Saudi property market shows signs of post-virus recovery

Saudi property market shows signs of post-virus recovery
Cars drive past the King Abdullah Financial District in Riyadh. (Reuters)
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Updated 06 May 2021

Saudi property market shows signs of post-virus recovery

Saudi property market shows signs of post-virus recovery
  • Resdiential mortgage growth supports sector
  • Retail stable despite upheaval across industry

RIYADH: Saudi Arabia’s real estate market has shown the first signs of a post-pandemic recovery, according to a report from broker Knight Frank.
It said that the outlook for the Kingdom’s real estate market was improving, supported by growth in residential mortgages.
Faisal Durrani, head of Middle East Research at Knight Frank, said: “Like other global economies, the pandemic has driven a widespread economic slowdown across the Kingdom. However, improved business confidence during the closing months of 2020, underpinned by economic reforms linked to Vision 2030 and the rapid response to COVID-19, has helped to drive a turnaround in performance in all main segments of the real estate market.”
In the grade A office market, rents experienced fragmented performance in the Kingdom’s three main centers, with rents in Riyadh increasing marginally by 0.5 percent to SR1,465 ($390.67) per square meter during the first quarter, while in Jeddah rents fell 2.8 percent to SR1,008 per square meter.
In Dammam, grade A office rents declined 4.3 percent to just over SR900 per square meter in the first three months of 2021.
The recent decision to exempt real estate transactions from a 15 percent value-added tax (VAT) charge has helped to boost activity in the residential market.
“The overall improvement in business confidence and market sentiment has led to a surge in residential mortgage loans, which rose by 38 percent in the 12 months to the end of February. That has, in turn, materialized in the form of a marked increase in residential transactions across the country, with Riyadh and Jeddah experiencing a 25 percent and 34 percent increase in deal numbers over the last 12 months,” Durrani said.
Despite the COVID-19 pandemic and retailers moving online, average vacancy rates in malls have remained stable. The market-wide vacancy rate in Riyadh increased by 1 percentage point in Q1 2021 to 16 percent.
Saudi Arabia has the world’s largest hotel construction pipeline, and the country’s supply is expected to increase by 61.1 percent over the next three years, the highest rate among the most 50 populated countries in the world, according to a report by hospitality data firm STR.
Durrani said: “The hospitality market has been somewhat of a bright spot. Despite continued weakness in Riyadh, Jeddah and the Dammam metropolitan area, these areas have experienced strong growth in both average daily room (ADR) rates, as well as revenue per available room.”
The resumption of the Umrah pilgrimage has underpinned performance in Jeddah’s hospitality market, where in the year to March 2021, ADRs grew by 18.7 percent, while occupancy decreased marginally by 2.2 percent.
Over this period, revenue per available room grew by 16.2 percent.


Kuwait’s credit rating downgraded to ‘AA-’ by Fitch

Kuwait’s credit rating downgraded to ‘AA-’ by Fitch
Updated 16 sec ago

Kuwait’s credit rating downgraded to ‘AA-’ by Fitch

Kuwait’s credit rating downgraded to ‘AA-’ by Fitch

RIYADH: Kuwait has had their long-term foreign-currency issuer default ratings, or IDR, downgraded from 'AA' to ‘AA-' by Fitch Ratings.

The downgrade comes as a result of the ongoing political constraints on decision-making that is contributing to structural challenges in the Gulf state. 

 


Deutsche Bank sees biggest annual profit in a decade

Deutsche Bank sees biggest annual profit in a decade
Image: Shutterstock
Updated 16 min 15 sec ago

Deutsche Bank sees biggest annual profit in a decade

Deutsche Bank sees biggest annual profit in a decade
  • Sewing’s 2019 plan involved shedding billions in risky investments

Deutsche Bank said Thursday it reaped its best annual profit in a decade in 2021 and had put most of the costs of its wrenching, years-long restructuring behind it.

The bank underlined its recovery by announcing a dividend for 2021 and a 300 million-euro ($338 million) share buyback to return money to shareholders.


CEO Christian Sewing said Thursday the bank had created “positive momentum” in a “negative environment” during the pandemic and that “the downward spiral turned into an upward spiral” as the bank made progress toward the goals laid out more than three years ago in an extensive plan to revamp its business.


Last year, Germany’s largest bank saw stronger earnings from its investment bank, which made 3.7 billion euros ($4.1 billion) in before-tax profits, a gain of 17 percent.

And it had lower losses for loans that aren’t being paid back, which fell 71 percent during the year against a background of low interest rates and an economic recovery from the worst of the pandemic lockdowns.


The bank said it had already accounted for 97 percent of its restructuring costs anticipated through the end of 2022.


In July 2019, Sewing announced a 7.4 billion-euro ($8.3 billion) restructuring that involved cutting overhead costs and thousands of jobs in an attempt to end years of uneven profits and large losses from repeated run-ins with regulatory authorities.

The bank had just under 83,000 employees at year-end 2021, down from 91,737 at the end of 2018.


Progress in cutting costs slowed during the year but in some cases for positive reason such as higher business volumes and spending on computer systems and financial controls.

Sewing said that such spending helped ensure the bank’s compliance with anti-money laundering regulations and promoted more profitable business going forward.
“Our determination to reduce costs further has not changed,” he said.


The bank also said it would be paying higher bonuses because of the bank’s stronger performance.


Sewing’s 2019 plan involved shedding billions in risky investments, leaving less profitable lines of business where the bank wasn’t a dominant competitor.

In 2021, the unit charged with running down holdings no longer seen as parts of the bank’s core activities shrank to 28 billion euros, down from 34 billion in 2020 and remained ahead of its 2022 goal.


Remaining costs for restructuring such as severance for employees being let go continued to weigh on earnings into the last months of the year, hitting fourth-quarter earnings with charges of $456 million.


Full-year net profit rose fourfold from the year before to 2.5 billion euros, the highest since 2011.

Revenues rose 6 percent to 25.4 billion euros. For the fourth quarter, the bank managed to turn in a net quarterly profit of 82 million euros despite higher remaining restructuring expenses including employee severance.

The bank proposed a dividend of 20 euro cents per share for 2021, its first since the 11-cent dividend for 2018.


Saudi Arabia to host the 14th edition of global oil and gas conference 

Saudi Arabia to host the 14th edition of global oil and gas conference 
Updated 32 min 50 sec ago

Saudi Arabia to host the 14th edition of global oil and gas conference 

Saudi Arabia to host the 14th edition of global oil and gas conference 

RIYADH: Saudi Arabia will host the 14th edition of the International Petroleum Technology Conference, known as IPTC, in Riyadh from Feb. 21 to 23, it has been announced.

Held under the patronage of Crown Prince Mohammed Bin Salman, the 14th edition of the oil and gas conference will have Saudi Aramco serving as the exclusive host. 

The conference will involve regional energy ministers, industry leaders, and governmental representatives to discuss their views on timely industry topics and trends.

“IPTC 2022 will demonstrate the energy sector’s resilience, ecosystem evolution and technological advancement during one of the most challenging times of our industry,” the event’s executive committee chair, Nasir Al Naimi, said. 

“The conference will highlight how innovation and technology can lead the industry to develop sustainable solutions to achieve growth within the boundaries of a circular economy,” he added.

The event shall attract over 18,000 attendees from more than 70 countries, to tackle over 530 diverse topics. 

It is a collaborative effort among the American Association of Petroleum Geologists, the European Association of Geoscientists and Engineers, the Society of Exploration Geophysicists and the Society of Petroleum Engineers.


Global crypto owners are expected to exceed 1 billion this year: Crypto Moves

Global crypto owners are expected to exceed 1 billion this year: Crypto Moves
Image: Shutterstock
Updated 40 min 59 sec ago

Global crypto owners are expected to exceed 1 billion this year: Crypto Moves

Global crypto owners are expected to exceed 1 billion this year: Crypto Moves

RIYADH: Bitcoin, the leading cryptocurrency internationally, traded lower on Thursday, falling by 3.38 percent to $36,519 at 1:34 p.m. Riyadh time.

Ether, the second most traded cryptocurrency, was priced at $2,435, down by 2.45 percent, according to data from Coindesk.

Other News:

The number of global crypto owners is expected to exceed 1 billion by the end of the year, according to a report by Crypto.com.

Crypto.com released its “Crypto Market Sizing” report last week which shows an analysis of cryptocurrency adoption worldwide.

The global crypto population increased by 178 percent in 2021, rising from 106 million in January to 295 million by December.

“Nations can no longer afford to ignore the growing push to crypto by the public. We may in many cases expect a friendlier stance towards the crypto industry,” the company said.

The report shows that the adoption of cryptocurrency in the first half of 2021 was impressive, adding that the main driver of growth was bitcoin.

“We expect developed nations to devise clear legal and taxation frameworks for crypto assets,” Crypto.com said.

More countries facing economies with high inflation and devaluation may adopt cryptocurrency as legal tender, similar to El Salvador.

Despite the IMF’s bitcoin stance, several people have predicted that more countries will make the cryptocurrency legal tender this year, including Salvadoran President Nayib Bukele.

Financial giant Fidelity recently said it expects other sovereign nation-states to acquire bitcoin this year as a form of insurance.

Regulating crypto industry

The leader of the Nigerian blockchain association, Senator Ihenyen, has implored the country’s lawmakers currently pushing for the securities law to be revamped to consider crafting laws that regulate the crypto industry.

As Nigerian lawmakers debate a bill that proposes a ten-year jail term for operators of Ponzi schemes, a leader of a Nigerian blockchain lobby group, Senator Ihenyen, has urged the country’s lawmakers to consider crafting a law to govern the cryptocurrency industry.

He argued that the unregulated crypto space is not in anyone's interest, Bitcoin.com reported.

Ihenyen, who heads the Stakeholders in Blockchain Technology Association of Nigeria, known as SIBAN, concedes that while the proposed bill does not expressly mention or refer to digital currencies, crypto Ponzi schemes are included in what the lawmakers call prohibited schemes.

The remarks by the leader of SIBAN follow reports that Nigerian lawmakers had passed a bill to repeal and re-enact the country’s Capital Markets, Investment and Securities Act for a second reading.

“The bill prohibits Ponzi/Pyramid Schemes as well as other illegal investment schemes and prescribes a jail term of not less than 10 years for promoters of such schemes, ” Ibrahim Babangida, one of the lawmakers who led the campaign to change the law, said.

In addition to seeking a custodial sentence, lawmakers also want the new law to grant the Nigeria Securities and Exchange Commission the power to shut down Ponzi schemes.

The lawmakers also insist the current law is not compatible with present trends in capital markets regulation, hence the need to revamp the act.


Norway wealth fund earns second-highest return in 2021

Norway wealth fund earns second-highest return in 2021
Image: Shutterstock
Updated 47 min 54 sec ago

Norway wealth fund earns second-highest return in 2021

Norway wealth fund earns second-highest return in 2021
  • Last year's return was the second highest in the fund's history

Norway's sovereign wealth fund, the world's largest, earned a return on investment of 1.58 trillion Norwegian crowns ($177 billion) last year, the second highest on record, with the biggest boost coming from tech stocks, it said on Thursday.


The $1.3 trillion fund's return on investment stood at 14.5 percent for the year, which was 0.74 percentage point higher than the return on the fund's benchmark index.


"The good results are mainly due to very strong developments in the equity market throughout the year," Chief Executive Nicolai Tangen said in a statement.


"There was good return in all sectors, but the investments in technology and financials performed particularly well," he said.


Tech stocks made a return of 30.2 percent, making it the best-performing sector.


Founded in 1996, the fund invests revenue from Norway's oil and gas sector and holds stakes in some 9,100 companies globally, owning 1.4 percent of all listed stocks. It also invests in bonds, unlisted real estate and renewable energy infrastructure.


Last year's return was the second highest in the fund's history, exceeded only by the 1.69 trillion crowns earned in 2019.


The biggest individual contributors to the fund's returns were Microsoft Corp, Alphabet Inc and Apple Inc, presentation material showed.


On a country basis, investments in the United States contributed the most, with 960 billion crowns in returns, followed by Britain with 112 billion crowns.


The fund holds the equivalent of $244,000 for every Norwegian man, woman and child.