Etihad Airways achieves record financial returns as global alliances pay off

Etihad Airways, the Abu Dhabi carrier, achieved record financial returns last year, boosted by its strategy of global alliances with other airlines.

The airline reported its best ever turnover and profit figures in 2015, with revenue up nearly 20 per cent to US$9.02 billion and net profits soaring 40 per cent to US$103 million.

Etihad is reporting consolidated financial statements for the first time for 2015 and figures for 2014 represent the stand alone airline business.

Some 17.6 million passengers flew with Etihad last year, up from 14.8 million in 2014.

Etihad’s partners – airlines in which it has an equity stake or codeshare agreement – contributed $1.4bn to revenue, and added five million passengers to the Etihad network last year.

James Hogan, president and chief executive, said: “Our mandate is to build a sustainably profitable airline. A fifth year of net profits, with our best annual financial performance to date, shows that we are delivering against that goal.

“Our profitability clearly demonstrates the success of our business strategy, based on organic growth boosted by our partnerships. As well as operating profitability, we are building enterprise value across the airline and its many additional business streams,” he added.

Etihad has strategic minority investments in six international airlines, as well as the European network Etihad Regional. It has codeshare agreements with 49 airlines.

In addition to the direct contribution to revenues and passengers, the partnership strategy also creates business synergies and cost savings.

Mr Hogan said the return on its investment in the seven equity partners was many times more than the money it had spent: “For an investment smaller than the cost of three new aircraft, we have been able to build our global network, attract five million new customers and $1.4 billion of revenues, and share massive cost synergies. That’s smart business,” he said.

“This is a two-pronged approach. From a strategic level, we are looking for the equity partners to bring network connectivity, generate additional revenues and create economies of scale. All our partners are delivering on this level.

Etihad committed to partnership with airberlin as it delivers $150m in direct revenues in 2015 – read here

“Each partner then has a profit and loss goal, which is the responsibility of its own management and Boards of Directors. Many of these, such as Air Serbia, Air Seychelles, Jet Airways and Virgin Australia, are now delivering on this level too,” he added.

Aviation industry experts say that 2015 saw airlines facing conflicting gravitational pulls. For many lower oil prices meant a reduction in fuel costs and an immediate boost to the bottom line.

But worries about global economic growth prospects raised worries about demand for air travel, especially at the premium end.

Etihad’s hedging policy meant fuel savings were less significant than for some competitors.

But the airline continued to experience strong demand with improved load factors. “The growth in passenger volume continued to exceed Etihad Airways’ capacity increase and outperformed regional market growth, which has seen a decline in load factors since mid-2014,” the airline said.

“Revenue passenger kilometres (RPKs), which measure passenger journeys, increased 21.3 per cent to 83.2 billion, while available seat kilometres (ASKs), which represent capacity, grew by 21.0 per cent to 104.8 billion,” it added.

In total, the airline operated 97,400 flights covering 467 million kilometres. The average network-wide seat load factor was 79.4 per cent for 2015, compared with 79.2 per cent in 2014.

Six new destinations were added to Etihad Airways’ global network – Kolkata, Madrid, Hong Kong, Entebbe, Edinburgh and Dar es Salaam – and capacity increased on 16 existing routes with bigger aircraft, more frequency and improved seat occupancy.

The strategy of diversification to become a travel and aviation group also paid off in 2015. Growth continued in cargo, with freight and mail volumes up 4 per cent to 591,000 tonnes. Extra bellyhold capacity and destinations were added in 2015.

Etihad’s operations in maintenance, repair and overhaul, and ground handling, also expanded.

Membership of the guest loyalty programme also grew, adding 70,000 new members each month for a total of 3.75m cardholders.

In the course of the year Etihad raised $700m on the international debt markets in what Mr Hogan called “a ground breaking transaction”. He added that the success of the fund raising “highlights the high level of confidence and support from institutional investors for our unique business strategy. It was a vote of confidence not just in Etihad Airways but in our partners too”. The resource will be used to fund future expansion.

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Emaar brings 'mini-Dubai' to London's Harrods

Emaar Properties has brought a taste of Dubai to one the world’s most famous department stores as it attempts to attract foreign investors amid the property slowdown in the emirate.

The Dubai developer, builder of the Burj Khalifa, is launching and exhibiting its latest project at Harrods in London until mid-August.

Visitors can experience interactive video displays, and view large scale models of Dubai Creek Harbour, Dubai Hills Estate and The Opera District.

The models include The Tower, which is expected to be taller than Burj Khalifa – currently the world’s highest – when completed in Dubai Creek Harbour.

Emaar and Harrods estimates that a window display on the ground floor is passed by 75,000 pedestrians per day.

A report released yesterday by Cluttons said that sale prices in Dubai fell by 2.2 per cent in the first three months of 2016, the steepest quarterly drop for five years.

Prices were 4.4 per cent lower year-on-year, with the biggest price declines for high-end villas, while premium apartment sale prices had held up in comparison but transactions had slowed.

JLL said last week that it expected prices to bottom out over the summer and a recovery in the second half of the year, but uncertainty remains with oil prices remaining in the $40 bracket.

It reported a 10 per cent year-on-year decline in house prices in the first quarter of 2016, which it blamed on the strong dollar (to which the dirham is pegged) and lower oil prices.

Simon Barry, head of new residential developments at Harrods Estates, said that the store’s clients will be extremely interested in what Emaar has to offer.

“Dubai offers one of the most compelling opportunities to invest in property in the world at present,” he said. “Just as London is the financial capital of the European time-zone, so Dubai is the financial capital of the Middle East time-zone.

“The Dubai property market is now stable, benefitting from huge inward investment from both the Middle East and the Indian sub-continent, and its economy is anticipated to grow strongly leading up to the Dubai World Expo in 2020, despite last year’s downturn in oil prices.”

One-bedroom apartments measuring 707 sq ft at Dubai Creek Harbour start at £184,135 (Dh986,311), a cost that equates to £260 per sq ft. Harrods Estates said that prime Central London equivalent values are £2,000 per sq ft.

Dubai Land Department figures for the first three months of 2016 show transactions worth Dh55bn were completed, which is a 14 per cent drop on the Dh64bn registered in the same period last year.

However, the volume of transactions completed was said to be 14 per cent higher at 12,568 as more affordable homes have come on to the market.

Emaar chairman Mohamed Alabbar revealed last week that the company had “severely cut costs” due to challenging market conditions, but was “pleasantly surprised” by sales activity.

Emaar Properties’ net profit in the fourth quarter of 2015 of $1.03bn was 1 per cent lower than in 2014, despite a 58 per cent uplift in sales to Dh3.8bn.

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Is world falling out of love with the iPhone? Apple records first sales drop in nine years

Apple on Tuesday posted its first-ever decline in iPhone sales and its first revenue drop in 13 years as the company credited with inventing the smartphone struggles with an increasingly saturated market.

The company’s sales dropped by more than a quarter in China, its most important market after the United States, and it also forecast another disappointing quarter for global revenues.

Its shares fell about 8 per cent, dropping below $100 for the first time since February. A hike in Apple’s share buyback and dividend as well as bumper revenue from services failed to mollify investors.

Apple’s results followed disappointing quarterly reports from Microsoft and Google-owner Alphabet and microblog Twitter also on Tuesday reported results that missed expectations.

Apple said it sold 51.2 million iPhones in its second fiscal quarter, down from 61.2 million in the same quarter a year ago but above analysts’ estimates of about 50 million devices.

While Apple executives had predicted iPhone sales would decline this quarter, they must reassure investors that the drop represents a momentary roadblock, rather than a permanent shift for the product that fuelled its meteoric rise.

After years of blockbuster sales, many investors fear the iPhone has reached saturation, spelling the end for Apple’s exponential growth.

“Apple needs to come up with a radical new innovation or product rather than just the current incremental improvements to existing products. This is the only way in which it will reinvigorate sales growth,” said Neil Saunders, chief executive of research firm Conlumino.

Apple chief financial officer Luca Maestri told Reuters that the success of the iPhone 6 a year earlier had set a difficult bar to beat in the second quarter. “The iPhone 6 is an anomaly,” he said.

But chief executive Tim Cook told analysts that the smartphone market was not growing, reinforcing wider concerns of saturation.

Cook also conceded that the iPhone 6S was driving customers to replace phones at a much lower rate than the 6. “I don’t mean just a hair lower; it’s a lot lower,” he said. “If we’d had the same rate on 6S as 6, it would be time for a huge party.”

He pointed to the services division, which includes Apple Music and the App Store, as a bright spot. Its revenue grew 20 per cent to $6 billion and surpassed iMac and iPad sales.

Cook also hinted that Apple had more gadgets to come. “The future of Apple is very bright,” he said. “Our product pipeline has amazing innovations in store.”

Earnings of $1.90 per share fell short of the average analyst estimate of $2 per share, according to Thomson Reuters I/B/E/S. Revenue of $50.56bn missed expectations of $51.97bn.

Apple forecast third-quarter revenue of $41 billion to $43bn, short of the Wall Street consensus of $47.3bn.

Apple also said it was raising its capital return programme by $50bn through a $35bn increase in its share buyback authorisation and a 10 per cent rise in the quarterly dividend.

In March, Apple released the iPhone SE, a smaller, 4-inch-screen phone featuring much of the company’s latest technology. Although sales of the phone were not captured in the second quarter, the device is off to a strong start, particularly in emerging markets, Maestri said.

“The situation right now around the world is that we are supply-constrained,” he said. “The demand has been very, very strong.”

Although Apple’s revenue in Greater China fell 26 per cent from the year-ago quarter, Maestri stressed that the company was “extremely optimistic” about China. “We continue to make a lot of investment there,” he said.

Cook said that mainland China sales were down only 7 per cent in constant currency, attributing much of the Greater China drop to Hong Kong, where strength in the local dollar, which is pegged to US currency, deterred tourist shopping.

The company did not comment on prospects for its iBooks Stores and iTunes Movie service, which were shut down last week in China.

The drop in after-hours shares wipes out roughly $46bn in market capitalization, roughly the value of heavy equipment maker Caterpillar.

In reaction to Apple’s results, shares of its suppliers Skyworks Solutions, Qorvo, Broadcom and NXP Semiconductors all fell 2 per cent or more on Tuesday.

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Dubai tenant in Dh400k villa wants out after no hot water for 10 months

My family and I have completed two years in our villa and we have not had hot water for 10 months. We have had to drive and take showers at gyms and hotels or have cold showers. My daughter and I have had to get our hair washed at salons. We have had two major water leaks in those two years from the water tanks, which are the landlord’s responsibility, and we have had to cover the DEWA bills for the excess water. We have asked the management company time and time again to compensate us but have received no reply on this matter. After more than five months of no hot water this year, they sent someone to fix the solar panels. Again this did not work and for one day we had no water at all – not even cold. On April 5, we informed them they had breached the contract and therefore we wished to terminate it and move out. Again we received no reply. Instead they turned on an electrical element and told us the solar was working. This was not true. We allowed the workers to come back and fix the solar panels but continued to inform them that our decision had been made. We do now have hot water but at what cost? We are business owners and have been in Dubai for 11 years and we do not want another family to go through what we have gone through. The psychological effect is not to be underestimated – it has been extremely unhygienic and soul destroying for us. There have been countless days where my husband could not go to work because he could not shower. We have a rent cheque due to go out and have informed the management company not to bank the cheque. I have told them that the account is being cancelled as that was the only way to get any kind of reply back from them. They replied and said deposit cash. When you pay over Dh400,000 for a villa, you expect hot water or at least excellent service from the company. SA, Dubai

What an ordeal you have gone through and yes I agree with all your points, this is no way to live or be treated. In short, my advice would be to immediately file a case at the rental dispute committee to get them to allow you to terminate your contract. You are clearly dealing with unreasonable people so the only way forward now would be to remove yourself and your family from this obligation. It does however have to be done in a proper manner. This is why I am suggesting you go to the rent committee to cancel your contract with no penalties or legal consequences on your side from the landlord.

These horror stories do exist but I can happily say that not all landlords or management companies behave in such a non caring way.

Landlords generally understand that they have a moral and legal obligation to their tenants and that the tenants do have the right of quiet enjoyment of the property in return for paying rent.

I have two questions related to air conditioning:

1. I am a landlord of an apartment where I live. I pay the service charge to the management company and separately an AC bill to the management company as well. Recently, the bills have been hiked up by an added “shared common areas” cost without any notification of reason or agreement of the landlords. Shouldn’t such charges for common areas already be part of the service charge?

2. The AC system of the building in common areas regularly gets over-humid during summer months and drops of water leak over ceiling lightings. The management company refuses to fix the fault although it creates danger. Any solutions?

MK, Dubai

It would appear strange that the said charges for common areas were not already part of the communal service charges, so before paying, I would definitely question this. The other point to make is, how have they arrived at their final figure? All maintenance fees and charges are payable by the landlord/owner so make sure you are totally satisfied with the accounting before proceeding to settle your bill.

The problem with leaks within buildings from chilled water pipes/AC systems is not uncommon throughout the UAE. The management company is responsible for repairs to these leaks in the common areas but again the cost of this often finds its way through to owners’ service charge bills eventually. The normal practice of repairs within private units is however down to the individual owner. I know this doesn’t seem fair but this is the norm.

Mario Volpi is a real estate professional who has worked within the industry for the past 31 years in London and Dubai. The opinions expressed in this article are those of the author and they do not reflect in any way those of the institutions to which he is affiliated. It does not constitute legal advice and is provided for information only. Please send any questions to mariovolpi64@gmail.com

First Solar, Enel and EDF are among the elite group of developers approved to bid for Abu Dhabi’s new solar power plant.

The Abu Dhabi Water and Electricity Authority (Adwea) has pre-qualified 34 companies for its 350 megawatt photovoltaic (PV) park in Sweihan, without disclosing in which of the three bidding categories the companies had each been listed.

According to industry sources, category A, for companies able to bid on the entire project as a single entity, is comprised of eight of the most experienced firms such as Italy’s Enel and EDF of France. This also includes First Solar of the US, the company that completed the 13MW first phase of the Mohammed bin Rashid Al Maktoum solar park in Dubai.

The next category is the largest, with 19 contenders, such as Spanish firms Acciona and TSK as well as Chinese entrants Jinko, China State Construction Engineering and Golden Concord Holdings. These firms can win the role of technical advisor in charge of the engineering, procurement and construction phase. While Category C comprises seven companies, including Saudi Arabia’s Acwa Power and Abu Dhabi’s Masdar, that can become the project’s managing member.

Adwea will hold a 60 per cent stake in the Sweihan project, located about 120 kilometres east of the city of Abu Dhabi, which is structured as an independent power producer (IPP) – similarly to Dubai’s park.

“The presence of Enel, which was the low bidder in tenders in Peru and Mexico recently, Acwa Power, Mainstream and other major solar developers suggest that it will be another very competitive process with razor sharp bidding,” said Jenny Chase, solar insight manager of Bloomberg New Energy Finance.

Last year, the UAE shattered world records for the lowest price for solar power with Acwa’s successful bid of 5.84 US cents per kilowatt hour for the 200MW second phase of the Mohammed bin Rashid Al Maktoum solar park. And rates are expected to drop further this year.

The contest for the remaining 40 per cent of Sweihan is likely to result in new partnerships and consortiums emerging.

Firms in categories B and C will need to either partner together or with a firm in category A in order to stay competitive on price. To help drive down project costs, developers could seek to tie up with a solar panel manufacturer, for example. A source close to the matter who did not want to be named, said that new consortiums would likely not be formed until after next week.

Although Adwea has completed 10 IPP and independent water and power producer projects since 1999, Sweihan marks the first time that the emirate’s utility has undertaken the development of a renewable energy project.

Adwea’s procurement arm, the Abu Dhabi Water and Electricity Company (Adwec), said on Monday that the plant would reduce some of the reliance on natural gas used to meet domestic power demand. Adwec’s managing director, Mohammed bin Jarsh, said that this would improve the economic performance of the water and electricity sector.

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Airbus urged to find more A380 buyers by Emirates chairman

The chairman of Emirates has urged Airbus to push its sales team harder to find more customers for the world’s largest passenger aircraft.

Emirates is the biggest operator of the A380, with 75 aircraft in service and 65 on order. The carrier this month ordered two additional A380s amid an uncertain future for the superjumbo programme.

“Where is an aircraft with just one customer?” Sheikh Ahmed bin Saeed, the chairman of Dubai Airports and Emirates Group, said at the Arabian Travel Market in Dubai. “They have to push their sales team to do much better, especially now, because this aircraft has been in the market for eight years.”

The double-decker plane that can carry more than 540 passengers has been key to the carrier’s aggressive global route expansion and surging traffic numbers through its hub at Dubai International Airport. It is already the world’s busiest airport for international travel, and passenger numbers topped 7.24 million in March.

But while the aircraft has suited the rapid growth trajectory of Emirates and the hub strategy of Dubai, its take up among many other global carriers has been slow.

Emirates has been pushing for a more ­fuel-efficient model of the plane before committing to any new purchases. Fuel is the largest component of an airline’s cost and makes up 28 per cent of Emirates’ operating costs.

Question marks have hung over the A380 programme since 2014, when Airbus first raised the possibility of discontinuing production because of a lack of new orders. That triggered a number of exchanges between executives from Emirates and Airbus over the future of the programme.

The order revealed this month from the Dubai carrier was the first new A380 purchase from Emirates since 2013, when it took 50 of the aircraft.

“For us the A380 is the flag aircraft for Emirates today besides the Boeing 777. We think that it’s an aircraft that we really want to continue with in the future,” Sheikh Ahmed said. “A lot of people were surprised that we took so many of them with 500 seats. We managed to fill them up.”

The Airbus chief executive, Fabrice Bregier, told CNN in February that he was still optimistic about its future despite slow sales.

Emirates, the world’s largest international airline by number of passengers, expects to fly 55 million passengers this year, up from about 50 million passengers a year ago.

Sheikh Ahmed also said the airline’s growth would not be limited by capacity issues at Dubai International. “We always have solutions,” he said.

Sheikh Ahmed, who is also the president of the Dubai Civil Aviation Authority, expects Dubai’s two airports to be handling about 200 million passengers by 2023.

Dubai International last year ranked third in terms of the world’s busiest airports, after it carried 78 million passengers.

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Saudi Arabia’s Al Tayyar Travel Group is betting on tourism as a key driver of the kingdom’s diversification plans.

Equinox Ventures, a joint venture between Equinox Group and Riyadh-listed Al Tayyar Travel Group, has signed a deal with the US-based mid-market hotel operator Choice Hotels International to open 25 properties accounting for 8,000 rooms in Saudi Arabia and the UAE by 2021. The Dubai-based Equinox Group is a subsidiary of Al Tayyar Travel Group.

The first two are expected to open this year in Saudi Arabia, while the first in Dubai is expected next year, Shuja Zaidi, the president of Equinox Group, said at the Arabian Travel Market in Dubai on Tuesday. The properties will be under Choice Hotels’ Clarion, Comfort and Quality brands.

Al Tayyar Group reported a net profit of 194 million Saudi riyals (Dh190m) during the first quarter, down from 286m riyals a year earlier. The decline in revenues was attributed to a “decrease in sales of the traditional travel industry and domestic tourism especially travel to the government sector and government sector related companies”, it said in a filing last week.

With the deal’s focus on the mid-market segment, the company expects to target Haj and Umrah pilgrims as potential clients, said Abdullah Aldawood, the chief executive and managing director of Al Tayyar Travel Group.

On Sunday, the kingdom launched a post-Umrah programme to allow pilgrims to visit tourism sites in the country by converting an Umrah visa into a tourist one.

The Saudi Vision 2030 has, among other sectors, identified tourism as a key to its diversification. While no policies have been disclosed, the Saudi government said it would identify plots of land to develop tourism projects and cultural venues besides improving pilgrim experiences.

International players are also bringing in new brands to the Saudi market.

Marriott International expects to expand its extended stay brands such as Residence Inn and Marriott Executive Apartments in the country.

“As the economy diversifies away from oil, that is an opportunity for us as there will be a greater growth in other sectors that will bring in more people [to the country],” according to Diane Mayer, a vice president and spokeswoman for the extended stay brands Residence Inn by Marriott and Marriott Executive Apartments at Marriott International.

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Retail, leisure and green spaces at DIFC's new Gate Avenue development

Dubai International Financial Centre has unveiled details of Gate Avenue, its new Dh475 million development, the biggest single infrastructure project it has launched since it opened 12 years ago.

The project – expected to be completed by the end of 2017 – is a vital component of DIFC’s strategy to triple in size by 2024. It will create a new retail and leisure destination in the heart of Dubai’s financial district.

“This is a significant step towards accomplishing our 2024 growth strategy that paves the way for the sustained development of DIFC,” said Essa Kazim, the DIFC governor.

“The project will be a significant value-add for professionals and residents currently working and living in the district, and create an even more attractive proposition for prospective clients and tenants, as we build on our already world-class infrastructure platform. This, in turn will elevate DIFC’s status as one of the most sought-after destinations in the world.”

Dubai was recently named as the 13th most attractive financial centre in the world, ahead of such established hubs as Frankfurt, Shanghai and Luxembourg.

The Avenue project was previously referred to as The Spine because it will link the main Gate and Village districts in the north of DIFC to the big commercial and residential developments in the south. It will comprise 660,000 square feet of built-up area including retail, leisure, dining and green spaces.

It will also have an “emblematic mosque, a beacon of modern Islamic design, that will host a total of 500 worshippers daily and for Friday prayers”, DIFC said. The project has been designed by the British architectural firm RMJM, which has worked on many significant jobs in the Middle East, including the original master plan for the Saudi holy cities of Mecca and Medina.

The cost will be met from the DIFC’s own resources.

DIFC said: “The project is set to emerge as a premium lifestyle destination offering vibrant and world-class amenities to the financial centre’s diverse community of professionals, residents and visitors. Gate Avenue at DIFC will also provide seamless connectivity to all building podiums within the district.

“The new destination will integrate the essential elements that make DIFC a remarkably rich international environment, and boast more than 150 of the region’s most distinctive and sophisticated dining, shopping and cultural experiences – all encapsulated in one iconic setting,” it added.

The Avenue will comprise three zones connected by an open-air promenade. North zone begins close to the Ritz- Carlton hotel, and will feature exclusive retail offerings, high-end stores and luxury outlets.

“The central zone will feature a plethora of high-street brands, a variety of beautiful indoor restaurants as well as sumptuous al fresco eateries. With easy connections to the Financial Centre metro station, the zone will also comprise convenience retail stores to cater to the metro traffic,” DIFC said.

The south zone will be aimed mainly at residents of the DIFC district, and will provide community and family facilities.

DIFC said that Gate Avenue would also host a variety of arts and cultural events, live music performances and festivals.

Existing office buildings along the Avenue – including the under-construction US$1 billion tower Brookfield Place, will be connected via promenade level walkways.

DIFC has grown rapidly since it was opened in 2004. Last year it reported its best-ever operating performance, with a 27 per cent rise in new registrations. There are now some 1,445 firms operating in DIFC, employing just short of 20,000 people.

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Retail, leisure and green spaces at DIFC's new Dh475m Gate Avenue development

Dubai International Financial Centre has unveiled details of Gate Avenue, its new Dh475 million development, the biggest single infrastructure project it has launched since it opened 12 years ago.

The project – expected to be completed by the end of 2017 – is a vital component of DIFC’s strategy to triple in size by 2024. It will create a new retail and leisure destination in the heart of Dubai’s financial district.

“This is a significant step towards accomplishing our 2024 growth strategy that paves the way for the sustained development of DIFC,” said Essa Kazim, the DIFC governor.

“The project will be a significant value-add for professionals and residents currently working and living in the district, and create an even more attractive proposition for prospective clients and tenants, as we build on our already world-class infrastructure platform. This, in turn will elevate DIFC’s status as one of the most sought-after destinations in the world.”

Dubai was recently named as the 13th most attractive financial centre in the world, ahead of such established hubs as Frankfurt, Shanghai and Luxembourg.

The Avenue project was previously referred to as The Spine because it will link the main Gate and Village districts in the north of DIFC to the big commercial and residential developments in the south. It will comprise 660,000 square feet of built-up area including retail, leisure, dining and green spaces.

It will also have an “emblematic mosque, a beacon of modern Islamic design, that will host a total of 500 worshippers daily and for Friday prayers”, DIFC said. The project has been designed by the British architectural firm RMJM, which has worked on many significant jobs in the Middle East, including the original master plan for the Saudi holy cities of Mecca and Medina.

The cost will be met from the DIFC’s own resources.

DIFC said: “The project is set to emerge as a premium lifestyle destination offering vibrant and world-class amenities to the financial centre’s diverse community of professionals, residents and visitors. Gate Avenue at DIFC will also provide seamless connectivity to all building podiums within the district.

“The new destination will integrate the essential elements that make DIFC a remarkably rich international environment, and boast more than 150 of the region’s most distinctive and sophisticated dining, shopping and cultural experiences – all encapsulated in one iconic setting,” it added.

The Avenue will comprise three zones connected by an open-air promenade. North zone begins close to the Ritz- Carlton hotel, and will feature exclusive retail offerings, high-end stores and luxury outlets.

“The central zone will feature a plethora of high-street brands, a variety of beautiful indoor restaurants as well as sumptuous al fresco eateries. With easy connections to the Financial Centre metro station, the zone will also comprise convenience retail stores to cater to the metro traffic,” DIFC said.

The south zone will be aimed mainly at residents of the DIFC district, and will provide community and family facilities.

DIFC said that Gate Avenue would also host a variety of arts and cultural events, live music performances and festivals.

Existing office buildings along the Avenue – including the under-construction US$1 billion tower Brookfield Place, will be connected via promenade level walkways.

DIFC has grown rapidly since it was opened in 2004. Last year it reported its best-ever operating performance, with a 27 per cent rise in new registrations. There are now some 1,445 firms operating in DIFC, employing just short of 20,000 people.

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New York’s Wall Street has all the buzz of the Big Apple. The City of London is home to a decades-old culture of joie de vivre. Tokyo’s Otemachi district is where financiers let their hair down after a hard day at the bank.

Even comparatively staid Frankfurt, Germany’s financial capital on the river Main, has built a glitzy centre sometimes called Mainhattan.

Now the two money centres of the UAE – Dubai and Abu Dhabi – are looking to create “urban destination” districts around their financial hubs, the Dubai International Financial Centre and Abu Dhabi Global Market.

DIFC’s launch of The Spine development is the next phase of its ambitious plan to triple in size by 2025.

When it was initially announced, the chief of DIFC Properties, Brett Shaffer, said: “Malls in Dubai get busy at night and on weekends. But our retail spine will be busy during night and day because we have people living here, and like a downtown, a high traffic area, it would have amenities so that people can remain.”

Likewise the huge glitzy development going on around ADGM Square on the capital’s Al Maryah Island, which the developers say will be an “experiential” destination.

In a retail culture such as the UAE’s, these planned facilities will be built mainly around the shopping experience. But increasingly, food and beverage (F&B) will play a bigger part in the after-hours activities of the financial centres.

Nicholas Maclean, the managing director of the Middle East arm of global property adviser CBRE, says: “It is a global trend. F&B is increasing its footprint within malls, and we expect it to account for 25 per cent of retail space by 2025. It’s particularly in evidence in the UAE, where it could reach as much as 30 per cent.”

One of the reasons is climatic. Mr Maclean points out that two other countries that have a high F&B proportion in their malls – Norway and Switzerland – also have weather challenges for much of the year.

But there is also a trend for F&B outlets to cluster around financial districts, which themselves are becoming as much residential as occupational centres.

“The concept of high quality F&B outlets in locations where high-income individuals work and live is increasingly common.

“Once a location has established itself as a high-income destination it has a positive effect on property prices and quality of life in those areas,” says Mr Maclean.

The other reason is that there has been a change in the tastes of traditional mall-goers. “Maybe the old ‘food court’ concept is outdated. People have become more sophisticated and don’t want to be in a noisy hall on the top floor of a mall,” he says.

The concept has already been tried and proven in Dubai, where the DIFC has gathered around it a cluster of five-star hotels and fashionable restaurants. “I think ADGM stands a good chance of success too,” says Mr Maclean.

DIFC’s Spine will boost its presence in this fast growing sector. CBRE says that retail amounts to a small proportion of its overall space – about 6 per cent compared with about 19 per cent in Al Maryah’s master plan.

Although the inspiration might be Wall Street or the City, the more relevant model for the UAE’s latest round of financial hub building is London’s Canary Wharf.

Built on derelict dock land, it has grown rapidly since the 1980s and is now arguably London’s most important financial centre.

“Canary Wharf has become a real regional location, not just a place for office workers to commute to every day,” says Mr Maclean.

With office space slightly smaller than DIFC but almost twice the size of Al Maryah, Canary Wharf has a daily working population of 112,000 who use 300 shops, bars and restaurants, CBRE says, and many of them live on or very near to the development. Canary Wharf has played a major role in regenerating the formerly rundown east end of London.

Strategists at DIFC and ADGM will be hoping for the same stimulus from their projects. But, Mr Maclean warns, there is a natural limit to the amount of restaurants, cafes and bars consumers will take, even in a mall-centred culture such as that of the UAE.

“We think the saturation level for F&B is around 30 per cent of the whole development. Global models show it would be difficult to have more than one third given over to food and drink,” he says.

fkane@thenational.ae

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