold in the continent, according to a statement. The trade mission’s agenda will include holding meetings between Dubai-based companies and their counterparts in Senegal and Morocco, with a focus on exploring collaboration, expansion strategies, and forging new partnerships and trade agreements.

#2- The World Air Transport Summit and International Air Transport Association (IATA) wraps its annual general meeting and the World Air Transport Summit today. The event, hosted by Emirate Airlines, is being held in the UAE for the first time and brings together some 1.5k participants including industry leaders, government officials and media to discuss challenges facing the international aviation sector.

#3- The Hotel Show kicks off today at the Dubai World Trade Centre and runs through to Thursday, 6 June. The three-day event welcomes visitors from across the hospitality supply chain to source products from global and regional exhibitors and discuss developments within the industry.

HAPPENING THIS WEEK-

S&P Global will publish PMI figures for May next Wednesday. The non-oil sector continued to expand in April, though at a slightly slower pace due to the impacts of the storm.

THE BIG STORY ABROAD-

#1- Tension between besties Russia and China? The Financial Times is picking up on growing tension between Russia and its closest ally China, after Beijing asked to purchase Russian gas at heavily subsidized domestic prices, endangering a major gas pipeline agreement between the two countries.

#2- Closer to home: Israel’s coalition government has fallen into infighting over a proposed ceasefire plan — and relations between Cairo and Tel Aviv are ever more frosty after Israel “defied” Egyptian warnings and took control of the Philadelphi Corridor.

YOUR DAILY DOSE OF ELECTION COVERAGE- Nigel Farage, the former leader of the UK’s Independence Party and a Brexiteer, will be running in next month’s UK general election. Farage “has been one of the most influential politicians in Britain since the Thatcher era,” the Guardian writes in a profile about the politician. The general election will take place on 4 July — Labour is looking to form its first government since May 2010.

AND- Mexican voters have elected Claudia Sheinbaum as the nation’s first woman president. She looks on track to claim a 30 percentage point margin of victory, giving her the opportunity to “reshape the country’s political landscape” together with her allies, the New York Times notes. Some investors are spooked, the Financial Times writes, noting some have “sold the peso on fears of radical constitutional change.”

FINALLY- The rich be getting richer: Half of the CEOs running S&P 500 companies surveyed by AP made at least 196x what their median employee earned last year, up from 185x in 2022. Data from the newswire also showed that CEOs’ median pay package rose 12.6% to USD 16.3 mn in 2023, while wages of private sector workers rose just 4.1% during the same period.

CIRCLE YOUR CALENDAR-

The AI Retreat is set to take place on 11 June at Dubai’s Museum of the Future, according to a Dubai Media Office statement. Organized by the Dubai Centre for Artificial Intelligence, the event will gather over 1k AI experts, policymakers and business leaders to explore the potential and challenges of AI at both local and global levels.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

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