NEWS FROM THE UAE
SOURCE : THE NATIONAL

One in 10 residents have lost their jobs

UAE - JULY 12: One in 10 people in the UAE say they have lost their jobs in the past six months, according to a poll conducted for The National.

Almost half say their companies have trimmed their workforce and a quarter say colleagues have been asked to take unpaid leave.

In the second in a series of surveys by YouGov, the international research organisation, 821 people were asked about the impact of the recession on their lives.

Because of the law requiring non-GCC residents to leave the country within a month of job loss, the real total figure is almost certainly higher that one in 10.

Almost two thirds said close friends or members of their family had lost their jobs.

However, of those who had lost their jobs more than half – 58 per cent – were planning to stay in the UAE and look for another job. A third of the unemployed did plan to leave: 20 per cent were heading back to their home country, six per cent were looking for work in another GCC country and seven per cent were hoping to relocate elsewhere abroad. Eight per cent planned to stay in the UAE and set up their own company.

By a wide margin, the hardest-hit sectors were construction and property, in which 44 per cent and 41 per cent of those questioned knew someone who had lost their job.

Of those still in work, 60 per cent said they were considering relocating to another country.

However, less than a third said the recession had caused them to accelerate their plans to leave the UAE.

More than two thirds (68 per cent) said they were very nervous about their job security, a proportion that fell to 42 per cent among Emiratis.

This concern was shared by men and women of all nationalities and across all age groups, but manifested itself most strongly among Arab expatriates, three-quarters of whom feared for their jobs.

Of those in work, 88 per cent expected their salary not to increase as much this year as it did last; 59 per cent said their companies had frozen pay in the past six months. Worst hit in this regard were Westerners (68 per cent), Arab expatriates (62 per cent) and Asians (59 per cent). At 42 per cent, Emiratis were least affected.

Almost 90 per cent of all those surveyed say they felt there was a lack of transparency in the UAE about the current financial situation, a concern felt most widely among westerners (97 per cent).

YouGov polled 821 UAE residents between July 1 and July 7.

Belt-tightening is order of the day

Abu Dhabi - JULY 12: Belt-tightening is the order of the day in the Emirates, according to the YouGov survey, as holidays, fine dining and big-ticket items fall victim to the downturn.

More than 60 per cent of people polled have either cancelled or are considering postponing or cancelling their next holiday, with a similar proportion planning to spend their break in or near the UAE.

Three-quarters of respondents are eating out less frequently – with a near-identical number, consequently, socialising more at home. A similar proportion say they are visiting the malls less often to avoid unnecessary spending, with almost 90 per cent saying they are spending money more cautiously in general.

For close to 85 per cent of respondents, grocery shopping has been stripped of all non-essentials while large purchases – such as cars and home cinema systems – have been put on hold.

Three-quarters of those who are planning to buy a big-ticket item, such as a laptop or car, will be opting for a model less expensive than they had hoped for, while 85 per cent say they have become more susceptible to special offers and price promotions in shops.

Almost 70 per cent of those questioned were in full-time employment, seven per cent were self-employed and six per cent were out of work. Of the 654 still working, more than two thirds are in middle management or executive roles.

The survey also provides a snapshot of the nature of the jobs market in the UAE, where twice as many of those in work are employed in the construction industry (14 per cent of the total) as in any other sector, with the rest scattered fairly evenly across a range of industries, predominantly IT (eight per cent), banking and finance, advertising, PR and media (each seven per cent) and education, tourism and retail (six per cent). Five per cent work in property and the oil, gas and energy sector, with a further four per cent in health care.

Three-quarters of those surveyed are renting the homes they live in. Although 20 per cent report their rent has fallen since last year, 40 per cent say it is the same and 20 per cent say it has risen.

There are marked difference among the emirates; only seven per cent report a decrease in Abu Dhabi, against more than three times as many in Dubai (22 per cent), Sharjah (22 per cent) and the northern Emirates, where 31 per cent say their rents have fallen.

Worn tyres are still on sale despite risk of fines

ABU DHABI - JULY 12: Worn and dangerous tyres are still openly on sale in the capital, despite a recent police campaign to fine drivers whose tyres are not roadworthy.

In its own investigation, The National confirmed that used, substandard tyres could be purchased easily. In Musaffah, Abu Dhabi’s industrial zone, eight out of 10 tyre merchants visited were offering used tyres for sale.

The findings supported a study released recently by the Ministry of Interior that found a “growing industry of second hand tyres” in Musaffah.

The police found that lorry drivers, particularly, showed a tendency to buy secondhand tyres, which can cost around a quarter of the price of new ones.

“Tougher measures are essential to undermine this growing industry,” the ministry said at the time.

In the past two weeks, Abu Dhabi Police have confiscated some 2,750 light vehicles with worn-out tyres.

Vehicles not meeting tyre safety standards can be confiscated for a week. Owners face fines of Dh200 (US$55) for small vehicles and Dh500 for heavy vehicles in addition to six black points.

Accidents caused by blowouts caused four deaths and seven serious injuries during the first half of this year, according to police.

Col Hamad Adil al Shamsi, head of the Abu Dhabi Police traffic department, said the police were stepping up their field inspections on used tyres, awareness programmes and monitoring of tyre shops.

Last year, 13 people died and 16 were severely injured because of blowouts, which accounted for three per cent of the total number of road accidents.

“The profit in selling used tyres is greater than that of selling new ones,” said Hesham Romayaeh of Al Raly Electronic Wheel Balance. “When someone buys new tyres, they often leave the used ones behind not caring what happens to them or where they go.”

Mr Romayaeh pointed to a stack of used tyres outside his store. “That tyre stack there has some tyres in it that can be resold, but since I don’t deal in used tyres, they serve no purpose for me. In fact, I pay two dirhams per tyre to have them picked up every Thursday and destroyed, as is required by law.”

He does not sell second-hand tyres. “Used tyres are unpredictable,” he said. “If I sell a used tyre to someone and he suffers a tyre blowout and gets injured or killed, the responsibility could fall on my shoulders.”

He said many used tyres remained under the manufacturer’s warranty so long as the tread wear limit had not been exceeded.

However, the manner in which they are treated before and after being removed from the original vehicle could lead to severe repercussions for those who purchase them next.

“If you leave tyres in the sun for a prolonged period of time, they begin to develop microscopic cracks and they become deformed, which diminishes their integrity and roadworthiness,” he said. “To the average person, the tyres may look fine and operate for a while but at any moment they can blow out with tragic consequences.”

Unlike in Saudi Arabia, where merchants found selling used tyres are fined 10,000 riyals (Dh9,800), there are no clear legal guidelines on the selling of used tyres in the UAE, according to the traffic and licensing department of the Abu Dhabi Police. But the sale of substandard tyres is clearly against the law.

“Selling used tyres that are damaged or do not meet the minimum standards of roadworthiness is illegal,” said Col Mohammad Mayoof al Ketbi, director of the traffic and licensing department. “Anyone found operating a vehicle with tyres that are in a poor condition faces a fine from the traffic police.

“When someone brings in their vehicle for inspection, the condition of the tyres is one of the factors that determines whether a vehicle passes the inspection or not.”

Lt Col Ahmad al Shehhi, director of the capital’s traffic police, called on authorities to enforce monitoring of importers of tyres and of factories where tyres are repaired and sold again to reduce the amount of poor quality tyres on the market.

He said while Abu Dhabi Municipality’s consumer goods inspectors were responsible for monitoring the quality of tyres sold throughout the emirate, the purchaser paid the potentially fatal price should they be substandard.

Hassan al Kathiri, an engineer expert in consumer protection quoted by the ministry, advised merchants to pay attention to the way they store their tyres.

“Storing tyres outside shops in times of hot weather would decrease their quality and effectiveness,” he said.

“A lot of consumers are deceived by recent dates shown on tyres without being aware of the conditions under which those tyres were stored.”

Mr Romayaek conceded that people with low incomes were naturally drawn to used-tyre merchants.

“Many people prefer to buy used tyres as they are cheaper than the new ones,” he said.

“Those of limited income cannot afford to spend between Dh250 to Dh1,000 for a single new tyre when they can get four used tyres for less than the price of one. Generally, the cheaper a used tyre is the worse condition it will be in.”

At one Musaffah store, four used tyres that can fit a Honda Civic or other compact car were stacked neatly in one corner.

The salesman there was asking Dh280 for the set of four where a single new tyre of the same size and brand would cost Dh220.

“These have been used for only three months,” he explained.

The tyres he had for sale were worn down, and scuff marks could be seen along the tyre wall indicating that they had probably been in use for much longer. When the diminishing tread was pointed out to the salesman he said, “They will last you a few months. Don’t worry, I will fit them on the car for you at no charge.”

The National purchased one of the four tyres for Dh50. At the traffic and licensing department’s motor vehicle inspection station, Mohammed al Katheri inspected the tyre and said it was not roadworthy.

“This tyre, although manufactured less than six months ago, has been through a great deal of abuse and appears to have been involved in an accident,” he said. “The tread on it is worn and one side of the tyre is almost entirely rubbed away. It would be very dangerous to place this tyre on a vehicle.”

At Al Faraj Tyre Centre, used tyres were not available. “No one but the person who had the tyres before really knows their history,” said Eisa Mohammed, the manager.

“Many tyres will form bubbles and others will continuously leak air. This leads to dissatisfied customers.”

Mr Romayaeh said that those who sold used tyres were playing with people’s lives and violating the terms of their business licence.

“In Abu Dhabi, the municipality issues commercial licences for tyre stores,” he said.

“The licence says that the store can only sell new tyres and repair old tyres.

“The permit does not allow for the sale of used tyres, but it goes on because no one checks.”

UAE shop rents climb as retail sales fall

UAE - JULY 12: Retailers in the UAE say they are struggling to survive as their rents rise up to 20 per cent, at a time when residential rates are decreasing and shoppers are staying at home.

Duncan McLellan, the general manager of Dubai Holding Group, which holds the local franchise for brands such as Zara, said turnover has fallen by as much as 35 per cent but mall rents, a retailer’s biggest expense, have risen between 5 per cent and 20 per cent upon renewal.

“We’re seeing quite significant decreases in our sales,” Mr McLellan said. “While everybody is trying to be more tight on their budgets, their staffing, salary increases – all of these areas which you can control – the one area you can’t control is your rent.”

A survey by the property consultancy CB Richard Ellis (CBRE) this month showed that retail rents in the first quarter fell in Dubai and Abu Dhabi for the first time in at least 10 years.

Shopping centre rents fell 10 per cent in Dubai to Dh450 (US$122.51) a square foot, while rents in Abu Dhabi were static at Dh371 a sq ft. High street rents fell in the first quarter, year on year, by 11 per cent in Dubai to Dh400 a sq ft, and by 3.5 per cent in Abu Dhabi to Dh280 a sq ft.

Mr McLellan said that while sales in Abu Dhabi had stayed relatively stable, sales in Dubai had taken a major hit. Yet, many retailers were still having their rents raised and were paying between 15 and 25 per cent of their sales towards rent, he added, more than the general standard of between 10 and 15 per cent.

In some cases in newer, incomplete developments, retailers were spending between 35 and 75 per cent of their sales revenues on rent, Mr McLellan said.

Keith Flanagan, the general manager of Al Ghurair Retail, which holds the local franchise for brands such as Springfield, said rents have risen between 5 and 20 per cent upon renewal. Closing these stores could lead to bigger losses, because of the capital investment in inventory and building, Mr Flanagan said.

Marwan Eskandrani, the business development manager in the GCC for Kamal Osman Jamjoom Group, which has brands such as Mikyajy, said rents could be renewed for one year at the regulated 5 per cent rent increase.
But Mr Eskandrani said that without a guaranteed renewal after that time, retailers were at risk of losing the money they put into the store.

Mr Flanagan said sales had dropped by as much as 35 per cent in the first half of this year, especially in shopping centres, the tenant retailers of which have lost visitors to the 1.12 million square metre Dubai Mall.
If landlords did not reduce retail rents in line with global trends, shop closures would increase, he said.

As more and more retailers pulled out, it was less and less attractive for shoppers to go to the mall, he said. “It’s not good for the retailers that are still locked in to those malls and can’t get out.”

However, Mark Morris-Jones, CBRE’s senior director for retail and industrial property in MENA, said rates that were agreed to five or 10 years ago might be lower than the current market rate and need to be increased.

“There are rents under market, and rents over market,” Mr Morris-Jones said. “Historical rents, where they are low, they will increase.”

He said the cost of a new store had dropped from a year ago, when the economic downturn had not yet reached the Emirates. However, there were variations depending on the location and conditions in previous lease agreements.

Majid Al Futtaim Shopping Malls, the developer behind Mall of the Emirates, has said it did not plan to reduce rents at its malls.

Shahram Shamsaee, the developer’s senior vice president of retail, said sales were strong in the region compared with other economies, and rent rises might be required for contracts signed three or four years ago, which saw only minimal government-regulated increases in the retail sales boom. At MAF’s malls, retailers were spending 7 per cent of sales on rent, he said.

The developer of Dubai Mall, Emaar Malls Group, has said it would not amend its lease agreements.
Craig Plumb, the head of research for Jones Lang LaSalle MENA, said it was only a matter of time before mall developers adjusted the rents.

“It’s logical it will happen but maybe it doesn’t happen overnight,” Mr Plumb said. “It takes a while for the market to adjust to the changing balance between the tenant and the owner, but once you see some vacancies in some of the centres, that’s obviously going to detract from their ability to offer an attractive retail environment.

“Therefore the owners will start to do more and support their existing tenants.”

Three men held in fake note scam

ABU DHABI - JULY 12: Three Arab men have been arrested on suspicion of trying to use forged Dh500 notes to buy cheap items such as phone top-up cards, then pocketing the real notes given as change, according to Abu Dhabi Police.

Police said one suspect, who was arrested on the spot, later confessed to possessing the forged notes. The man, identified as SHD, allegedly bought 45 fake Dh500 notes from another man, identified as HAS, who sold them through a middleman, MMT, for between Dh100 and Dh150 each.

SHD had already cashed 10 notes by buying cheap items in several stores and had eight in his possession when he was arrested, Col al Sharifi said.

Police said the second suspect admitted having 48 counterfeit notes, which he claimed to have bought from an Arab man no longer in the country.