West London's Television Centre a place to live in, not just an investment

LONDON // Studio lights used to blaze around the clock at Television Centre in West London, where some of the best-known BBC programmes were made.

And even though the building is being transformed into flats and offices, the developer, Stanhope, wants a “lights-on policy” to remain in place.

Stanhope, backed by the Japanese property company Mitsui Fudosan, bought the much-loved, 14-acre TV centre site for £200 million in 2012 (then about Dh1.17bn).

It plans to build new blocks, with the entire project to comprise 950 residential units. Prices range from £500,000 for a studio to as much as £7m for a top-spec penthouse, while there will also be “affordable” home options for eligible buyers.

Amid a growing backlash against the number of London properties being bought up by foreign investors and left largely unoccupied, Stanhope says it is making efforts to ensure that Television Centre is lived in – as buzzing as it used to be.

Alistair Shaw, the managing director of the Television Centre redevelopment, said “block sales” of units at the development had been banned to boost occupancy.

“We’re keen to have a lights-on policy,” he said in an interview in a show apartment bordering the development. “We’ve always wanted to get people to live here.”

This is an emotive topic in the UK. It emerged last month that the mayor of London plans to launch an inquiry into the surge in homes being bought by overseas investors, amid concern over property prices and the number of units left unoccupied.

That is not a problem that Mr Shaw expects at Television Centre. Stanhope exhibited at the recent Cityscape Global property show in Dubai, where it looked to promote Television Centre to Middle East investors – as a place for people to live.

“We’re doing no block sales to anybody. If you do block [sales], which others do, you lose control a bit of who’s going to live there, their rationale for living there,” he said.

“Our message in the Middle East will be, ‘come and live here, use it to live and enjoy it’. We do have rental investors here and that’s fine because [units will still] be occupied. But occupation is what we are looking for. Because that’s the buzz of the place – the people make the place. So we have to invite Middle Eastern buyers to come and live here, or get others to live here.”

Another reason that the developer is not doing bulk sales of units in the development is the way it was financed, Mr Shaw said. “We were in a very fortunate position, in that the way Mitsui Fudosan has financed this project, there was no banking requirements to do pre-sales. So it gives us more time to make our case for occupation.”

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Gulf investors know London property is fashionable in every season

LONDON // It is fitting that the Dubai developer Damac Properties chose Knightsbridge in which to build its London show apartment.

The display unit, just opposite Harrods department store, is a replica of a Versace-furnished flat at the planned Aykon London One development, Damac’s first outside the Middle East.

On the street below, shoppers from the Arabian Gulf flock to the local stores and luxury boutiques. There are bargains to be had following the UK’s Brexit vote in June, which prompted a dramatic devaluation of the pound: according to research by Deloitte, London is now the cheapest place in the world to buy a Louis Vuitton handbag.

Knightsbridge is where visitors from the Middle East come to buy luxury goods – and they’re getting more and more bang for their buck or, indeed, dirham.

And the trend with Louis Vuitton handbags, it seems, also applies to London property.

Estate agents say the decline in the value of the pound since June 23 – the drop stood at 17.3 per cent as of Sunday – has spurred interest among Middle Eastern investors. The picture is complicated by forecasts that London property prices will fall further, reports of wary sellers delaying transactions, new taxes on upmarket homes and wider uncertainty over the UK’s exit from the European Union.

Damac’s Aykon London One, which is to be built in the Nine Elms district south of the River Thames, is set for completion in 2020. When it was launched on July 20 last year, starting prices for flats stood at £700,000. That would have cost you a cool Dh4 million at the time; today, £700,000 converts to a mere Dh3.1m.

Tim Fallon, the vice president for international corporate communications at Damac, acknowledged that the Brexit vote had created an initial shock in the market. But he said appetite is still strong, with London property considered a long-term investment.

“Yes, there was a shock in the very beginning, but especially with the weaker pound people took that as an opportunity to buy in London at a lower price,” he said. “The London market is being looked at not purely from an investment point of view. It’s more about the security, safety and a long-term holding, rather than as a short-term market.”

Mr Fallon said that 44 per cent of the units at Aykon London One have now been sold to local and international buyers – with the number of inquiries spiking last month.

“We thought it was going to be predominately foreign GCC buyers. But because of the Versace Home association we had a big chunk looking at it from London itself, local buyers,” Mr Fallon said. “Clients are very excited. They see an opportunity with the lower pound. They see that developers are more flexible today, offering payment plans and on prices. So they are seeing an opportunity, they are seeing greater value.”

The wider Battersea and Nine Elms district, where Apple’s UK headquarters and the new US embassy will be, has about 20,000 units in the pipeline.

But there have been concerns over potential oversupply in the area, along with price cuts and some foreign investors reportedly deserting the scheme. The London-based property research and analytics firm Propcision earlier this year reported discounts of up to 38 per cent on some properties in the area.

“Foreign investors certainly will be proceeding cautiously and considering all factors before investing in new-builds in Nine Elms [and] Battersea – an area that has seen an exceptional number of new apartments being brought to market in a concentrated area within a relatively short time span,” said Michelle Ricci, a co-founder of Propcision.

“Those foreign investors willing to take the risk will certainly be scrutinising purchase prices to ensure insulation from further price erosion.”

Ms Ricci said that low sterling prices do not necessarily mean a resurgence in foreign investment in UK property. She pointed to the falling prices of new-build properties in the prime central London market and said investors always have the option of forfeiting deposits to cut their losses.

“Investors need to believe that sterling will rise, and not sink, against their home currency. Furthermore, investors need to believe that the property will appreciate over the duration of their investment,” she said. “The economic and political climate in the UK has changed since Brexit in that there is short-term uncertainty for the UK economic growth. Since late 2015, new-builds in prime central London have experienced continued downward price pressure.

“Both the UK economy and prime central London property market will need to demonstrate stability in order to make investments attractive again.”

Damac said that most buyers of units at its London development are viewing it as a long-term investment. “They’re not flippers,” said Mr Fallon. “The way we see it, this is extremely healthy.”

Other housebuilders and commentators agreed that the slump in the pound has prompted interest among foreign property buyers.

Alistair Shaw, the managing director of the Television Centre residential project for the developer Stanhope, says the conversion of the former BBC building in West London has attracted foreign buyers, including a few from the Middle East.

“It’s a good opportunity at the moment for foreign buyers to take advantage of the weaker pound. And we’re certainly starting to see that. In fact we’ve had a reasonably buoyant summer,” he said.

Dana Salbak, an associate partner at property company Knight Frank in Dubai, said the devaluation of the pound had indeed boosted interest among Gulf investors. But she said that some sellers are proving to be reluctant to transact in the wake of the Brexit vote. “Currency is playing a significant role in spurring interest from buyers denominated in foreign currencies, particularly those pegged to the [US dollar] such as the Gulf states,” she said.

“In the two months since the vote, inquiries for London prime properties have remained active. However, many buyers have sought asking price reductions before closing deals. In turn though, the majority of sellers are adopting a wait-and-see approach before compromising on price points. This has undoubtedly affected transaction volumes,” she said.

The forecast of future property price declines further complicate the picture for potential Middle East investors.

House prices in Greater London are expected to fall by 1.25 per cent next year, according to the estate agency Countrywide. And rival Savills expects prices for prime central London properties – such as many of those found in Knightsbridge – to drop by 9 per cent this year and stay flat next year and in 2018.

Ms Salbak said increases in taxes – or “stamp duty” – on some properties and other tax changes had already affected the prime London market. “Higher stamp duty saw transactions fall by an average of 5 per cent in the five years to March 2016, particularly in areas like Kensington and Chelsea and Camden,” she said.

Naomi Heaton, the chief executive of the London Central Portfolio, a specialist residential property adviser focusing on prime areas of the UK capital, also said that the top end of the market had been affected by the tax hikes. In April last year, the UK introduced a capital-gains tax for overseas property investors, requiring them to pay a percentage of the uplift in a property’s value when they sell.

“The luxury end has been hit by three successive stamp duty rises in four years and taxes specifically hurting foreign investors. Price discounts are almost inevitable,” said Ms Heaton.

But prime central London property remains “very compelling” for Middle Eastern investors given many countries in the region have dollar-pegged currencies, she said.

“Middle Eastern investors have particularly benefited,” said Ms Heaton. “Within the new-build and luxury sectors, investors are seeking out only the very best opportunities and then driving hard discounts.”

The overall London market remains “highly fragmented”, with submarkets reacting differently to various domestic and global “headwinds”, Ms Heaton said. “One certainty in the London property market is that nothing is certain,” she said.

Despite that and the uncertainty over the timing and terms of the UK’s exit from the European Union, Damac’s ambitions in London remain on track.

Hussain Sajwani, the Dubai developer’s chairman, speaking before the Brexit vote, said that the company had viewed at least 30 other sites in London for a future development. “We want to be among the three biggest property developers in London within five years,” he told the Financial Times in March. “We are there for the long haul.”

Additional Damac projects in London remain on the cards, even after the Brexit vote. “We are very much looking at many sites in London,” said Mr Fallon. “We think … we will find more opportunities, and more realistic opportunities. Rather than a year ago, when it was more expensive.”

And so London property, like Louis Vuitton handbags, could still be in fashion for some seasons to come.

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Gulf investors know London is fashionable in every season

LONDON // It is fitting that the Dubai developer Damac Properties chose Knightsbridge in which to build its London show apartment.

The display unit, just opposite Harrods department store, is a replica of a Versace-furnished flat at the planned Aykon London One development, Damac’s first outside the Middle East.

On the street below, shoppers from the Arabian Gulf flock to the local stores and luxury boutiques. There are bargains to be had following the UK’s Brexit vote in June, which prompted a dramatic devaluation of the pound: according to research by Deloitte, London is now the cheapest place in the world to buy a Louis Vuitton handbag.

Knightsbridge is where visitors from the Middle East come to buy luxury goods – and they’re getting more and more bang for their buck or, indeed, dirham.

And the trend with Louis Vuitton handbags, it seems, also applies to London property.

Estate agents say the decline in the value of the pound since June 23 – the drop stood at 17.3 per cent as of Sunday – has spurred interest among Middle Eastern investors. The picture is complicated by forecasts that London property prices will fall further, reports of wary sellers delaying transactions, new taxes on upmarket homes and wider uncertainty over the UK’s exit from the European Union.

Damac’s Aykon London One, which is to be built in the Nine Elms district south of the River Thames, is set for completion in 2020. When it was launched on July 20 last year, starting prices for flats stood at £700,000. That would have cost you a cool Dh4 million at the time; today, £700,000 converts to a mere Dh3.1m.

Tim Fallon, the vice president for international corporate communications at Damac, acknowledged that the Brexit vote had created an initial shock in the market. But he said appetite is still strong, with London property considered a long-term investment.

“Yes, there was a shock in the very beginning, but especially with the weaker pound people took that as an opportunity to buy in London at a lower price,” he said. “The London market is being looked at not purely from an investment point of view. It’s more about the security, safety and a long-term holding, rather than as a short-term market.”

Mr Fallon said that 44 per cent of the units at Aykon London One have now been sold to local and international buyers – with the number of inquiries spiking last month.

“We thought it was going to be predominately foreign GCC buyers. But because of the Versace Home association we had a big chunk looking at it from London itself, local buyers,” Mr Fallon said. “Clients are very excited. They see an opportunity with the lower pound. They see that developers are more flexible today, offering payment plans and on prices. So they are seeing an opportunity, they are seeing greater value.”

The wider Battersea and Nine Elms district, where Apple’s UK headquarters and the new US embassy will be, has about 20,000 units in the pipeline.

But there have been concerns over potential oversupply in the area, along with price cuts and some foreign investors reportedly deserting the scheme. The London-based property research and analytics firm Propcision earlier this year reported discounts of up to 38 per cent on some properties in the area.

“Foreign investors certainly will be proceeding cautiously and considering all factors before investing in new-builds in Nine Elms [and] Battersea – an area that has seen an exceptional number of new apartments being brought to market in a concentrated area within a relatively short time span,” said Michelle Ricci, a co-founder of Propcision.

“Those foreign investors willing to take the risk will certainly be scrutinising purchase prices to ensure insulation from further price erosion.”

Ms Ricci said that low sterling prices do not necessarily mean a resurgence in foreign investment in UK property. She pointed to the falling prices of new-build properties in the prime central London market and said investors always have the option of forfeiting deposits to cut their losses.

“Investors need to believe that sterling will rise, and not sink, against their home currency. Furthermore, investors need to believe that the property will appreciate over the duration of their investment,” she said. “The economic and political climate in the UK has changed since Brexit in that there is short-term uncertainty for the UK economic growth. Since late 2015, new-builds in prime central London have experienced continued downward price pressure.

“Both the UK economy and prime central London property market will need to demonstrate stability in order to make investments attractive again.”

Damac said that most buyers of units at its London development are viewing it as a long-term investment. “They’re not flippers,” said Mr Fallon. “The way we see it, this is extremely healthy.”

Other housebuilders and commentators agreed that the slump in the pound has prompted interest among foreign property buyers.

Alistair Shaw, the managing director of the Television Centre residential project for the developer Stanhope, says the conversion of the former BBC building in West London has attracted foreign buyers, including a few from the Middle East.

“It’s a good opportunity at the moment for foreign buyers to take advantage of the weaker pound. And we’re certainly starting to see that. In fact we’ve had a reasonably buoyant summer,” he said.

Dana Salbak, an associate partner at property company Knight Frank in Dubai, said the devaluation of the pound had indeed boosted interest among Gulf investors. But she said that some sellers are proving to be reluctant to transact in the wake of the Brexit vote. “Currency is playing a significant role in spurring interest from buyers denominated in foreign currencies, particularly those pegged to the [US dollar] such as the Gulf states,” she said.

“In the two months since the vote, inquiries for London prime properties have remained active. However, many buyers have sought asking price reductions before closing deals. In turn though, the majority of sellers are adopting a wait-and-see approach before compromising on price points. This has undoubtedly affected transaction volumes,” she said.

The forecast of future property price declines further complicate the picture for potential Middle East investors.

House prices in Greater London are expected to fall by 1.25 per cent next year, according to the estate agency Countrywide. And rival Savills expects prices for prime central London properties – such as many of those found in Knightsbridge – to drop by 9 per cent this year and stay flat next year and in 2018.

Ms Salbak said increases in taxes – or “stamp duty” – on some properties and other tax changes had already affected the prime London market. “Higher stamp duty saw transactions fall by an average of 5 per cent in the five years to March 2016, particularly in areas like Kensington and Chelsea and Camden,” she said.

Naomi Heaton, the chief executive of the London Central Portfolio, a specialist residential property adviser focusing on prime areas of the UK capital, also said that the top end of the market had been affected by the tax hikes. In April last year, the UK introduced a capital-gains tax for overseas property investors, requiring them to pay a percentage of the uplift in a property’s value when they sell.

“The luxury end has been hit by three successive stamp duty rises in four years and taxes specifically hurting foreign investors. Price discounts are almost inevitable,” said Ms Heaton.

But prime central London property remains “very compelling” for Middle Eastern investors given many countries in the region have dollar-pegged currencies, she said.

“Middle Eastern investors have particularly benefited,” said Ms Heaton. “Within the new-build and luxury sectors, investors are seeking out only the very best opportunities and then driving hard discounts.”

The overall London market remains “highly fragmented”, with submarkets reacting differently to various domestic and global “headwinds”, Ms Heaton said. “One certainty in the London property market is that nothing is certain,” she said.

Despite that and the uncertainty over the timing and terms of the UK’s exit from the European Union, Damac’s ambitions in London remain on track.

Hussain Sajwani, the Dubai developer’s chairman, speaking before the Brexit vote, said that the company had viewed at least 30 other sites in London for a future development. “We want to be among the three biggest property developers in London within five years,” he told the Financial Times in March. “We are there for the long haul.”

Additional Damac projects in London remain on the cards, even after the Brexit vote. “We are very much looking at many sites in London,” said Mr Fallon. “We think … we will find more opportunities, and more realistic opportunities. Rather than a year ago, when it was more expensive.”

And so London property, like Louis Vuitton handbags, could still be in fashion for some seasons to come.

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Weak pound lifts sentiment for London property

LONDON // The property market in London is experiencing a surge in interest from foreign investors, including those from the Middle East, despite the “froth” coming off the sector, a prominent UK banker has said.

The 17.4 per cent devaluation in the pound against the US dollar since the Brexit vote in June is a major driver of the renewed interest, said Sir Howard Davies, chairman of the Royal Bank of Scotland.

“There’s no doubt that for dollar-based investors, the falling pound has made London property more interesting again. And we are seeing some signs of investors who had sat on the sidelines, post-Brexit, are coming back and making inquiries,” said Mr Davies.

“I couldn’t say that we have yet seen any great [deal] flow. But I think people are more interested at this price level than they were immediately post-Brexit.”

The banker was responding to a question posed by The National at Mipim UK, a property trade show that began in London on Wednesday.

But the former deputy governor of the Bank of England warned that the London property market could be hit by an exodus of financial workers, while real estate investment yields are “uncertain” and the wider UK economy in a fragile state.

Mr Davies said the UK economic climate is “worrying” given that there is only “modest” growth despite the positive forces of low interest rates, oil prices and inflation.

He forecasts that several financial services companies will move staff out of London following the UK ’s vote to leave the European Union – something he considers will affect a property market that has already come off the boil.

“The froth has gone off the London property market,” he said.

“When I talk to financial firms about their location decisions, they are talking about moving people from London to Frankfurt, Berlin, Luxembourg.”

Financier and investor Guy Hands, the chairman of Terra Firma Capital Partners, one of the largest private equity firms in Europe, said the UK capital’s financial district will “continue to thrive”.

“There’s no way that Paris, Amsterdam or Frankfurt are going to replace London as a centre of financial excellence in my lifetime or my children’s lifetime,” said Mr Hands.

“One of the big mistakes that some of the Europeans are making is the belief that they can somehow take the financial services business out of London, and they can plonk it in Frankfurt, or plonk it in Paris, or Amsterdam. It’s not going to happen. If the financial services business moves out of London it will move out of Europe. And it will affect Europe very negatively indeed.”

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Businesses using drones must respect the rules of the air

Drones are taking off – but, as the most recent shutdown of Dubai airspace shows, the rise of the technology is causing considerable turbulence.

Aside from recreational use, there are myriad commercial applications for unmanned aerial vehicles (UAVs), ranging from infrastructure inspections to document deliveries.

But some specialist UAE drone consultancies have a warning for businesses looking to ride this new wave of technology. Doing so involves rather more than popping to Dragon Mart and picking up a few UAVs, they say.

Asam Khan, the chief executive of the Dubai-headquartered Exponent Technology Services, which develops drone technology for commercial use, says businesses need to be very clear about the relevant rules and responsibilities.

“It’s very easy to run out and go buy a drone and say ‘let’s see what we can do with it’. But really, it’s not the solution,” says Mr Khan, a Pakistani ex-banker who holds a private pilot’s license.

“Commercial operators … really need to understand that flying drones is not a fundamental human right, let’s put it that way. You have to be very careful how you use it. You have to understand [that] you share the national airspace.”

An illustration of the importance of responsible drone use came in September, with the latest of several shutdowns of airspace around Dubai International Airport because of “unauthorised drone activity” in the area.

Despite the expensive fallout of such instances – which globally often stem from individual, rather than commercial misuse of drones – consultants say the technology has great potential for both making, and saving, businesses money.

Exponent’s US subsidiary in August undertook a test inspection of part of the Gold Star Memorial Bridge in Connecticut. A drone video inspection of the full bridge would have cost between US$18,000 and $24,000, and taken two people about three or four days to complete, Mr Khan says. But without using a drone, inspecting the bridge manually would require a crew of 12 to 14 working 72 days, costing approximately $100,000, according to Exponent.

Services already offered by the company include drone-powered inventory tracking, water-sample retrievals, security surveillance and 3D mapping. The company will either build a client a drone from scratch, or adapt an off-the-shelf model, as well as providing sensors, comms devices and software.

The consultancy’s clients in the UAE include DP World and “several major government” entities, Mr Khan says. Another organisation it is working with is the Dubai Civil Aviation Authority, with which it is developing a live-tracking system for drones, which it plans to launch later this month. The “revolutionary” system will be akin to an air traffic control for drones, Mr Khan says.

The need for such a system becomes all the more apparent given what is on the horizon for the devices in the UAE. In 2014, for example, officials unveiled ambitious plans to use UAVs to deliver government documents and packages to citizens.

Such a vision is realisable “in the next five to ten years” – but other applications are emerging sooner, Mr Khan says.

“Delivery of goods and services is one of the primary things that gets people excited. But that’s probably the last one that I would see [being] implemented. What I see is drones being used for things like industrial applications, which have far wider potential in the short- to medium-term,” he says

Regulation is “the major challenge” in the evolution of drone use, Mr Khan says, adding that the UAE is “way ahead of even most industrial countries” in this regard.

National rules require that recreational users of drones greater than half a kilogram in weight register with the UAE General Civil Aviation Authority (GCAA); in Abu Dhabi the sale of recreational drones is banned altogether. Business users must comply with different rules, and are required to obtain both GCAA operating approvals and – when cameras are used – security clearance.

Given such requirements, another Dubai-based UAV consultancy offers advice to businesses wanting to launch drone operations.

David East founded DroneWorks in 2014 and now runs it with three other partners on a part-time basis. The Briton certainly knows the ropes of the aviation world, given his day job as a commercial airline pilot.

“There’s this misconception that [drones] are just so easy to operate, and you don’t need to have any kind of ability. And yet the regulation is very strict – you have got to be very qualified,” he says.

“This isn’t just a matter of going to the local toy shop and buying something and then just flying around, capturing loads of information, and that’s it, you’re in the drone business … You’re now working in controlled airspace,” added Mr East.

“To work commercially in this region, you need to have a commercial license to operate drones, just like flying an airplane.”

Mr East agrees, however, that drones have great potential in industry. His company worked on a test project in the UAE last year with Nokia Networks and du, which included the use of drones for inspecting telecoms towers – often a time-consuming and hazardous job for humans.

“It’s reckoned to be a multi-billion dollar industry that is coming,” Mr East says of the drone business. “The sky is the limit, so to speak.”

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London // The UAE’s global image gave an extra US$12 billion boost to the value of its home-grown brands over the past year, research published this week shows.

The London consultancy Brand Finance said that the combined value of all the top brands in the UAE – including its biggest names like Emirates and Etihad Airways – stands at a colossal $478bn, a 19 per cent increase on last year.

Of that, $81.1bn of value is dir­ectly attributable to the reputational boost brands get by being based in the country and benefiting from “brand UAE”. That is 17 per cent – or some $12bn – more than last year, the 2016 Nation Brands report found.

Brand Finance measures the world’s companies according to both their brand strength – factoring in things like advertising spending, marketing investment and brand equity – as well as their financial performance in the wider economy.

The report published yesterday also considers brands’ countries of origin and what value national heritage – such as the positive impact of Ferrari coming from Italy – brings with it.

Alex Haigh, the nation brand director at Brand Finance, said things were looking up for UAE brands. “Compared to various other Middle Eastern countries, the UAE has improved quite significantly. And I think that’s largely because of the fact that it’s not quite so reliant on oil; it’s a more diversified economy,” he said.

In Saudi Arabia, by comparison, there was a 5 per cent decline in its “national brand value”, the measure of the combined worth of a nation’s brands, which factors in the boost they get from their country of origin.

“Saudi Arabia … is trying to open up and diversify its economy in a similar way to the UAE,” said Mr Haigh. “The UAE is obviously a success story. And considering its size, it’s biting at the heels of Saudi Arabia in terms of total value. [With] Saudi Arabia, it’s good that it’s going on the same track as the UAE, but it’s got a lot to learn.”

Emirates airline is the Middle East’s most valuable brand, with a valuation of $7.743b, Brand Finance data shows.

Despite the growth in the value of such brands, the UAE’s nat­ional brand strength – based on factors like its worldwide image and perceptions about tourism, investment, governance and sec­urity – slipped slightly this year.

The UAE now anks as the world’s 12th strongest nation brand, down from third position last year, the Brand Finance data shows. But the consul­tancy downplayed the significance of this, saying the country has retained its strong “AAA” brand strength rating. Singapore, Switzerland and Hong Kong were found to have the strongest nation brands globally.

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A Trump triumph could tarnish the US brand

A victory for Donald Trump in the November 8 presidential election would threaten the global image of the United States and send the $20 trillion valuation of its brands into decline, a London-based consultancy has said.

The US currently has by far the highest “national brand value”, a measure of the combined worth of a country’s brands, Brand Finance said in research published yesterday.

It also ranks as the 11th strongest nation brand globally, according to the consultancy’s 2016 Nation Brands report, published this week.

But success of the divisive Republican candidate in the presidential poll could send “brand USA” into decline, because of Mr Trump’s controversial stance on ethnic issues and perceived protectionist attitudes towards business, the consultancy said.

“If [Trump] does get into ­power we could expect to see the US nation brand value go into reverse,” said Robert Haigh, the marketing and communications director at Brand Finance in London.

Mr Trump has made a string of controversial remarks about groups including Muslims and Mexicans, while a 2005 recording recently emerged in which he was heard making a series of lewd remarks about women.

“He’s bad from a reputational point of view for the US, because it just sends out all the wrong signals to ethnic minority groups,” said Mr Haigh.

“But then also he has combined that xenophobia and hostility with business unfriendliness and protectionism. He’s made a lot of noise about companies that send their jobs and investment offshore.”

According to Brand Finance, the US national brand value currently stands at $20.5tn, a 4 per cent increase on last year. The US “nation brand effect” – the proportion of the national brand value that is directly derived from the companies’ American heritage – stands at almost $3.5tn.

But next year’s numbers could look very different whether or not Mr Trump’s presidential bid is successful, said Alex Haigh, the nation brand director at Brand Finance.

“There’s obviously the damage that has been made just by the virtue of him being popular. The fact that he’s almost level pegging in the polls with Hillary Clinton shows that there’s a fairly large swath of the American public who are anti-immigrant, anti-trade and anti-foreign investment,” he said.

“So lots of people will be looking at that and thinking: ‘Even if Donald Trump doesn’t get in, my business isn’t welcome here’.”

Mr Haigh also pointed to a trend of “resurgent nationalism” in the UK, given the Brexit vote in June to leave the European Union.

The UK’s national brand value slipped by 2 per cent to $2.9tn in Brand Finance’s ranking, largely due to the devaluation of the pound following the Brexit vote.

But the UK’s brand strength – based on factors like its worldwide image and perceptions about tourism, investment, governance and security – actually improved, ranking fifth place globally this year, compared to 11th in 2015.

Brazil – despite hosting the Olympic Games last summer – was one of the poorest performing nations in Brand Finance’s ranking. The nation registered a 30 per cent decline in its national brand value in the last year, the figures show.

Mr Haigh said that while perceptions of tourism in Brazil had risen slightly, the overall economic situation was bleak, and the country was still grappling with unravelling scandals over alleged political corruption.

“The Olympics can only do so much, and the economic situation in Brazil is dire,” said Mr Haigh. “These sporting events simply don’t have that bang for the buck.”

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Stable and solid: UAE retains 'AAA' brand rating

LONDON // Promoting “brand Middle East” would be many a marketing man’s idea of a nightmare; the widespread conflict, political upheaval and economic jitters do not, of course, help.

But despite the wider turmoil, the stable UAE has held its own in the international branding stakes and has retained its “solid” image, new research by the London-based consultancy Brand Finance shows.

The UAE’s “national brand value”, a measure of the combined worth of the country’s brands against the wider economy, this year rose by 19 per cent to US$478 billion, Brand Finance said in its 2016 Nation Brands report. About 17 per cent of that is directly attributable to the benefits of companies being based in the UAE.

The UAE’s own brand strength – based on factors like its worldwide image and perceptions about tourism, investment, governance and security – slipped slightly this year, with the country now ranking as the world’s 12th strongest nation brand, down from third last year. But the country has retained its “AAA” brand rating, and its brand score – 85 out of 100 – is almost level with the 86 recorded last year.

Andrew Campbell, the managing director of Brand Finance Middle East, based in Abu Dhabi, said the latter statistic is simply a “rounding issue” and that the UAE’s brand remains “solid”.

“The strength of the brand has held its own,” he said.

“Obviously the regional issues weigh against it, as do trends in the oil price. But in its favour there’s still a very high degree of visibility of the UAE as a brand, in terms of the airlines [which] carry a lot of brand recognition, as do things like the Expo 2020 and tourism generally.

“As a safe haven within the region, it still maintains that profile; even though it is in a region of unsettled politics, [the UAE is still] an island of stability and relative strength.

“Activities in terms of diversifying away from reliance on oil are continuing apace. Overall, the negatives are balanced out by the positives.”

One complication around assessing “brand UAE” is that many international marketing efforts are actually undertaken by individual emirates, rather than the country as a whole, Mr Campbell noted.

“There’s not a great deal of consolidated effort into promoting ‘brand UAE’. Brand Dubai is actively promoted, as is brand Abu Dhabi, as is brand Sharjah, and even Ajman and the likes are raising their profile. In terms of the actual promotion of the brand it’s effectively an agglomeration of the seven emirates’ brands,” he said.

Other branding experts agreed that the UAE had cemented its name internationally.

“Other countries should envy the link between our nation brand and our global brands,” said John Brash, the founder and chief executive of Brash Brands, which has an office in Dubai.

“The UAE really stands for something on the world stage – innovation, ambition, energy; that ‘can-do’ spirit,” he added.

Mr Brash said that the UAE’s relative resilience to the oil price decline has “surprised the world”.

He told The National: “People expected falling oil prices to drag the UAE down, but they hadn’t counted on the diversification that had been put in place. Once the UAE showed its economy wasn’t dependent on oil and gas, at all, I think people looked afresh at our brands in other sectors – from real estate to aviation, technology to creative sectors and more – and saw their real strength.”

But this positive picture is not reflected in all countries in the region.

Jordan, for example, was ranked the worst-performing of all the 100 nations ranked in Brand Finance’s report. Its national brand value plummeted by 35 per cent to $24 billion – something caused exclusively by the fallout from the conflict in neighbouring Syria, said Robert Haigh, the marketing and communications director at Brand Finance in London.

“The deteriorating situation in Syria is having an impact on Jordan, both because of the perception of regional instability, and also the number of economic migrants and refugees who are flooding into Jordan and other surrounding countries,” said Mr Haigh.

Lebanon, Bahrain, Morocco, Oman and Turkey all experienced decreases in their national brand values this year, the Brand Finance report noted.

Turkey – whose national brand value fell by 29 per cent – has faced a “perfect storm” this year, Mr Haigh said.

“The coup [attempt] makes Turkey look like the kind of place that isn’t as stable as people had thought it would be. It had been seen as this kind of bulwark against the troubles of the Middle East, and relatively isolated from them itself, essentially a safe European place. Whereas that now looks much less certain,” he said.

“The combination of the unrest of the Kurds within, its proximity to Syria, which is still in a very troubled condition, and then its own internal problems makes the security picture seem very uncertain.”

Saudi Arabia has announced sweeping economic changes after the oil price crash, and its national brand value declined by 5 per cent to $482bn.

But Mr Campbell said there was much hope on the horizon for brand growth in Saudi Arabia given the country’s plan to diversify its economy under the Vision 2030 reform programme.

“As they put those building blocks into place, Saudi Arabia as a brand will become more recognised and potentially will grow,” said Mr Campbell. “And as the country opens up and attracts more international investment, that potentially could be a future growth story.”

So while the prospect of positive “brand Middle East” remains unlikely, there are a few bright spots on the horizon.

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Venture fund helps Mena region tap into expertise of veteran investors

Most technology investors are hunting future “unicorns”, as start-up ventures valued at US$1 billion or more are known. But with millions of businesses launching each year, these are proving ever elusive.

Step in one new fund aimed at Middle Eastern investors, which – while certainly not promising to scout out the next Facebook – does offer regional investors access to “cherry-picked” US start-ups.

The Arab Angel Fund was launched earlier this year by Kyle Hendrick, who until April worked as a commercial specialist at the UAE embassy in Washington DC.

Most start-ups do, of course, fail. But Mr Hendrick says his fund’s policy of only investing in tech businesses alongside established venture capital (VC) firms does at least mitigate some of the risk.

“We’re giving proprietary access to deals that US venture firms are taking lead positions in,” says Mr Hendrick, who is a general partner of the Arab Angel Fund.

“Co-investing with these VCs is really cherry-picking some of the top deals. Because if they’re turning down thousands of start-ups and investing maybe in 50 or 100 a year, they’ve gone through some serious hurdles.”

The Arab Angel Fund, which is registered in the Cayman Islands, is capped at $25 million and has so far raised about $11m, primarily from the Arabian Gulf. It has struck at least 14 deals to date – although Mr Hendrick says he cannot yet disclose details – and plans to invest in a total of 150 to 175 start-ups over three years. The vast majority will be US-based, with the fund specifically targeting early-stage start-ups in places such as Silicon Valley, Boston and New York.

Mr Hendrick says the fund has already attracted at least 38 investors from countries including the UAE, Saudi Arabia and Kuwait. Several top executives and two UAE ministers have invested in the fund, he says, although he could not give names.

The maximum an individual can put in is $1m, and the minimum investment is $100,000 – something Mr Hendrick says was a relatively low threshold.

“Venture returns can happen throughout the life of the fund but we generally expect to see returns within the first three to five years,” he says.

“For a lot of these investors – I would say about 95 per cent of cases that I’ve seen – this is their first foray into this asset class.”

Mr Hendrick says it was his experience working in the trade and commercial office at the UAE embassy that made him realise there was a gap in the connectivity between US start-ups and “everyday” Middle East investors.

“Family offices and individual investors really didn’t have a vehicle that was giving exposure to the top-tier US venture funds,” he says.

While is nothing stopping Arab investors pursuing US start-ups through individual investments or other more established US funds, Mr Hendrick says the fact that the fund will co-invest alongside multiple VC companies – he name-checked the likes of New Enterprise Associates and the notable angel investor Mark Cuban – was a major draw.

“There has to be a notable VC in the US that has taken a lead position before we can invest. So we’ll never be the first money in on a start-up. And that’s really a risk-mitigation tactic,” he said.

Another aim of the fund is to help some of the start-ups it invests in enter the Middle East market, building on the fund’s connections in the region and the prominent UAE business people on the Arab Angel Fund investment committee.

While one UAE investment expert says there would probably be strong demand for an investment vehicle such as this, he strongly cautioned against individuals putting their money in such an asset class.

“Shiny new ideas and exciting tech investments sound great and will likely attract investors,” says Sam Instone, the chief executive of the fee-based financial advisory AES International, which has an office in Dubai. “[But] everyday investors shouldn’t be speculating in angel investing … Evidence suggests that most normal investors can get better returns net of fees and charges by investing in index funds.”

Mr Hendrick acknowledges that venture capital was typically riskier, and the Arab Angel Fund is not suited to all investors. But he says that, in a wide portfolio of start-ups, a handful of star-performing ventures can compensate for the many that, inevitably, fail.

“Risk is generally frowned upon in the Middle East. So it’s sort of a changing of mindsets. Yes there’s going to be some failure, but the success within this fund is going to make up for that,” he adds.

So the odds of a business success may still be stacked against you – but so it goes when you’re scouting for start-up unicorns.

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Pure Harvest wants to grow tomatoes in the desert

Today the chips for smartphones are made in high-tech clean rooms – and, from next summer, so could the food on your plate, according to a “smart” farming venture launching in the UAE.

About 80 per cent of food consumed in the country is imported, according to the Ministry of Economy, bringing huge economic and environmental implications with it.

But one new entrepreneurial venture has a bold solution on the table. Pure Harvest, cofounded by Sky Kurtz, a former Silicon Valley-based private equity investor, and his Emirati business partner Mahmoud Adi, plans to bring the latest hydroponic farming techniques to the UAE – a process of growing plants in solutions, rather than soil, allowing for the careful control of the nutrients the plants receive.

And this, they say, could eventually lead to the country becoming a food exporter.

The operation – funded by a US$1 million investment from Shorooq Investments, Mr Adi’s family investment vehicle – has bought a farm in Nahel, a rural town about 30 minutes north of Al Ain. A $2.5m to $3m fund-raising round is in the pipeline, which Pure Harvest hopes to complete in January. If that goes ahead, the venture plans to install the latest high-tech farming kit on site, and could be harvesting its first crop – tomatoes – next summer.

“It is a factory, not a farm,” Mr Kurtz says of the proposed facility.

Pure Harvest’s first production centre plans to incorporate the latest Dutch technology – although Mr Kurtz says a supplier has not yet been signed.

The Dutch have a long history of innovation in horticulture, with many of today’s leading greenhouse technologies and hydroponic methods originating from Holland, says Mr Kurtz.

Crops will be grown year-round in a “natural substrate”. The substrate – or the material chosen by Pure Harvest – will be derived from coconut shavings. No pesticides will be used, but because the produce is not grown in soil it will not be classed as organic under European guidelines – a rule Mr Kurtz calls “arcane and silly”.

Under Pure Harvest’s plans, internet-connected sensors will monitor crops and precision-feed individual plants according to need, while the air will be dosed with CO2 to make the plants grow like they are “on steroids”, Mr Kurtz explains. “We are able to control the climate around the crop within one degree centigrade. And in doing so, it doesn’t know that it is not growing in the heart of Holland.”.

Workers will have to be washed down before they enter the building, and wear suits inside, to keep pests outside and keep it “incredibly pure and natural inside,” Mr Kurtz adds. “It’s almost like a clean room.”

While other hydroponic farms already exist in the UAE, such as Elite Agro and Emirates Hydroponics, both in Abu Dhabi, Mr Kurtz says Pure Harvest will bring the latest agriculture technology to the country for the first time.

Mahmoud Adi, the co-founder of Pure Harvest, says the technology has the potential to ween the UAE off its food imports in the long term.

“That is solving a food security problem,” he says. “If we can produce locally at a similar quality, and guarantee supply around the year, we think there would be less demand for the imports.”

The first crop Pure Harvest plans to grow is tomato, but that will be expanded to other crops such as capsicum and cucumber, Mr Adi says.

The produce would be sold with a “meaningful discount” compared to imported food, but Mr Adi could not disclose the percentage savings.

The UAE could even become a food exporter if such technology took off, Mr Adi says.

“I truly believe that we can be the food basket not only for the GCC but also for other places. In Europe, what happens in the winter is that the cost of production of food goes through the roof, because then you need a lot of heating. There is a nice business to be made by shipping food in the other direction,” he says. “We believe if we deploy this at scale, if we make the right decisions, if we have the right quality, there’s nothing stopping us from being a global player.”

But Howard Resh, a Canada-based hydroponics consultant and author who has worked on projects in the Arabian Gulf, says that the capital and operational costs in such ventures can be high.

While Mr Resh says he cannot comment on Pure Harvest’s UAE initiative without knowing more about the exact technology used and numbers involved, he says it is generally difficult to produce crops using high-tech Dutch methods cheaper than importing low-cost produce from markets such as Turkey.

“I think the cost of production would be far greater than field-production importation,” he explains.

Mr Kurtz acknowledges that the technology is not cheap and would require significant energy for cooling. But he says Pure Harvest will be still be “far more sustainable” because the food does not have to be transported by air, and uses less desalinated water.

“[Our food will be] picked less than 100 kilometres from where it’s consumed,” he adds. “Our aspiration is to build a major agriculture player in the region. I believe we can scale and grow.”

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