Saudi retail activity picks up, but landlords still feel pressure on rents

Saudi retail activity picks up, but landlords still feel pressure on rents
Many customers prefer the ‘physical experience' of shopping in-store. (Reuters)
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Updated 17 July 2021

Saudi retail activity picks up, but landlords still feel pressure on rents

Saudi retail activity picks up, but landlords still feel pressure on rents
  • Point-of-sale transactions have doubled from last year
  • During the Riyadh and Makkah saw 28,000 sq. meters and 57,000 sq m of new retail space in H1

RIYADH: Saudi Arabia’s retail sector has seen a recovery in sales at physical stores but, despite the increased footfall, landlords are still feeling the pressure as rents decline amid new space coming onto the market, according to a new report.

“The point-of-sale transactions have been increasing over the past few weeks, and almost doubled compared to the same period last year,” said the report from real estate consultancy firm JLL, based on data from the Saudi Central Bank. “This indicates that, despite the change in consumer behaviors and the shift to e-commerce, many customers prefer the ‘physical experience.’” 

A consumer behavior poll by global consultancy firm Kearney in June found that 57 percent of shoppers in the Kingdom believed that the knock-on effects of the pandemic on buying habits would continue for at least another six months, with 44 percent of those questioned saying they preferred to head to malls to buy essential items.

During the first half of this year, Riyadh and Makkah saw the delivery of 28,000 square meters and 57,000 sq m of new retail space. Jeddah and the Dammam Metropolitan Area saw an extra 53,000 sq m and 12,000 sq m added.

The new supply has resulted in downward pressure on rental levels, with average year-on-year rates dropping by 8 percent for super malls in Riyadh and 2 percent for smaller regional malls. Hardest hit was Makkah, where rental levels among large malls were down 24 percent year-on-year.

Looking ahead, the retail property market is likely to continue to favor tenants as new retail supply enters the market, such as Riyadh Avenue and Mall of Saudi in Riyadh.

Across other sectors the pandemic also had an impact. In the office segment only 7,900 sq m of office space was handed over across the four main Saudi cities, and many of the projects due for delivery within the year will experience further delays.

However, there was a 48 percent rise in the number of residential mortgages registered during the period. 

Based on the high demand for residential villas, as they represent 80 percent of total mortgages, the Ministry of Housing’s Sakani program provided 77,000 housing units during the first five months of 2021, roughly 55 percent of the target of 140,000 units by 2021.

The hospitality sector saw a slight improvement in performance. Riyadh saw the delivery of 590 new hotel rooms over the first half of 2021, while Jeddah saw the delivery of only one hotel, as most hotels delayed their openings to the upcoming Formula 1 event, which is scheduled to begin on Dec. 5, 2021.

Makkah’s hospitality sector continues to face pressure as this year’s Hajj is limited to those who live in Saudi Arabia, with a total of 60,000 pilgrims.


Lebanon’s Central Bank sets new rate for withdrawals from dollar deposits

Updated 5 sec ago

Lebanon’s Central Bank sets new rate for withdrawals from dollar deposits

Lebanon’s Central Bank sets new rate for withdrawals from dollar deposits
BEIRUT: Lebanon’s central bank said on Thursday it had set a new rate of 8,000 Lebanese pounds to the US dollar for withdrawals from bank deposits denominated in dollars but which can now only be accessed in the local currency.
The rate was previously set at 3,900 pounds, which implied a “haircut” or loss of more than 80 percent at the current market rate of around 25,000 pounds per dollar. The new rate represents a haircut of around 70 percent.
The central bank also set a withdrawal ceiling of $3,000 per month equivalent in Lebanese pounds for account-holders, who have been unable to freely access their savings since the collapse of the financial sector in 2019.
The central bank had maintained a pegged rate of 1,500 pounds per dollar until summer 2019, when it unofficially allowed the currency to become untethered after accumulating tens of billions of dollars in losses.
The pound has since lost more than 90 percent of its value, throwing the majority of Lebanon’s population into poverty and leading to shortages of basic goods such as medicines in the formerly middle-income country.
The central bank officially maintains a rate of 1,500 but almost all goods trade at the market rate.

Egypt to list army companies on stock exchange soon: sovereign fund CEO

Egypt to list army companies on stock exchange soon: sovereign fund CEO
Updated 7 min 54 sec ago

Egypt to list army companies on stock exchange soon: sovereign fund CEO

Egypt to list army companies on stock exchange soon: sovereign fund CEO

RIYADH: Egypt is planning an initial public offering of two of its army’s companies, the CEO of the country's sovereign fund has said.

Ayman Soliman told Asharq the fund is currently in the final stages of legal restructuring of Safi and Wataniya to make them eligible for listing on the Egyptian stock exchange.

Safi supplies the Egyptian market with bottled mineral water while Wataniya specializes in supplying and distributing petroleum products.

Both companies are subsidiaries of the National Services Products Organization, which is part of Egypt’s armed forces.

Soliman emphasized that the main condition before listing on the bourse is to identify a strategic investor to manage the companies’ operational activities.

The official added that the offering pipeline includes more companies that are to be disclosed after finalizing their legal restructuring.


Saudi’s Hassana Investments acquires 4.99% in Jahez International

Saudi’s Hassana Investments acquires 4.99% in Jahez International
Jahezgroup.com
Updated 13 min 59 sec ago

Saudi’s Hassana Investments acquires 4.99% in Jahez International

Saudi’s Hassana Investments acquires 4.99% in Jahez International
  • The company plans to list on the parallel market Nomu

RIYADH: Hassana Investments, the investment arm of the Saudi government’s General Organisation of Social Insurance, has acquired a 4.99 percent stake in Jahez International, the online food delivery platform. 

The Capital Market Authority approved to increase the number of Jahez International’s shares for the initial public offering, representing 18 percent of the company capital, Al Arabiya reported. 

The company plans to list on the parallel market Nomu, with the offering period starting from Dec. 23 to Dec. 26.

Through its contribution to Jahez company, Hassana Investments will be able to enhance its investments in one of the Kingdom’s technical sector companies, which is seen to be one of the most attractive, Alarabiya reported citing CEO Saad Al-Fadly.

 

 


‘With luck and pixie dust, you might find a gem’: Bahrain revives its pearl industry

‘With luck and pixie dust, you might find a gem’: Bahrain revives its pearl industry
Updated 28 min 14 sec ago

‘With luck and pixie dust, you might find a gem’: Bahrain revives its pearl industry

‘With luck and pixie dust, you might find a gem’: Bahrain revives its pearl industry

Bahrain has revived its age-old pearl industry as it looks to other sources of revenue to diversify its oil economy.

The Bahrain Institute for Pearls and Gemstones recently announced that it has examined over 10 million pearls from all over the world since it was established in 2017. It said its commercial laboratory has become a global authority on the verification of these stones.

The institute is owned by the kingdom’s sovereign wealth fund Mumtalakat, and run by CEO Noora Jamsheer, who noted the world is seeing growing demand for these gems.

She told Arab News: “The reason we’re seeing an increase in natural pearls is due to the growing global demand for items with rarity value. And that rarity is being maintained by the government of Bahrain.”

Jamsheer noted that there is greater demand for natural pearls as opposed to the cultured variety.

Cultured pearls are artificially produced by inserting a tiny piece of mother-of-pearl into a live oyster shell, but Jamsheer said the result produces an almost “too perfect” stone that is only 20 percent natural, with the core made from inferior material.

But the beauty of 100 percent natural pearls are their subtle imperfections and incomparable luster, which have been prized for thousands of years, she said.

Pearl Monument in Manama, Bahrain (Shutterstock)

Pearls have a storied modern history. A high-water mark came around 1915, when an especially fine pearl was found to be worth four times a diamond of the same weight.

The following year the famous French jeweler Cartier bought its New York showroom by exchanging two strings of pearls for a Fifth Avenue building — a deal worth some $1.5 million at the time.

But only a few years later those same strings of pearls were valued at only $140,000, as the natural pearl market declined due to a combination of factors including the Great Depression and the demise of the imperial families of Europe and the maharajas of India, who prized the stone.

As demand for natural pearls fell, the artificial cultivation of pearls grew more sophisticated and came to dominate the market.

Meanwhile, Bahrain, which has always had an established pearl industry, increasingly became an oil-based economy after crude was discovered in the kingdom in the 1930s. Severe restrictions were imposed on the extraction of pearls, which kept a lid on the sector for decades.

Jamsheer pointed out that the kingdom has a wide-ranging plan to boost the pearl business.

This includes using the institute to regulate new pearls by developing its gem laboratory, and protecting the country’s offshore pearl beds, which are larger than the whole of Bahrain.

The body also works to preserve the heritage of the industry and strengthen the kingdom’s position as a global center for the trade in natural pearls.

The Pearl Diver monument in the Bahrain National Museum (Shutterstock)

Jamsheer pointed out that pearls continue to be sourced by divers, as they have since the beginning of the industry, but they now use oxygen tanks making the job less dangerous.

She said some 800 Bahrainis have been awarded a license to dive for pearls, after completing a course covering extraction techniques and regulatory issues.

The global market for natural pearls is valued at between $100 million and $150 million a year, according to a report by consultants McKinsey, a sector dominated by Bahrain.

The value of a pearl can vary dramatically depending on factors such as type, size, color and surface quality — but in general they range from $200 to over $100,000, according to UK firm The Pearl Source.

Jamsheer said the market for natural pearls is driven by two major factors: The growing demand for ultra-luxury items with great rarity, and the fact that natural pearls are sourced in sustainable conditions that are not tainted by conflict, unlike gold and diamonds, which can often be associated with civil war, child labor and oppressive regimes.

Before joining the institute, Jamsheer worked with the UN Security Council as an expert in natural resources.

She said: “I visited West Africa and monitored natural resources there, and when I came into the pearl sector, I thought I would be seeing something similar to gold and diamond production.

“But it was completely different because this material is made by nature, which doesn’t need to be cut and polished. It’s remarkable because there’s never been any conflict associated with natural pearls, unlike with other gemstones.”

Jamsheer pointed out that tourists to the kingdom are also allowed to dive for pearls.

She said: “As a tourist, you have a quota of 60 oysters, and you get to keep whatever you find. So with a bit of luck and some pixie dust, you never know, you might find a gem.”


Italian bank UniCredit plans to give investors $18bn by 2024

Italian bank UniCredit plans to give investors $18bn by 2024
Image: Shutterstock
Updated 09 December 2021

Italian bank UniCredit plans to give investors $18bn by 2024

Italian bank UniCredit plans to give investors $18bn by 2024
  • UniCredit has over 14 million private clients and 1 million corporate clients in Italy, Germany, eastern Europe and central Europe

Italian bank UniCredit announced a three-year business plan Thursday that includes distributing some 16 billion euros ($18 billion) to shareholders from 2022 to 2024.


The plan under CEO Andrea Orcel, who took over in April, also calls for raising net profit to 4.5 billion euros by 2024, from a targeted 3.3 billion euros this year.


“With this strategy we will deliver materially increased and growing shareholder returns while growing our business and maintaining capital strength,” Orcel said in a statement.


The bank’s shares grew by 9.5 percent, to 12.65 euros, after the plan was announced.


It includes half a million euros in cost-cutting as the bank boosts revenue by 1.1 billion euros, to more than 17 billion euros, through fees and recovering market share.


The bank also plans to invest nearly 3 billion euros in a digital strategy, including a new platform, more digital services and real-time payments along with strengthening cybersecurity.


UniCredit has over 14 million private clients and 1 million corporate clients in Italy, Germany, eastern Europe and central Europe. It is the second-largest bank by assets in Italy and the third-largest in Germany.