Business

AMMAN — The wholesale trade price index increased by 2.8 per cent during the first quarter (Q1) of this year compared with the same period of 2013. According to the Department of Statistics, the increase was due to the rise in prices of motor vehicles and parts, raw materials, food, drinks,  tobacco, cosmetics and machineries.

AMMAN — A business delegation from the Federation of Indian Export Organisations (FIEO) will explore trade opportunities in Jordan and best ways to maximise commercial ties during a visit to the Kingdom between May 26 and 28, according to an embassy statement. Information technology, pharmaceuticals, textiles, fertilisers, automobiles and spare parts are among the main areas of interest to the delegation besides electrical machinery, frozen meat, organic and inorganic chemicals and agricultural products. FIEO, in association with the Amman Chamber of Commerce and the Indian Embassy in Amman, will be organising B2B (business to business) meetings to connect entrepreneurs with potential customers, strategic partners and other like-minded entrepreneurs, according to the embassy statement. India, one of the Kingdom’s main commercial partners, represents one of the biggest markets for Jordan’s fertiliser industry and it is a main importer of its phosphate and potash exports. In 2013, the joint Jordanian-Indian commercial exchange totalled $1.61 billion, according to the embassy website.

AMMAN –– Abdali Boulevard, a JD300-million-project, is scheduled to open for business on June 11, developers said Tuesday. 

The Boulevard is part of the $5 billion Abdali project, the largest mixed-use urban development scheme in Amman.

The entire mega- project, Abdali, is expected to be ready within six to seven years, George Amireh, chief executive officer of Abdali Investment and Development Company, told journalists on Tuesday during a media tour at the site.

Amireh indicated that the project, which developers call the New Downtown of Amman, spans over 384,000 square metres with a built-up area of 1,800,000 square metres that comprises residential, commercial, hospitality, retail outlets, entertainment facilities and serviced apartments.

Asked about the delays, as the scheme was supposed to open in 2010, he mentioned financial troubles faced by some investors after the global financial crisis. 

"The entire project will be ready in six to seven years, but, gradually, some big projects such as five-star hotels and the shopping mall will open next year and the year after," Amireh said. 

“Abdali will play a major role in shaping Amman’s new identity as a modern and vibrant city for years to come,” he added, noting that the investment will attract many regional and international businesses that consider the Kingdom as a suitable place for their investments.

The developing company, Abdali Investment and Development is a public-private partnership between the government-owned estate developer National Resources and Development Corporation (MAWARED) and Horizon, an international construction conglomerate owned by Lebanese businessman Baha Hariri. 

Taher Jaghbir, chief executive officer of Abdali Boulevard Company, said the Boulevard  includes high-end retail outlets, in addition to 30,000 square metres of modern office spaces and approximately 400 luxurious serviced hotel apartments, operated and managed by the Rotana Hotel Management Corporation, one of the region’s leading hotel management companies. 

Jaghbir explained that the Boulevard consists of a pedestrian spine bordered by 12 buildings that offer 22,000 square metres of retail space to house 120 stores.

The Boulevard rooftop, sized 18,000 square metres, will consist of outdoor swimming pools, sports clubs, spas, lounges and restaurants, he added.

DUBAI — Qatar Airways has become 100 per cent state-owned after the government bought out private investors, including a former prime minister, its chief executive Akbar Al Baker said Monday.

Al Baker said the acquisition took place last year, shortly after a political shake-up in which Sheikh Hamad Bin Jassem was removed from the post of prime minister.

The airline became “100 per cent government-owned at the end of July” when 50 per cent of the company was purchased from the investors including Sheikh Hamad, Al Baker told reporters in Dubai.

“It was not only Hamad Bin Jassem; there were other shareholders,” he said at the Arabian Travel Market.

He declined to comment on the motives for the buyout and said he did not know how much the ex-premier had received for his stake.

Qatar Airways, he remarked, would start revealing its results now that the carrier was government owned.

Qatar Airways, along with Dubai’s Emirates and Abu Dhabi’s Etihad, have snatched a sizeable share of the long-haul travel sector, turning their home cities into major hub on the routes to Asia and Australasia.

The three are major clients of aircraft manufacturers, with extensive lists of orders from Boeing and Airbus.

Baker said the recent soft opening of Doha’s new airport should allow the carrier to expand unhindered, noting “growth was blocked by the capacity of the current airport” in Doha.

He added the much-delayed Hamad International Airport, which opened last week, has an annual capacity to handle 30 million passengers which can be pushed to 45 million passengers if needed.

The new international airport, built at a cost of $15.5 billion, welcomed its first commercial flight on Wednesday.

Initially, the facility will only be open to 10 airlines with other carriers, including Qatar Airways, expected to use it from May 27.

Baker also complained of airspace congestion in the Gulf region, saying limiting space for commercial carriers in favour of military use is “not conducive” to the aviation sector.

AMMAN — Real estate trading in the Kingdom went up by 26 per cent during the first four months of 2014 reaching JD2.5 billion compared to JD2 billion during the same period of 2013. 

According to Department of Land and Survey report, released on Monday, government revenues from the property market increased by 25 per cent to JD139.5 million during the January-April period of this year.

The value of exemptions related to apartments amounted to JD26.4 million, bringing the overall total of revenues and exemptions  to JD166 million.

The number of transactions rose by 24 per cent reaching 33,998 deals during the first four months of this year. 

Out of the total, 14,438 transactions were in Amman alone, accounting for 42 per cent, and 19,560 transactions were in other governorates, accounting for 58 per cent.

In Amman, investors sought apartments as the number of transactions came at 7,994 whereas the number of land deals stood at 6,444.

The preference was more for land in governorates as the number of transactions was 16,081 deals compared to only 3,479 for apartments.

The number of purchase transactions by non-Jordanians stood at 1,808 deals, of which 1,206 were contracts to buy apartments valued at JD109.4 million (66 per cent), and 602 transactions to purchase land valued at JD56.5 million (34 per cent).

Combined, the total came at JD165.9 million, 25 per cent higher than the revenues registered during the first four months of 2013.

Iraqis topped the list of non-Jordanian investors with 764 properties, followed by Saudis, in second place, with 254 possessions.

Syrians, in third place, purchased 198 properties and Kuwaitis bought 163 assets.

In terms of value, Iraqis also came first with JD102 million accounting for 62 per cent of non-Jordanian purchases, Saudis’ percentage was 9 per cent with JD15 million in the second place, while Syrians’ transaction values were estimated to reach JD12 million with 7 per cent, while the other 22 per cent included other nationalities.  

During April 2014, trading in Jordan’s real estate market reached around JD737 million, a 26 per cent increase compared to JD584 million in April 2013.

SYDNEY — The Australian budget later this month will involve "tough decisions" to put the economy back on track, a senior minister said Sunday as a poll revealed a voter backlash against any new tax to cut debt.

Australia has enjoyed more than 20 years of annual growth, sidestepping the worst of the global financial crisis due to a mining boom fuelled by Asian demand.

But the government elected in September has said it is facing a deficit of A$47 billion ($43.6 billion) this fiscal year due to the previous Labour administration, and that the debt will only mount in coming years.

House Leader Christopher Pyne refused to comment on whether a new tax reportedly under consideration to plug the deficit — on workers earning more than A$80,000 a year — would be unveiled as part of the budget on May 13.

"I think they [Australians] fully understand we have to make the tough decisions necessary... to get the economy back on track again," he told the Australian Broadcasting Corporation.

"They know it won't be easy and it is important that everyone shares in that burden of repairing the damage Labour did to the economy and to the budget," he said.

A Galaxy Poll in The Sunday Telegraph found 72 per cent of voters felt that introducing the levy would amount to a broken promise by Abbott, who before the election had pledged no new taxes.

The poll of the 1,391 voters also found support for Abbott's coalition had dropped significantly since the election, from 53.5 to 48 per cent, meaning it would lose an election to Labour if a poll were held now. 

Pyne dismissed the poll, saying the government had been elected to fix the budget and Australians understood this was a priority.

"There's no easy way out from the debt and deficit disaster left for us by the Labour government," he said.

"We don't want to end up in the situation that Europe and the United States are in — and we don't have to as long as we have a government that is prepared to take responsibility and make the decisions now that will set up the economy and our society in the years ahead," Pyne added.

In a statement, Prime Minister Tony Abbott stressed that the nation must live within its means and try to reduce debt.

"Beyond a certain point, you don't control debt; debt controls you," he said.

Opposition Labour leader Bill Shorten said his party would oppose any deficit levy.

"Increasing taxes on working-class and middle-class Australians is a terrible mistake, and people will not forgive Mr Abbott for breaking this very big promise," he said.

Separately, the Australian government said Friday that it wants to lift the pension entitlement age to 70 — the highest in the developed world — by the year 2035 to help cope with an ageing population.

Treasurer Joe Hockey said the previous Labour government planned to raise the age from 65 to 67 in 2023 and the new Abbott administration wanted to take it further by 2035.

"Increasing the pension entitlement age to 70, we are intending for that to occur in 21 years' time," said Hockey.

Australia has no statutory retirement age but men have been entitled to the pension at age 65 and women at 60 since it was introduced in 1908.

While no members of the Organisation for Economic Cooperation and Development (OECD) group of rich countries yet have an official retirement age as high as 70, the effective age for men in Japan and South Korea is close to this despite an official retirement age of 60, a recent report by the OECD said.

Hockey said any Australians getting the pension now would not be affected but he stressed the government's view that the "age of entitlement" was over.

"It is hugely important we have long-term planning out of this budget," he said.

Australia has for years grappled with how to plan for its ageing population, and in 2009 the former government said it would gradually push back the age at which people could claim the state pension to defuse a "demographic time-bomb".

Over the next 30 years, the number of Australians aged 65 or over will double from 3.5 million to 7 million, accounting for 22 per cent of the population, the Actuaries Institute of Australia has forecast.

Meanwhile the number of those aged over 85 will almost triple from under 0.5 million to 1.4 million people in that time, placing pressure on the health system, it said.

Australia currently has a population of 23.4 million, and the life expectancy at birth is 79 for males and 84 for females, according to official Australian Bureau of Statistics figures.

DUBAI — Egypt's tourism minister on Sunday announced ambitious plans to try to revive the country's tourism sector, in distress after years of political turbulence.

Government data showed last month that tourism revenue dropped 43 per cent to $1.3 billion in the first quarter of this year.

Egyptian Tourism Minister Hisham Zaazou said in an interview in Dubai: "The world will see tourism returning to Egypt. We have an ambitious global plan to show the world that it is safe and fun to visit Egypt anytime."

Egypt's Islamist insurgency has largely spared tourist sites, but on Friday suicide bombers hit near the tourist resort of Sharm El Sheikh, killing a soldier and wounding at least eight other people.

Three South Koreans were killed in February when a bomb hit a tourist bus in South Sinai near a border crossing with Israel.

Zaazou said: "Our plan is to attract more than 25 million tourists by 2020. Revenues generated will double from the 2010 peak of $12.5 billion to $25 billion within the coming 6 years." 

He added that India, China and Latin America would be major target regions in a marketing campaign.

The tourist sector hopes that Egypt's political climate will become more stable.

Speaking in Dubai less than four weeks before the country's planned presidential election, Zaazou said Egypt is gearing up for a fresh new start with a new president and a parliament.

"Tourism in Egypt has its captive audience and the major flow of tourists will happen once the political scene is settled," he said.

Latest government figures show that tourism currently contributes 11.3 per cent of Egypt's gross domestic product (GDP) and brings in 14.4 per cent of foreign currency revenues. 

Three-year campaign

More than 14.7 million tourists visited Egypt in 2010, dropping to 9.8 million after the revolution that toppled former president Hosni Mubarak. The sector picked up in 2012, attracting 11.5 million but shrank again to 9.5 million last year after various attacks on tourist destinations.

But the tourism ministry is launching this week a three-year marketing campaign in the hope of attracting tourists and investors to the country, probably the country's last hope in fixing its own internal finances without relying on aid from Gulf Arab states.

"We are currently negotiating agreements to prevent double taxation on airlines and tourist agencies. We want to partner with companies like Emirates Airline and Etihad Airways to bring in tourists to the country. There's a well-prepared plan in place," Zaazou said.

Saudi Arabia, Kuwait and the United Arab Emirates (UAE) pledged more than $12 billion in aid to Egypt after the army toppled president Mohamed Morsi on July 3 following mass protests against his rule.

Zaazou called on companies in the UAE like property developer Emaar Properties and hotel management firm Jumeirah to invest in the Egyptian market.

The government earlier this year sold five plots of land on the Red Sea coast and plans to initiate new investment opportunities for local and international investors.

"We had valued the square metre in this area at $38 but it was sold at more than $150 per metre at the auction. Investors buying the land must know the value of what they're getting," he said.

RIYADH — Saudi Public Transport Co. (Saptco) has won a $2.1 billion contract to operate and maintain buses in Riyadh jointly with French group RATP Dev. The 10-year deal is worth 7.885 billion riyals ($2.1 billion, 1.5 billion euros), Saptco indicated, noting that Riyadh authorities informed them they won the deal on Wednesday. Saptco and RATP Dev in January 2010 signed a strategic partnership to develop the public transport system in Saudi Arabia, including a tramway and metro system. In July 2013, Saudi Arabia granted three foreign consortiums — led by US, Spanish and Italian firms — contracts worth $22.5 billion (16.9 billion euros) to build a Riyadh metro The metro aims to help ease traffic congestion in the capital, a city of six million people, with a six-line network across Riyadh and serving the airport.

LONDON — London's red-hot property market has struck a new record with the sale of a £140 million ($237 million) unfurnished apartment, but even the developer of the opulent building warned that some asking prices in Britain were unsustainable.

Buoyed by the wealth of Russian oligarchs, Chinese tycoons and Arab sheikhs, London has become one of the most expensive markets on earth, raising concerns ahead of parliamentary elections in 2015 that locals are being squeezed out of the market.

"We're in boom-time prices, more expensive than we've ever been in the history of mankind," Nick Candy, one of the developers of London's One Hyde Park luxury apartments, at the pinnacle of the capital's super-prime residential sector, told Reuters.

"There is a concern over the market overheating... . Everyone thinks the main central London is doing so well, [so] the ripple effect is going throughout the UK, and some of the prices being achieved are probably unrealistic and not sustainable," he said.

But money is still pouring in.

A source familiar with the matter said an eastern European buyer bought a penthouse at the One Hyde Park apartment block for a record £140 million.

Candy confirmed that a 16,000 square foot penthouse had been sold but declined to comment on the price or name the buyer. Developer CPC Group, which is run by his brother Christian, said the flat could be worth £160-175 million when furnished.

Britain's previous record for an apartment was set three years ago by Ukrainian billionaire Rinat Akhemtov, who paid £136 million for a penthouse and apartment at One Hyde Park to knock together into one property.

There have been more than $2 billion in sales at the block, whose developer is a joint venture between CPC Group and Waterknights, the private company of Qatar's Sheikh Hamad Bin Jassim Bin Jabor Al Thani.

Candy & Candy, run by Nick Candy, were the interior designers and development managers for the project.

Political threats

The wall of money chasing a finite amount of property has sent luxury London prices soaring almost 80 per cent since 2009, and while plutocrats' ostentatious purchases grab the limelight, prices have rocketed even in poorer areas.

Prime central London house prices have risen 79.4 per cent since March 2009, against a 40.6 per cent increase in Greater London house prices over the same period, according to data from Savills.

Candy, who with brother Christian started out in 1995 with a £6,000 loan from their grandmother, indicated that the main risks to the market were changes in government policy, a rise in interest rates or oversupply at the top end.

"If the political climate changes in either [London or New York], so in London next year the government wants to charge mansion tax and other taxes, the market might change. They might have a correction, a significant correction," he said.

"I don't see a massive correction unless a number of things happen, firstly a change of government, second of all, interest rates start going up high and inflation starts going," he added.

The British government has in recent months imposed new taxes on overseas purchasers, while the opposition Labour Party, which is leading in opinion polls for the national election, has proposed a tax on houses worth over £2 million.

Rising prices have prompted a rush of luxury developments.

More than 20,000 residential units — worth over £1,250 per square foot — are scheduled to be built in London over the next 10 years, building consultancy EC Harris said in December, adding that this was more than double the 2011 pipeline.

Such is London's wealth that Property consultant Savills calculates 10 London boroughs now have an aggregate property value equivalent to the total value of Scotland, Wales and Northern Ireland combined. 

Separately, the owner of much of London's upmarket Mayfair and Belgravia districts has sold millions of pounds of prime properties, seeing recent rampant price rises as unsustainable and preferring to invest in rental homes in cheaper districts.

Grosvenor Group, controlled by the Duke of Westminster — one of Britain's richest men, said it had cut its exposure to superprime London homes last year, making sales that helped its Britain and Ireland unit treble profit.

Demand from foreign investors in search of a safe haven has pushed London's luxury home prices up by 68 per cent since 2009, compared with a rise of 49 per cent in greater London as a whole, according to property consultancy Knight Frank, leading many analysts to express concern that a bubble might be forming.

"I'm more concerned about it [high-end residential pricing] than I was last year," said Chief Executive Mark Preston, who last year called the rate of growth in London luxury house prices unsustainable.

"It's very much a deliberate initiative on our part to capitalise on prices that we think are high," Preston added.

Grosvenor said it sold off £240 million ($400 million) worth of central London homes, including row of mid-19th century terraces in Belgravia for 115 million.

The company intends to reinvest in rental homes outside its traditional Mayfair and Belgravia turf, targeting more affordable neighbourhoods, Preston said. It is looking at securing up to three schemes, having already spent £70 million on a site in the Bermondsey district last year, where it intends to let homes.

"Housing for rent is something that we're beginning to turn our minds to more than we've done in the past," he added. "We're recognising that London desperately needs more in that mid-market area where people are literally priced out." 

The firm is controlled by the Grosvenor family, headed by Gerald Grosvenor, who was No. 8 in Britain's Sunday Times Rich List last year with his £7.8 billion fortune.

Grosvenor's London estate, which it has owned for more than 300 years, comprises 300 acres of Mayfair and Belgravia with more than 1,500 homes, shops and offices as well as investments in China, Europe and North America, and a fund management arm.

The company said group profit before tax rose 38 per cent to £506.9 million in 2013. The value of its property assets was 5.8 billion, unchanged from 2012. 

According to a recent key survey, British house prices rose strongly last year.

Prices rallied 7.5 per cent in December 2013 compared with the level in December 2012, according to a survey by lender Halifax, which is part of the state-rescued Lloyds Banking Group.

However on a monthly basis, house prices fell by 0.6 per cent in December from November. That was the first drop for 11 months and took the average property price to £173,467 ($284,727, 209,579 euros).

The nation's property market was also bolstered last year by government stimulus programmes and record-low interest rates, analysts said.

"The revival in house prices over 2013 is due to a sharp rise in housing demand coupled with a very subdued supply of homes coming onto the market," said Capital Economics analyst Matthew Pointon. "That has led to very tight market conditions, and put the ball firmly in the seller's court — homes are selling faster and at a price much closer to the asking price."

He added: "Demand has been bolstered by record low rates, government schemes and fears that house prices are about to take-off."

Halifax forecast that prices will rise by between 4 and 8 per cent during 2014.

"Mounting signs that the economic recovery is becoming firmly established, together with a predicted decline in unemployment, should further boost consumer confidence over the coming months," said Halifax housing economist Martin Ellis.

KUWAIT — Energy subsidies are draining Kuwait's public budget, the Gulf state's finance minister said on Wednesday, as the government carries out a spending review to help avoid a budget deficit as early as this decade.

Subsidies in the major oil producer are expected to cost 5.11 billion dinars ($18.2 billion) next fiscal year to cover items like fuel and energy.

Kuwait's growth model has generated large improvements in living standards and welfare, Finance Minister Anas Al Saleh told a conference co-chaired by the International Monetary Fund (IMF).

"However, this growth model has involved many costs. The public sector wage bill is currently very high as a per centage of public spending, subsidisation of basic goods is exhausting our state budget," he said.

The IMF says Kuwait, one of the world's richest countries per capita, could have a budget deficit as early as 2017 if it keeps spending at the current rate. Kuwait estimates this could happen by around 2021. It has posted a budget surplus for at least the past 15 years, according to latest available data.

Policy makers have intensified calls for economic reform, but any changes are likely to face resistance from the elected parliament and prove unpopular in a country which provides a cradle-to-grave welfare system for its citizens.

Analysts say extensive social spending programmes are one of the reasons why Gulf Arab states such as Kuwait, which has no income tax, have been shielded from the kind of Arab Spring unrest seen elsewhere in the region.

Thanks to subsidies it costs as little as 5.2 dinars ($18.40) to fill an 80-litre petrol tank. Electricity costs just 2 fils (less than 1 US cent) per kilowatt hour, a fraction of what it costs to produce.

Results of the subsidies review are expected this year. Kuwaiti newspapers have reported that the government is considering lifting subsidies for expatriates, who make up two-thirds of the population. Saleh told reporters on Tuesday that nothing had been decided yet.

He also told the conference that Gulf Arab countries need to reduce their reliance on oil for state revenues. Crude income accounts for more than 90 per cent of Kuwait's government revenues.

"You will see the cost for producing oil becomes higher and higher now. Really you cannot depend on oil forever, this is becoming ever clear," IMF Deputy Managing Director Min Zhu told reporters on the sidelines of the conference.

Gulf policy makers had started to realise this after seeing changes in the global oil supply structure, demand and costs, Zhu said. "They realised then they cannot rely on oil forever."

Energy subsidies in Kuwait account for 6 per cent of the gross domestic product (GDP and this is too big, he said.

"If you say you need a sustainable fiscal account, the first thing you want to cut is energy subsidies," he added.

Money saved on subsidies can be used on social expenditure, such as healthcare and education, he said, adding that per dollar spending on such areas was much more productive than on subsidies, which did not always reach the people in need.

"This is the area we talk to many authorities in the region [about]. I can tell you, it was not an easy issue before but now people are open to talk about it," Zhu said.