Emaar and Aldar property alliance underscores new economic landscape following oil rout

The Emaar Properties logo in Downtown Dubai. It is collaborating with Aldar on projects for the first time. (WAM)
Updated 22 March 2018
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Emaar and Aldar property alliance underscores new economic landscape following oil rout

LONDON: The decision by Abu Dhabi’s Aldar and Dubai’s Emaar to forge a strategic alliance has attracted widespread attention in the Gulf.
The pair have plowed lone furrows in the past but are now teaming up in a move that analysts see as a sign of closer commercial ties between the UAE’s two biggest emirates.
It comes as UAE property developers are under increased pressure amid a weak housing market, faltering consumer confidence and expatriate job losses.
“We are in a new economic reality, one that commenced four years ago with the oil rout. I think the best thing for UAE going forward is to consolidate entities, play off each other’s strengths and present a more unified front to the rest of the world,” said Faisal Durrani, who heads research for Cluttons, the property broker.
The deal between the two property companies is for co-operation and pooled resources in selected areas.
But collaboration has the benefit of making a bigger land bank available for exploitation, and potentially, fatter margins. “We are happy to witness the signing of this partnership, which will contribute to our development journey and help enhance the UAE’s position as a tourism destination of choice,” said Mohammed bin Rashid Al-Maktoum, prime minister of the UAE, and ruler of Dubai.
“We want our companies to collaborate to explore creative ideas for strengthening the UAE’s leadership,” he added.
The developers will initially collaborate on two UAE-based projects: Saadiyat Grove in the heart of the cultural district on Abu Dhabi’s Saadiyat Island, and the Emaar Beachfront project, a private island in Dubai located between Jumeirah Beach Residence and Palm Jumeirah.
Emaar and Aldar are both profitable, even though in many segments, the Gulf trading environment is not as lucrative it was — especially in the real estate sector.
So is it possible that economic realities have helped to propel the latest deal? “That could be one key, underlying factor,” said Durrani.
The tie-up between the two big property players in both emirates follows similar collaboration in the aviation sector.
Last October Dubai-based Emirates and Abu Dhabi-based Etihad revealed plans to cooperate in areas that included procurement.
Beyond the business arena, there are also signs of a more joined-up approach in sport, with the Abu Dhabi and Dubai cycle tours scrapped in favor of a single UAE race from 2019.
“That appears to be part of a wider government move to help position the UAE on the global stage,” said Durrani.
Emaar has an excellent track record in developing real estate projects, in multiple asset classes and can produce sparkling numbers even when the economy hits a soft patch.
Equally, Aldar — which operates in the more challenging Abu Dhabi property market, has good experience to pass on in the area of beach front developments.
But the biggest benefit could be the enhanced reputation that would accompany an Emaar-Aldar alliance.
More than that, if we accept that two is better than one, heralding greater profitability, investors may stand to benefit further down the line.


In nod to debt concerns, China Belt and Road summit to urge sustainable financing

Updated 18 min 9 sec ago
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In nod to debt concerns, China Belt and Road summit to urge sustainable financing

  • The Belt and Road Initiative envisions rebuilding the old Silk Road to connect China with Asia, Europe and beyond
  • But the initiative has proved controversial in many Western capitals, particularly Washington

SHANGHAI: World leaders meeting in Beijing this week for a summit on China’s Belt and Road initiative will agree to project financing that respects global debt goals and promotes green growth, according to a draft communique seen by Reuters.
The Belt and Road Initiative is a key policy of President Xi Jinping and envisions rebuilding the old Silk Road to connect China with Asia, Europe and beyond with massive infrastructure spending.
But it has proved controversial in many Western capitals, particularly Washington, which views it as merely a means to spread Chinese influence abroad and saddle countries with unsustainable debt through nontransparent projects.
The United States has been particularly critical of Italy’s decision to sign up to the plan last month, the first for a G7 nation.
In an apparent nod to these concerns, the communique reiterates promises reached at the last summit in 2017 for sustainable financing — but adds a line on debt, which was not included the last time.
“We support collaboration among national and international financial institutions to provide diversified and sustainable financial supports for projects,” the draft communique reads.
“We encourage local currency financing, mutual establishment of financial institutions, and a greater role of development finance in line with respective national priorities, laws, regulations and international commitments, and the agreed principles by the UNGA on debt sustainability,” it added, referring to the United Nations General Assembly.
The word “green” appears in the draft seven times. It was not mentioned once in the summit communique from two years ago.
“We underline the importance of promoting green development,” the draft reads. “We encourage the development of green finance including the issuance of green bonds as well as development of green technology.”
The Chinese government’s top diplomat, Wang Yi, said on Friday that the Belt and Road project is not a “geopolitical tool” or a debt crisis for participating nations, but Beijing welcomes constructive suggestions on how to address concerns over the initiative.
A total of 37 foreign leaders are due to attend the April 25-27 summit, though the United States is only sending lower-level representatives, reflecting its unease over the scheme.
The number of foreign leaders at the April 25-27 summit is up from 29 last time, mainly from China’s closest allies like Pakistan and Russia but also Italy, Switzerland and Austria.
China has repeatedly said Belt and Road is for the benefit of the whole world, and that it is committed to upholding globally accepted norms in ensuring projects are transparent and win-win for all parties.
“We emphasize the importance of the rule of law and equal opportunities for all,” the draft reads.