Wednesday, August 20, 2008

Oil Down, USD Up...still problems

Dollar strength to create problems


All the best humour is deadly serious. I contend that the finest comics and satirists are really true cynics – idealists who examine the way the world is against the bright light of their own, very pure notion of what it should be. When they find that reality falls short of their ideals, they snarl. They try to change the world by pointing out the lunatic inadequacy of the way things are.

My point is, that the best humour is true to life as it is, and makes us think about how it should be.

But that's enough of the introduction to basic humour. So here's an old joke with a very serious financial subtext of direct relevance to today's global property markets – specifically, in London, the French Riveria and Dubai.

Our story originated in the Moscow of the mid-90s – a time when the middles classes had their savings wiped out, the Communist system finally died on its feet, and gangster capitalism and handguns in the boardroom.

It was also a time of fabulous wealth for a few (the oligarchs and their cronies) and the emergence of a predilection for conspicuous consumption that is still very much a part of mainstream Moscow business culture.

The tale itself concerns two businessmen. Ivan notices that his friend Viktor has a new gold Rolex watch.
How much did it cost, asks Ivan.
$50,000 (Dh183,500), announces Viktor, with a small smile.
And where did Viktor get it?
Viktor reveals the address of an exclusive shop on the Arbat.
"Fool!" cries Ivan. "I know a place just a couple of minutes away where you could have got the same thing for twice as much!"
There is still plenty of mileage in the principle of "if you've got it, flaunt it" among the Russian plutocrats – and the Asians too, if I read the runes of what's happening with Li family right (but more of that in another column).
My contention that flashing the cash is still very much in vogue at the top end of the market is supported by a number of deep niches that remain impervious to the vicissitudes of the credit crunch and all those boring economic ills that affect the common herd (people like me, gentle readers, bit not all of you, I'm sure).

The modern art market (specifically Jackson Pollock, and latterly the truly dismal work of Jonathan Rothko) is booming on the back of Russian and Asian investment. Wine, too, is a popular investment. But property is top of the tree.

No-one can really be quite sure which is Europe's most expensive residential property, as, I suspect, real wealth requires true secrecy.
Some of the most sought-after properties change hands without the common herd ever being aware that the assets had come on the market.
An exception to this rule is the recent acquisition of the Villa Leopolda. Sited in Villefranche-sur-Mer on France's Cote d'Azur, the property has been acquired for $500 million by a Russian billionaire.
Now, this property has cachet. Formerly owned by the Safra banking family, it has reportedly housed guests as famous as Ronald Reagan, Elvis, and Frank Sinatra. The estate agents who did the deal claim that the market in ultra-exclusive locations is more buoyant than ever.

Well, that may be so, for the moment. But think back to my little Russian joke. It makes a simple point that the cachet in buying an object does not really come from the object itself, but the expense of its acquisition. Thus the same object, at twice the price, would have more cachet.

What does this tell us (other than the obvious fact that explaining jokes is deadly dull)? I believe that the strength of the dollar is going to create real problem for these exclusive, high-end markets which have so far not seen any kind of downturn.

Comment on global currency rates is not my brief here. But I contend that the dollar has well and truly turned. It is strengthening rapidly against sterling, the euro and its prospects against the dirham look very good to me too.

In short, viewed from the prospect of the dollar-rich billionaire (commodity oligarchs spring to mind) these prize properties will soon seem embarrassingly cheap.

The Villa Leopolda transaction has broken the previous record residential property deal of $220m. Britain's richest man, the Asian billionaire Lakshmi Mittal is reported to have paid this sum for a home next door to Prince Charles's pad in Kensington.

But that sum will seem like what you'd hand over for some miserable hut selling kebabs when you consider what Indian industrialist Mukesh Ambani is planning.

Asia's richest man is soon to move into a 27-storey mixed-use development (family residence and the offices of his own businesses). Located in Mumbai, estimates put the value of the development at around $2 billion. Its design, appropriately enough, is apparently themed on the Hanging Gardens of Babylon.

So I fear for Kensington, Chelsea, Knightsbridge, the Cote d'Azur and Dubai for the perverse reason that the rising dollar means they won't be expensive enough to attract the interest of the mega-rich.

That said, I've been very impressed with the size and scale and ingenuity of Dubai property development. When you look at the 1.4 billion square feet Waterfront development that Middle East property developer Nakheel has taken on, the sheer scale and logistical difficulty make one think of, well, something not unlike the Hanging Gardens of Babylon.

I was surprised to learn that this and another Nakheel development, the transformation of the QE2 liner into a luxury resort hotel, is being managed by a huge system of super-smart internet-based software that allows the project managers to co-ordinate the efforts of suppliers from all over the planet.

Each contributes its own bit to the project and is given access to relevant buts of the site. The system software is rented out to developers such as Nakheel by a highly successful and dynamic company based in England, BIW Technologies, which is, apparently, looking for investment capital (a market listing is a possibility, once the markets pick up).

I wish the company luck. Without systems like BIW's platform, major global-scale developments wouldn't be Hanging Gardens of Babylon, more disorganised Towers of Babel. Mind you, not using clever systems would be one way of making them that much more expensive.

Martin Baker is a journalist, author and commentator on international business affairs.

Emirate's Superluxe Airbus A380 Makes Flying Fun Again

SAN FRANCISCO -- The world's biggest jetliner brings back the golden era of air travel, when flying was an event so grand men wore ties and women wore furs. That is, it will bring it back if you've got $14,000.

That kind of cash buys a first-class ticket for a New York-Dubai round trip on Emirates airline's new A380, a 489-seat behemoth where the 14 people rich enough to sit in first class enjoy hot showers, massaging chairs, 1,000 channels and seven-course meals served on china and linen. Oh -- there's also a bar with a waterfall.


If you're like the rest of us and have just $1,500, you get a seat sandwiched between nine other people, a 9-inch TV screen and space in an overhead bin. But the seat's comfy, there are 500 channels, and the cup holder's gyroscopic.


Dubai-based Emirates is adding 58 A380 super-jumbo jets to its fleet as fast as Airbus can build them. It picked up the first one last week and made the maiden voyage from Dubai to New York on Friday. Emirates is adding service from Dubai to San Francisco and Los Angeles by the end of the year, and even though it's using the more conventional Boeing 777-200 on those runs, it brought the A380 to San Francisco Monday to show people how the other half lives.


Huge doesn't begin to describe the A380. It's 238 feet long, it weighs 560 tons and it carries 82,000 gallons of fuel. The airline says the plane burns just 3.1 liters of fuel per passenger per 100 kilometers (a little more than three quarts of fuel per passenger every 60 miles), a figure it boasts is "better than most hybrid passenger cars."



Just how big is it? The KLM Boeing 747 next to it looked dinky, and the American Airlines Airbus A300 that taxied past looked like a Smart car alongside a Hummer. Despite its size, the A380 is said to be quite nimble, very fast and a dream to fly.



"It's like driving a Ferrari," says Abbas Shaban, chief pilot for Airbus and captain of the three flights the plane's made since Emirates picked it up last week. He's been flying commercial jets for 28 years and says the A380 "is much better than any plane I've flown. It's more responsive, more powerful and more stable."



It's also more ostentatiously over the top than anything in the sky. If Steve Wynn built airplanes instead of Vegas casinos, they'd look like the Emirates A380. First-class passengers sit in leather seats that fold flat at the push of a button. They watch first-run movies on 23-inch flatscreens. Their private suites -- seats are so plebeian -- are trimmed in polished wood and brass. There are two showers with faux marble floors, fluffy towels and the biggest assortment of shampoo this side of a Beverly Hills salon. (With just 50 gallons of water for 14 people, you're limited to five minutes.) Lighting that mimics sunrise and sunset is said to keep your internal clock in sync and minimize jet lag.



One of the 76 business class seats will set you back $9,000. They're almost as swanky as those up front, but you don't get the showers, the TVs are a little smaller and there's no waterfall -- but there is a well-stocked bar that'll seat 25 people and apparently was hopping on the flight from Dubai. Even the 399 seats in economy class -- which, at $1,500 a person round-trip, is a bit of a misnomer -- is nicer than anything you've flown recently. The cloth seats are wide and supportive, the entertainment system offers so many choices it's overwhelming. and your meal doesn't come in a box.


Emirates is flying the A380 only on its Dubai to JFK route, but it's got two more planes on the way for its Dubai to London and Sydney-Auckland runs. It has $18.8 billion worth of A380s in the pipeline and may bring them to other U.S. cities in the future. All those planes will add more than 25,000 seats to the airline's fleet, which makes you wonder who's going to fill them.



Emirates isn't worried. The airline's grown by 20 percent annually since it was founded in 1985 (and, according to Senior VP Nigel Page, done it without any government subsidies). With air travel expected to triple in the next two decades and landing rights at airports getting tougher to secure, airlines need to pack as many people into every flight as possible. Adel Al Redha, executive vice president of engineering and operations, said the demand is there. "The only thing holding us back is the planes," he says. "We can't get them fast enough."








The Roads & Transport Authority of Dubai Looking For Malaysian Engineers

The Roads & Transport Authority of Dubai (RTA) is very keen to employ Malaysian Engineers,
10 posts are offered

Requirements:
1. Malaysian
2. Muslim
3. Min 8 years experience
5. Advantage experience in highway and bridge design.

5 posts for design team and 5 posts for supervision team

Kindly forward resume direct to byhusin@gmail.com

More jobs at kerjadubai

About RTA

Since Dubai is one of the fastest growing cities in today's world, making the provision of high quality infrastructure facilities absolutely imperative, and since providing an advanced transport network for the people of Dubai has been high on the government’s agenda, which is evident from its initiatives to enhance the public transport facilities and improve roads across the emirate to make travel safer and smoother, the Roads and Transport Authority (RTA) was formed by the decree number 17 for the year 2005.

RTA is responsible for planning and providing the requirements of transport, roads & traffic in the Emirate of Dubai, and between Dubai and other Emirates of the UAE, neighboring countries in order to provide an effective & an integrated transport system capable of achieving Dubai's vision & serving the vital interests of the Emirate.
RTA responsibilities also include:
Buses
Roads & Parking
Roads Engineering
Taxis
Rail Project
Registration & Licensing
Inter-City Transport
Marine Transport - Abra
Traffic Safety
Commercial Ads on the Right of Way
Public Buses
Roads Beautification