Thursday, August 31, 2006

Leasing Hotels with Farook

Farook called me Tuesday and said it was very important, so I went to his office.

When I arrived, he told me he had a Brit who wanted a hotel. Since hotels must be owned by Citizens, the ex-pat who wants one has to lease it (or sub-lease it). Farook was hoping to lease a hotel for about €2,500,000, though (he said) the owner only wanted €2,000,000, so he would have a quick profit of €500,000.

He asked me, ‘Should I show him three hotels, or six?’


He told his secretaries (he has about five this week), ‘Take this down.’ He had a loose-leaf binder filled with Arabic, which he was trying to translate in English.

Then he said, ‘It’s getting late, we finish tomorrow, now we eat dinner.’ So we left his office around 10 p.m. for pizza. He dropped me at home around 2:00 a.m., and said I could really help him with the Brit. ‘We meet tomorrow 7:00 my office.’

He called Wednesday at 1:00 p.m. to say the meeting had been moved to 5:00, but I was in another meeting, so 7:00 it was.

Farook met me and took me to a hotel where we were to meet the Brit. With Farook was a desk clerk from the hotel where the Brit was staying, but the clerk didn’t want to be seen pestering guests at his own hotel, so we were waiting for the Brit at another hotel. It seems the Brit had approached the clerk about obtaining a hotel in Dubai, the clerk had called Farook, and here we all were. Except for the Brit.

By 8:00, with no Brit, we called his hotel, and found him sleeping. He said he’d come in 30 minutes. By 8:30, the clerk said we should go to the hotel where the Brit was staying. With the traffic, we arrived at 9:00. Farook and I went in through the guest entrance, the clerk went in through the staff entrance, and reappeared a few minutes later in uniform.

After another half hour, the Brit met us in the lobby and led us up to his suite. The business room of the suite, where we sat, was a posh set-up with a computer, fax, large plasma TV, and boardroom table.

Farook had prepared specification for six hotels. Typical was: 5-star hotel, 24 suites, 39 regular rooms, total 287 guest rooms. Not one of the six specifications added up.

The Brit said he was really interested in a nightclub.

‘Haram. Haram. The UAE will ban all nightclubs within one year and return to true Islam. Nightclub very bad. I have hospitals, schools, lots of properties, but you must not buy nightclub. No, you must get freehold. Many people buy in Meadows, Springs, but too remote, price will fall by 90% within one year. I here 30 years, I certain price will fall 90%. You must buy in Bur Dubai. I have property for sale on Bank Street that will go up 25% a year.’

Farook got more and more excited. He took a sheet of paper and began drawing pictures of the property on Bank Street, with lots of Arablish in the margins.

By this point, it was clear that Farook does not have a single hotel available: that was just an opening to convince a Brit, new to the UAE, to part with his cash. If the Brit made a deposit on land off Bank Street, the deposit would be non-refundable.

Only the Brit has been in Dubai for 20 years, and knows there is no property available for sale to ex-pats anywhere along Bank Street.

So the Brit thanked us for coming, and we departed. Farook was a bit upset that I hadn’t convinced the Brit to ‘buy’ his vacant lot on Bank Street. Or, for that matter, one of the bridges across the Creek.

Wednesday, August 30, 2006

Goodbye, Modesh

Secret Dubai should be happy. By this time Saturday, all the Modesh figures should be lying down waiting for the Official Modesh Removal Trucks.

By the end of the week, all the Modesh Figures should be gone until next summer.

Monday, August 28, 2006

DFM crosses 450 (in the right direction)

Today, the DFM is up sharply, crossing 450, promising continued gains for the short to medium term.

But also today, Secret Dubai linked to the May, 2005 article by Matein Khalid
which pointed out that the Dubai Marina was mostly deserted.

Since the Dubai Marina is (more or less) beachfront, Mr. Khalid said it should sell for about four times as much as inland developments such as The Meadows, but was selling for eight times, and should therefore fall by about 50% sometime in 2007.

The impact on Emaar and the DFM is not clear. Certainly, if the Marina drops 50%, some of the panic will spill over to other developments, but much of Emaar’s developments are outside the Marina.

As the article says, there are a lot of dodgy developers; however, failure of these developers could impact Emaar’s share price in either direction, driving a general decline, or a flight to quality.

But failure by dodgy developers will have an unambiguous impact on any mortgage lenders who financed their developments, and these comprise a significant segment of the DFM.

The article also counted available residences in Dubai, and estimated that there were about 30% more people who wanted a residence in 2005 than there were available residences; however, with developments in the pipeline for 2007 that number 133% of the current residential properties, Mr. Khalid couldn’t see any way to fill them in 2007.

Assuming most investors who purchased properties planned to sell before completion, and assuming there will be an insufficient number of people willing to purchase from those investors, a major panic could easily ensue in the next 15 months.

For investors who did not purchase with 10% down in order to sell at a premium before the next instalment was due, current rent controls provide some cushion:

In summer, 2005, the Emaar developments in the Springs and Meadows were renting for about 60% of current rents; honest landlords, however, cannot raise rents on continuing tenants more than 15%. Hence, a drop of as much as 25% in rents would not affect these landlords, who would be able to increase rents by 4% next year.

And rents at 2005 levels were enough to drive longer-term investors to buy Emaar properties at prices that provided Emaar with a good profit. A 25% drop in rents from current levels would still leave rents 20% higher than in 2005, which would still be enough to support Emaar stock prices at above current levels.

One further factor: the increase in residential properties by 133% in 2007 is based on stated completion dates, something which never happens in this part of the world.

Which would postpone the predicted property collapse until 2008 or 2009.

(Caution: Stock Markets tend to drop about six months before any foreseen disaster, and a property collapse is rather clearly forseen, but the exact date remains murky.)

Sunday, August 27, 2006

8% Inflation?

The UAE measures inflation in about the same way as the commonly accepted economic method. Start by listing the percentage of income spent on various items, then compute the weighted average. For example, suppose a family only spends on two things, dividing their spending 50/50. One item increases by 10%, the other by 20%, then inflation is 15%. If the spending was 75/25, inflation would be 12.5%. This method tends to understate inflation.

Three years ago, I spent about 20% on rent. So, if rent goes up 40% but other things are about the same, that’s an 8% increase overall. Only, after the rises in rent, I now spend more than 50% on rent, but the official formula, used worldwide, still puts inflation at 8%, not 20%.

Actually, inflation in Dubai has been helped by the 15% rent cap, which my landlord has honoured. With rent now running 50% of my budget, that’s 7.5% inflation from rent, and 0.5% for everything else. Which feels about right.

Wednesday, August 23, 2006

DFM rising strongly, but for how long?

The summer doldrums for the DFM seem to be quite over, with the markets going up on much larger volumes than we’ve seen since the beginning of the summer vacation season (temperatures did not break 40 today).

Again, the problem is that the DFM is mostly based on property: Emaar and the finance companies.

Emaar has many projects outside the UAE, but the Saudi Project (e.g.) is part of a Saudi IPO, so it is not clear if any of the profits will accrue to the Dubai shares.

It is clear that the profits on Emaar’s Dubai projects will provide returns to Emaar's DFM shareholders, but will these profits continue?

Basically, we have a commenter on this blog reporting that, from his flat, he can see that most of the flats around him are empty, owned by investors who have been hoping to sell at a profit but have been unable to find buyers; and we have predictions that rents and prices will fall drastically in 2007, with, presumably, an adverse impact for Emaar and the home finance companies.

However, Dubai has a 15% cap on rental increases. Two properties with which I am familiar are renting to new tenants at rates more than 25% above what they are allowed to charge existing tenants. Even should rents decline by 10%, new tenants will benefit, but existing tenants will face another year of 15% increases to bring their rents up to the new, lower levels.

Dubai has had rent declines of 10% before, but not major crashes in rental prices; however, Saudi did see declines of more than 50% (when oil was less than $10 per barrel), and this could happen in Dubai, though, given current conditions, the immediate prospect of such drastic declines seems quite remote.

Properties from some developers other than Emaar, Nakheel, and Dubai Holding are said to be selling at discounts rather than premiums, but this would not necessarily affect Emaar.

Oil is also due to fall in 2007, but it is not clear how much of the demand for Dubai is from Dubai’s oil-rich neighbours looking for a vacation spot where they can play; Europeans, South Asians, and East Asians are coming to Dubai, and their disposable incomes will go up if oil declines.

So, for the short to medium term investor, it does look like a fairly good time to get into the DFM.

Longer term is a much murkier prospect, but that’s because prediction is always difficult if it’s with respect to the future.

Tuesday, August 22, 2006

Sonya (Conclusion?)

Sonya’s husband bought her a ticket for today, and took her to the consulate for an Emergency Replacement Passport. Today, he will drop her at the airport and she will try to fly home.

Of course, her original passport is with the Sharjah Police, who held it after she was arrested for possessing beer in Sharjah.

Sonya and her husband are hoping that, given the alternative of paying for Sonya’s incarceration and ticket, she will be allowed to depart with nothing more than a ban stamped in her passport.

Unfortunately, this is all I know, and probably all I will ever know. When Sonya’s husband gets depressed, he refuses to answer his mobile, and, whether Sonya gets on the plane, or gets returned to Sharjah, I suspect he will be depressed.

And if, after a month or so, he finally answers his mobile, I don’t think he’ll tell me what really happened.

Sunday, August 20, 2006

Faysel (Last?)

Faysel has always told me he was a gangsta. Unlike a certain talk-show hostess, who presented a middle-class novelist as a gangsta, I was dubious. Today, Faysel convinced me of his bona fides.

It started with a date. I am no spring chicken, and I had invited a woman my own age to lunch. The New York Times reports that women my age can’t find a man who will go out on a date with them. That is because, by my age, a man must be a CEO who is taller than 185 cm, which I’m not (on both counts). So, thinking things over, she cancelled, and I was upset. So, when Faysel invited me to lunch, I accepted.

There is an old story about a minor car wreck. The first driver says, ‘Look, it wasn’t anyone’s fault, so let’s both agree to that.’ The second driver agrees. The first driver says, ‘Here, I have a little whiskey, and we’re both shaken up, please have a glass’ and he pours out two glasses. ‘Bottoms up,’ says the first driver, but, as the second driver downs his glass, the first driver pours his out. ‘Why did you pour out your glass?’ asks the second driver. ‘I think I’ll wait until after the police breathalyse us before I have a drink.’

Faysel had been desperate, and I had loaned him a little money. Today, he was explaining salesmanship to me: ‘You have to convince your customer. I told you I’d repay you in a day or two, when I knew it would be two or three months.’ I replied, ‘I thought that was the case, but I don’t understand why you didn’t tell me the truth. We're friends. Why did you have to lie to me?’

Faysel took me to lunch, and then delayed taking me home. After six hours, at around 11:00 p.m., he offered me a beer as ‘compensation.’ I tried to decline, but it looked like I would have to accept in order to get home. Finally, after I'd had the beer, Faysel offered me a lift home. It was around midnight.

He actually drove me to the industrial area of Sharjah and said he was going to kill me, a) for calling him a liar, and b) so he wouldn’t have to repay me. He had some friends with him, and thought they would help, but, instead, they pulled him off me and advised me to run. I ran.

While waiting for a taxi, Faysel caught up with me and starting trying to kill me a second time. His friends arrived and saved me once again. Again I ran, and this time found a taxi and said, ‘Dubai,’ and off we went.

The taxi driver said, ‘You look tired.’

‘Someone just tried to kill me.’ The taxi driver looked and saw the blood. ‘Let’s call the police,’ he advised.

But, like the second driver in the car wreck, I knew I couldn’t call the Sharjah police, so I said, ‘Just get me to Dubai.’ Which he did.

Friday, August 18, 2006

Home Delivery

One problem with home-delivered food where I come from is that it is usually cold by the time it arrives, even if delivered inside insulated thermal containers.

I thought of this today, as I saw a delivery person carrying three uninsulated cardboard boxes.

This being Dubai, he had found nowhere to park except on the far side of the car park from his destination. And he had ended up parking illegally on the pavement (the other pedestrian pavements being already occupied with other, illegally parked cars).

Fortunately for his customers, it is August in Dubai. Even if the boxes had been sitting on the front seat of the delivery van in the direct path of the A/C, the delivery person had to carry them all the way across the car park to his destination.

So I’m sure the food was piping hot when it was delivered.

Thursday, August 17, 2006

Dubai Metro Progress

I was at the site where the main station for the Dubai Metro will be, what was once Union Square Park. Perhaps I just didn’t notice it before, but there’s a big sign, which, as of today, said 1,1 1 8 days until completion.

I will go back sometime next week to see if the numbers have changed.

Pizza with Farook

Farook called today, Wednesday, around 3:30 p.m. and said he wanted me to go with him to look at a pizza place. The new pizza place is located in The Greens. It is called Hurrah Pizza, and the owner, Bahram, is hoping the restaurant will grow into a large chain.

I told Farook I’d go with him on Saturday, since I was supposed to help Phillip this evening (though I hadn’t told Phillip when). Farook said, ‘OK.’ Half an hour later, he said, ‘I’m coming. Please be waiting outside.’ I tried telling Farook, ‘I have an appointment at 6:00. I have to be back at 6:00. Couldn’t we do this Saturday?’ No luck.

‘I have you back before 6. Maybe before 5. This only take few minutes.’ Out I went.

It is common here for new restaurants to put down a small deposit; rent doesn’t start until the restaurant opens.

Bahram, however, agreed to pay rent during construction. This being the Middle East, on many days, the contractors didn’t bother to show up, so progress has been slow, but the rent still has to be paid. He also has 10 workers on staff, so his cash burn rate must be high.

The place I saw was very nice, but tiny, with almost no space for customers. Bahram intends that most of his business will be take-out or home delivery.

He has prepared a lot of promotional materials to distribute as soon as the restaurant opens, all with his 800-number, ‘800-Hurrah’ printed in large letters. Only there are no 800-numbers available where he is located.

In the Greens development, Etisalat is not the telephone service provider. The provider for the Greens charged Bahram for an 800-number but, so far, hasn’t delivered, and won’t have the ability to deliver for some time.

Farook promised that, using his Citizen’s attire (though he isn’t really a Citizen) he will be able to intimidate the phone company into providing an 800-number. Bahram was very grateful, and asked Farook to come by. Somehow, I got invited to tag along.

When Farook and I arrived, Bahram said he wanted a computer system that would use Called-ID to give the address and order history of the caller, but, when he asked about such a system, he was told that this has never been done. Which seems strange, since I’ve seen such systems working.

Bahram had ordered Caller-ID for the restaurant phone, but it wasn’t working, which would have made life difficult for the computer program he wanted, if he had been able to buy it.

Bahram insisted on giving us free pizza, partly to repay Farook, and partly so that we could see that he had developed a better pizza, and I have to agree that it was a nice pizza. Prices are normal for Dubai, about €5 for a small pizza or about €10 for a large. Farook told Bahram that he should double the price of the pizza.

Bahram invited me to come back regularly, but it’s a long way from the part of Dubai where I live.

I kept saying I had to be getting back, but Farook kept talking on the phone, promising to provide visas to Australia and/or Canada, and was setting up appointments for this service. But finally, he drove me back (with a few detours).

When I finally arrived home at 7:00 p.m., I called Phillip, but he said it was too late, so we re-scheduled.

To pay for my pizza, I looked at the instructions that came with my phone and called Bahram. I explained that, if he would dial 182, 2, 3, that would start the Caller-ID service. He called, and the automated system promised Caller-ID within 24 hours.

But whether Farook will deliver on the 800-number remains to be seen.

Tuesday, August 15, 2006

Farewell to the Lodge

Back in April, The Desert Weasel reported that The Lodge was closed.

It is my sad duty to report that, in August, his report has become operative.

I went by The Lodge today, and, as I approached the entrance, a security guard came up and informed me that The Lodge was closed. I had dined there earlier this month, and the staff said that, to their knowledge, the Lodge would remain open.

Of course, it was usually empty, except during the World Cup, and then most people were watching the game and not spending much money.

So the Weasel heard that it was for sale, and assumed it was already closed.

A couple of weeks ago, The Lodge was finally sold to a Brit. Meaning, the Brit paid to take over the lease. Or just took over the lease, getting the previous tenant off the hook for the payments.

The new tenant must have an agreement that rent will not start until the official opening. So, for now, The Lodge is closed.

I assume The Lodge is closed permanently, i.e., that the new tenant will give it a new name.

And I doubt that my favourite lunch will re-appear even after the Grand Re-Opening.

Sunday, August 13, 2006

Sonya (1)

In the West, many places prohibit alcohol in public. Drinking is legally restricted to licensed bars or inside private homes, and in some Western cultures, drinking inside private homes is discouraged if any women or children are present.

In a Muslim country, one would hardly expect a more liberal attitude.

What actually happened is not clear, since Sonya and her husband give different versions.

Both agree that they were living in Sharjah, and that they had driven to Ajman, bought some beer, and brought it back to their flat in Sharjah. This is only permitted if one has a license, which they hadn’t bothered to obtain.

Sonya says that they carried the beer from the car into their flat, but some neighbour must have recognized the distinctive Ajman shopping bags, and called the police. She says that the Sharjah police arrived at her flat, noted the open cans of beer, and arrested her. ‘Where was your husband?’ I asked. ‘He was out.’

Her husband says they went out for a walk at 3:00 a.m., each holding a can of beer. Her husband saw the police and shouted, ‘Sonya, run,’ but she had already consumed several beers, so she remained and was arrested.

‘The police thought she was Russian, that’s why they stopped her,’ was her husband’s theory, though the beer can in her hand might have had more than a little to do with her arrest.

In any case, her husband got into their car and drove off.

Sonya, desperate, called him on her mobile, but he said, ‘If I come back for you, they’ll just arrest me, too.’ So he drove around all night.

The next morning, he arranged for a friend to go to the police station and bail Sonya out. She’d spent 7 hours in gaol, and was not pleased.

Her husband had given the friend some money, and the friend posted bail of about €210. He also had to deposit Sonya’s passport.

This was one year ago.

Sonya is now pregnant and desperate to leave the UAE.

Her husband says he has taken care of everything, and she will be flying home this Sunday.

But she’s heard that promise before.

Saturday, August 12, 2006

Noon-Day Break 2

There is a construction project going on right next to my flat. Until last Thursday, all work stopped promptly at 12:30 p.m. and resumed at 3:00 p.m.; however, last Thursday the cement mixer arrived, blocked one lane of the street, and sat there turning with the meter ticking. Work continued through the break in order to get the cement poured as quickly as possible.

Other days, the project has scrupulously honoured the noon break; however, the new rule that the project must provide shade for all workers is only observed for about half the workers. The project provides a wooden shade, but about half the workers are forced to sleep in the narrow band of shade on the north of a nearby building, or in the underground car parks of the neighbouring buildings. Apparently, this project has only half heard about the new rules.

Friday, August 11, 2006

Inter-Emirates Bus Station

I had to go to the Northern Emirates, so, as a confirmed pedestrian, I went to the Deira inter-Emirates bus station. The busses used to face south as they waited for passengers, so I was surprised to see that now they face north. This is a consequence of the Metro construction. Also, the Ajman busses are parked under the signs for Sharjah, and the Sharjah busses are parked under the signs for Ajman.

What this means in practice is that, upon getting into the wrong bus, the driver asks, ‘Where you going?’ and, when the passenger says where, the driver says, ‘No, that bus,’ and points at the correct vehicle.

It only costs about €1.20 for the bus to Sharjah, and about £1 for the bus to Ajman, which is much cheaper than trying to find a regular taxi (and more comfortable than trying to find an illegal, cheap taxi).

After my visit, my host offered to bring me back to Dubai, and I gratefully accepted.

This was at about 5:00 p.m.

‘Five minutes and I’ll take you home,’ he said. At 6:00 p.m., I said, ‘I think I’ll take a taxi,’ but, when I asked, the taxi demanded £10, which is outrageous, so I went back up to my friend's flat. My friend said, ‘Just five minutes and I’ll take you home.’ At 7:00 p.m., I asked another taxi, who agreed to take me for €9, which is almost reasonable, and it was getting late, so I agreed on the fare and took the taxi back to Dubai.

My friend said he finally made it to Dubai at 11:00 p.m.

Wednesday, August 09, 2006

Summer over for DFM?

After Saturday, when the DFM only traded €14.6 million, today the DFM did almost €100 million in trades, and was up sharply. Optimists have been predicting that, once people start returning from their summer holidays, they will want to buy at current levels. Yesterday and today could be the first signs that those optimists were correct.

Another view said that, while no one wants to buy following the crash, current prices are so low that no one wants to sell, either, so volume will remain low and the trend will be neutral, and the last two days only represent a small blip.

More than 60% of today's trading on the DFM was Emaar and Amlak, a property developer and a mortgage lender.

One commentator to this blog, who lives in one of the freehold properties, says that, at night, very few lights are on. This could be from the fact that most of the people rich enough to live in these properties can afford to be away from Dubai for the summer, or that the properties are by one of the more dodgy developers, and are not representative of Emaar properties. But it could mean that most of the Emaar properties, while sold, are owned by desperate investors who have been trying, unsuccessfully, to sell at a profit. If the latter scenario is true, the consequences are:
  1. continued declime of the DFM; combined with
  2. a property crash.
Right now, however, it looks like there is still a lot of demand, especially for the new, more affordable properties. Emaar has a new arrangement with the lenders so that the buyer only needs to put 5% down and starts paying upon completion. Loan payments will be less than rents in the older parts of Dubai. This offer is restricted to Citizens and professional workers employed in Dubai, a small minority of the residents. And some are concerned that Emaar needs such an arrangement, as their first properties sold out immediately, when the buyer was required to put 30% down and the full balance upon completion (though buyers could try to find morgage loans on their own). So, again, is the property market maturing (with new, more convenient, purchase arrangements), or is the property market getting desperate?

Because, for now, the property market is the DFM.

Monday, August 07, 2006

DFM Doldrums

Today, the DFM only traded about €14.6 million. Last November, a typical day was more than €450 million.

Emaar, one of the main, publicly traded property developers, and Amlak, one of the main mortgage lenders, comprised 55% of total volume.

Emaar traded about 2 million shares today, and some investors want to sell 1.6 million shares tomorrow.

If they succeed in getting their asking price, that will be a slight increase over today's last trade, but the volume on offer looks like a rather firm resistance to a big upward movement. And the highest offer to purchase Emaar consists of just 2,000 shares (although there could be a huge, invisible offer at a slightly lower price).

The level of the DFM, obviously, depends heavily on what properties Emaar will be able to sell in the UAE, and how much Amlak can make loaning buyers the money.

And Farook, a realtor, is predicting a property collapse.

Back in 1999, my apartment building had to lower rents by 10%, as it was mostly vacant. Since then, rents have more than doubled, and today there is a waiting list of prospective tenants. Will 1999 repeat?

But if my rental property is completely full, one commenter on this blog wrote that, in the freehold areas, most are empty. They were apparently purchased by investors who are just hanging on, hoping for further price increases, leaving the property vacant in order to get a better price. Of course, there are no official statistics, so there is no way of checking if the commenter is correct.

In addition, many more properties are to be completed in 2007 and 2008.

Obviously, if rents collapse, so will prices. Then Emaar may have trouble continuing its remarkable growth of profits, and the DFM will have little support.

On the other hand, if the US$70+ oil continues to bring in more 'temporary migrant' professional workers at the current rate, they will need places to live, and things could turn back up.

Sunday, August 06, 2006

Noon Break: New Regulations

Last week, I reported that the construction site next to my flat stops for the legally required noon break (12:30 - 3:00 p.m.)

There is a small awning for shade, open on three sides, and too small for all the workers to fit under, so many of them can be seen sleeping on bits of cardboard in the garages of nearby buildings, or against any wall that provides a little shade.

Today, the UAE newspapers reported this is to be banned: the workers must remain in company furnished accomodations during the break period.

When this ban is to start isn't clear: today, the narrow shady areas beside the walls of various buildings were all filled with sleeping construction workers during the mandatory break.

On the other hand, the illegal DVD sellers who have been visible for the last month were all gone.

Saturday, August 05, 2006

Support, Resistance, and the DFM

A local newspaper said the Dubai Financial Market had broken through support at 400. Round numbers tend to make headlines as the markets pass through (in either direction) but they are not support. Chartists look for points where the index keeps bouncing. In May and early June, the DFM kept bouncing back up from the 455 level, then broke through and dropped to about 416. Then 416 provided support until the beginning of August. Now support is around 393.

Resistance is the opposite, a level from the which the market bounces back down.

There is no guarantee that the market won't break through this support and continue down, or break through the resistance (now about 405) and continue up.

Support is a real phenomenon, though it's not clear chartists can really spot it or profit from it. Investors can place two kinds of orders, market orders, which will be filled at the current price, and limit orders, which can only be filled at a price not worse than the limit.

The brokers have all the limit orders entered in their order book. A large buy order (or a large combination of buy orders) at a certain price does provide support, but only the highest buy order is shown on the DFM, so one can't really see the true support for the stock.

For EMAAR, as of today, someone offered to sell 505,142 shares for 10.85, and someone else has bid to buy 156,437 shares at 10.80.

Today was a very slow day, but the volume was still over 2,000,000 shares, so the price could easily go below 10.80 (or, for that matter, rise above 10.85) tomorrow; however, the larger sell offer means the odds are slightly greater that EMAAR will go down tomorrow. If the buy bid were larger than the sell offer, we would expect the stock to go up.

If we could see the entire order book, we would have a very good idea about where the stock was heading, but no market in the world makes that information available except to market insiders.

Meanwhile, the chartists keep looking for patterns that will make them money, one way or the other. Some succeed, some don't.

Friday, August 04, 2006


When I moved into my current apartment, I found a small pool in the courtyard. Quite a few apartment and villa complexes in Dubai have swimming pools. My apartment was not too expensive when I moved in, though it was about twice as expensive as Fernando's.

Meanwhile, about a year ago, in a development of villas, a small child, allowed to play outside by himself, tragically managed to get into a swimming pool and drown.

Something had to be done. For awhile, all the swimming pools at developments by that developer were closed.

And now, a year or so later, all swimming pools are apparently required to have a lifeguard. At least a lifeguard has just appeared to supervise the pool at my apartment. He has other jobs besides lifeguard, and his seat has him sitting with his back to the pool, but at least he won't allow an unattended child into the pool area.

Which is all that is really needed.

Thursday, August 03, 2006


When I first arrived in the UAE, every Thursday I would wander around Bur Dubai, amazed at the mysterious sights, sounds, and smells of the Orient. As I wandered, I looked for inexpensive places to eat, and found a one-star hotel that offered a variety of tikkas for less than €2 (at today’s exchange rate), including a complimentary, unlimited salad bar. All the other patrons of this hotel were from the sub-continent.

One Thursday, the hotel was very crowded, and Fernando asked if he could sit at my table. I naturally said yes. Fernando seemed delighted.

‘This is so nice of you. You aren’t like other Westerners. They won’t share their table with an Indian. They are prejudiced, but you’re not.’ We continued to talk, with a great deal of flattery on Fernando’s part, until I had to leave. When the waiter came with the bill, Fernando said something in Hindi. The waiter smiled, and indicated that everything was taken care of. Fernando didn’t pay, either, and I have no idea what he’d said, but I thanked him.

As I was leaving, he said, ‘Would you please come to my home?’ I accepted the invitation, and, the following Thursday, I paid Fernando a visit.

Fernando lived in Satwa with his wife, who was obviously pregnant. His flat was a single room that barely held a bed, a chest of drawers, a single chair and a small table. On top of the chest of drawers were a few keepsakes, including an electric image of the Blessed Virgin, the electric lights substituting for the traditional candles. Just outside this bedroom they had a gas ring, a small refrigerator, and a sink.

The floor was bare cement with an inexpensive carpet covering the area around the foot of the bed, and the walls were bare cinder block with a few Christian posters.

He said the chair and table were for me, but he and his wife would sit on the floor. I insisted on sitting next to them. ‘This is so nice of you,’ he said.

Dinner was a spicy prawn dish, flavoured with cocoanut. I had never tasted anything like it. Fernando said he quite enjoyed my company, and really hoped I could come again, so I agreed to a second visit.

At the second visit, Fernando confided, ‘My employer is cheating me.’ He showed me his contract, promising €900 a month, and his paycheque for €300. He said he wished his wife could stay home, but, with the embezzlement of his salary, she had to work. I was outraged at this injustice. The second visit ended like the first, with the request that I return as soon as I could. I agreed to return the following Thursday.

On the fourth visit, Fernando explained that, due to his employer’s dishonesty, he owed quite a lot of money, and, if he could not raise it, he would go to gaol. He begged me to help him with a ‘loan,’ which he would repay in full.

And then I understood.

Fernando had seen a Westerner stupid enough to go into a hotel that catered to people from the sub-continent, and thought, with a very modest investment, he could obtain a significant return.

He had obtained his position from a friend or relative, and had agreed on a salary of €300, but had asked the friend to write that his salary was €900.

A salary of approximately €900 is required if a husband wants to bring his family to Dubai. Once here, his wife can work for a company that has no employment visas available, and there are many of those in Dubai.

I have no idea if Fernando really owed any money, but convincing me that he would be gaoled certainly aroused my sympathy.

I did not return to Fernando’s, but eventually Fernando saw me wandering about Dubai, and immediately pounced. He had a small child now, his wife was pregnant again, and he was again faced with the imminent prospect of gaol, so he was desperate. He just needed to ‘borrow’ a bit of money for a short time. Sadly, his pleas were to no avail.

And subsequent acquaintances with equally sad stories of desperation have had little luck convincing me their plights are, in fact, real.

Wednesday, August 02, 2006

Lion Tamer’s Assistant

According to today’s Gulf News:

‘Dubai’s newly formed circus requires an assistant to its experienced tamer of man-eating lions. Applicants need not have previous experience in the field, but …’

This is a real ad, that concludes:

‘To apply, please mail your CV along with a covering letter to: Mr. B Smart, …’

and gives his address.

It does not include the following, which, IMHO, should also be included:
  • Life-long employment

  • Obese applicants welcome

Tuesday, August 01, 2006

Student-Centred Education

A few years ago, I attended a presentation by an award-winning Western University about the new, student-centred education.

In the old days, the presenter explained, students who preferred the classics had to deconstruct Homer. In Greek. Even in Greece, this is something that is of no use: the Greek shipping magnates have no need to study (let alone deconstruct) a work about a navigator who took 10 years to sail from Turkey back to Greece.

On the other side of campus, science students had to study thermodynamics, which is still being taught. They showed us the before and after versions of the course.

The first video showed the old, teacher-centred style. The professor lectured: ‘Thermodynamics is very important. It applies to the heat diffusion in rockets, so they won’t blow up, and to the design of computers so the heat won’t destroy the chips.’ The professor went on to write the partial differential equations that must be solved in order to calculate heat flows. The class was bored. Some students slept through the lecture, some were sending SMS messages on their mobiles, and some were heckling the professor.

The presenter said, ‘This is wrong. Our students won’t be rocket scientists, and computer manufacture is all outsourced to East Asia. What we need are people to sell the computers. We need people people; we need team players. The last thing students need to know is how to solve partial differential equations.’

She showed us the new, student-centred approach to thermodynamics.

The video started in the classroom. The teacher entered and said, ‘We have a library with lots of texts on thermodynamics. Now, form into teams. Each team will do a project on thermodynamics. Do whatever you want. Look up what you need in the library. If you have any questions at all, you can ask me.’

[Fade. Continue inside the professor’s office.]

‘Professor, we’re stuck,’ said the leader of a team. ‘Please help us.’

‘Have you considered all the parameters?’ the professor asked the team. ‘Wow, professor, you really put your finger on our problem. That’s exactly what we were doing wrong. Now we can finish our project.’ Not only had the professor solved their difficult thermodynamics problem, she had done it without needing to know anything about thermodynamics!

Finally, we saw the project that received the highest mark: the group had taken a five-gallon plastic water bottle, spray-painted it black, and showed how it provided hot water without using any fossil fuels.

Clearly, spray-painting plastic water bottles is a valuable skill in the modern, urban world. Either it sublimates the students’ desire to spray-paint public edifices, or it trains the students to do a better, more artistic job when they do spray-paint those edifices.
The university presenting the lecture on student-centred learning has won many awards. All for having the greatest increase in the percentage of secondary school leavers from their district obtaining a university degree.