DUBAI/MILAN/PARIS: The naming of a new boss at Etihad Airways presents the Gulf carrier with an opportunity to rethink its aggressive expansion strategy after the failure of minority-owned Alitalia underlined the big barriers to global growth. Ray Gammell was appointed interim CEO this week, days after Alitalia sought bankruptcy protection with $3.3 billion of debt. He replaces veteran boss James Hogan.
Hogan’s strategy was to buy up minority stakes in myriad airlines but the struggles of that strategy, most recently with Alitalia, are emblematic of a quandary peculiar to the industry. The path to growth for airlines often lies in gaining access to rivals’ routes. Yet in the EU, which mainly operates as one nation in aviation, foreigners cannot majority-own an airline. At Alitalia, the lack of full control meant that Etihad could not deal effectively with labor problems.
Since 2011, Abu Dhabi’s state-owned Etihad has spent billions of dollars buying minority stakes from Europe to Australia as it races to catch up with regional rivals Emirates and Qatar Airways.
Alitalia was Etihad’s eighth and most high-profile bet. But the €560 million ($609 million) investment lies in tatters, placing Hogan’s wider strategy under the microscope after staff overwhelmingly rejected its latest restructuring plans. Now the future of Etihad’s other leading investment, in Air Berlin, is also in doubt as the Gulf carrier pursues a strategy review that began last year. Like Alitalia, the German carrier has made big losses and it said two weeks ago it was seeking a new partner, which could include a new investor.
An Etihad spokesman said its review was ongoing but declined to comment on how its strategy might change or the impact of Alitalia’s failure on its global plans.
But a senior source at the Gulf carrier said lessons would be learned from the Italian investment and they would play a role in shaping future strategy.
Etihad’s strategy has allowed it to cut costs by pooling items like airplane procurement while offering a larger network; it says it brings together 600 destinations and over 700 aircraft.
Hogan’s “approach to partnerships did not pan out, but a few of his principles are still valid,” said Will Horton, a senior analyst at Australian aviation consultancy CAPA.
Etihad’s efforts to grow through minority stakes have at times been compared to Swissair’s failed “Hunter” strategy of the 1990s. Swissair’s buying binge, often acquiring stakes in ailing airlines, contributed to huge losses which eventually saw it grounded in 2001 and sold to Germany’s Lufthansa in 2005.
Hogan has always rejected the comparison, saying Etihad was doing things differently to Swissair and had demonstrated it could control costs. Etihad and its rivals have demonstrated spectacular growth but are increasingly pressured by a slowing Gulf economy due to relatively low oil prices. They have chosen different strategies to sidestep the regulatory dilemma governing foreign ownership and pursue global expansion.
Qatar Airways, like many other carriers, has entered one of three global alliances. These give some access to other carriers’ traffic rights without breaking ownership rules but allow only limited control over route-planning and costs.
Dubai’s Emirates, by contrast, mainly operates alone — an approach that gives it control of over its network and costs but also means it carries all the risk. The Middle East’s largest airline reported a drop in annual profit on Thursday for the first time in five years.
As the youngest of the three major Middle Eastern carriers, 14-year-old Etihad has looked to catch up and followed a third path of buying into other airlines to expand its reach.
When Hogan rescued Alitalia in 2014 after months of negotiations, he had been encouraged by two reformist prime ministers, Enrico Letta and his successor Matteo Renzi. Letta flew to Abu Dhabi to help clinch the deal.
“When Etihad arrived in 2014, we thought this time it would finally work, that this was it,” said Alitalia pilot Stefano Di Cesare of the Fit-Cisl union. Yet, Italian industry leaders say Etihad underestimated the country’s tangled politics and chronic labor strife.
Italian executives, officials and unions said in interviews with Reuters that alienating Alitalia’s workforce was among a series of missteps that ended Etihad’s Italian dream. Many also say Etihad underestimated the blistering growth of low-cost carriers Ryanair and easyJet. Without a majority stake, Etihad’s influence was limited despite being the largest single investor on 49 percent. And despite the lure of Italy’s important tourism market, it was forced to watch Alitalia’s efficient rivals mop up the benefits.
“There is no doubt that the idea to manage the company from Abu Dhabi was a very serious mistake,” Italian Industry Minister Carlo Calenda told Parliament last week.
The Etihad spokesman said Alitalia had been in financial trouble for decades and that its investment was welcomed wholeheartedly in Italy. Etihad believed the new restructuring plan developed by Alitalia’s management would have addressed its problems, he added.
In Germany too, Etihad had seen Air Berlin, its first investment in 2011, as the door to unrestricted access in a market where it has limited traffic rights with its own planes. But that airline has seen losses widen to a record €782 million in 2016. For now, Etihad continues to provide funding. Air Berlin says Etihad has granted another loan facility of €350 million and a letter of support for at least 18 months. But industry sources say Etihad could exit Air Berlin by seeking a deal with German flag carrier Lufthansa, with which Etihad is keen to work.
Lufthansa CEO Carsten Spohr said on Friday he had held talks with Abu Dhabi about the future of Air Berlin, but that it was up to the emirate to resolve Air Berlin’s €1.2 billion debt problem, which also prevents Lufthansa buying it.
Other investments such as Air Serbia and Air Seychelles have been more successful. There, Etihad was given hands-on management control and benefited from close diplomatic ties.
Even as the carrier picks up the pieces of its European adventure, Etihad faces its own restructuring that sources close to the company say has seen near-daily redundancies.
This may also weigh on the strategic decision facing Gammell, as he takes up his interim post this week, followed in coming months by a permanent successor to Hogan.
New Etihad boss to rethink strategy after Alitalia dream fails
New Etihad boss to rethink strategy after Alitalia dream fails
Oman, India revise deal to avoid double taxation
JEDDAH: Oman and India have finalized an updated protocol to prevent double taxation and curb financial evasion related to income taxes, further bolstering their economic ties.
The agreement was signed in Muscat on Jan. 27 by Nasser bin Khamis Al-Jashmi, Chairman of Oman’s Tax Authority, and Indian Ambassador to Oman Amit Narang, as reported by Oman News Agency.
Al-Jashmi highlighted the importance of the new protocol in strengthening economic relations between the two countries, noting that the agreement is the result of ongoing efforts to enhance bilateral cooperation in the tax sector.
In December, Oman also signed a similar agreement with Tanzania to deepen their strategic partnership.
That deal aimed to foster an attractive investment climate, protect investors from double taxation, and increase transparency in financial transactions.
In October, Al-Jashmi represented Oman in signing a similar agreement with Estonia. The agreement adhered to the standard framework set by the Organization for Economic Co-operation and Development.
According to a statement from Estonia's Ministry of Foreign Affairs, the agreement was designed to provide a stable tax environment for both foreign entrepreneurs investing in Estonia and Estonian businesses expanding internationally.
The ministry emphasized that the primary goal of double taxation avoidance agreements was to foster investment between the signatory countries.
Additionally, the ministry highlighted that foreign investors value the assurance that they will not face a higher tax burden than local businesses operating in the target country.
As of October 2024, India exported $410 million worth of goods to Oman and imported $743 million, resulting in a trade deficit of $334 million, according to the Observatory of Economic Complexity.
India’s top exports to Oman included petroleum products valued at $146 million, processed minerals at $24.4 million, and basmati rice at $15 million. Iron and steel exports totaled $13.9 million, while ships, boats, and floating structures contributed $9.93 million.
On the import side, India’s purchases from Oman were led by fertilizers, totaling $118 million. Petroleum products accounted for $92.5 million, and ships, boats, and floating structures reached $77.5 million. Other commodities amounted to $45.2 million, while crude petroleum was valued at $43.5 million.
Asir region offering further $5.3bn in investment opportunities: top official
RIYADH: Saudi Arabia’s Asir region is working on securing a further SR20 billion ($5.3 billion) in private investments as part of its transformation into a year-round tourism destination, with significant projects already underway.
With 7.8 million visitors recorded in 2024, the region is rapidly approaching its formal target of 9.1 million annual tourists by the end of the decade, revealed a senior official.
In an interview with Arab News at the Real Estate Future Forum in Riyadh, Hashem Al-Dabbagh, CEO of the Asir Region Development Authority, said that private sector investments in the region have already exceeded SR7 billion ($1.87 billion).
“Aside from that SR7 billion of investments from the private sector, we also have another SR20 billion or so that we are working on, and it’s in the pipeline, but it’s not yet realized,” said Al-Dabbagh.
He added: “So hopefully, between the investments that are realized and the ones in the pipeline, we have from the private sector somewhere around SR27 billion that hopefully is going to happen in Asir.”
Al-Dabbagh noted that while some of the projects currently in the pipeline are expected to be finalized this year, others are slated for completion in 2026 or 2027, with certain long-term initiatives extending beyond 2030.
He expressed optimism about the progress of investments in Asir, noting that the region has been “moving full speed ahead” in this area.
Al-Dabbagh emphasized that the ongoing projects in Asir are primarily driven by private sector investments, while also highlighting significant initiatives led by the Public Investment Fund.
Among these, he pointed to the Alwadi project, a SR14 billion waterway development located in the heart of Abha.
The project will include commercial, cultural, residential, and agricultural spaces on both banks, all designed with pedestrians in mind and catering to both locals and visitors.
“I claim that with that investment, Abha is going to be the most livable and beautiful city in the Arab world as a whole,” Al-Dabbagh added.
He also highlighted the Al Soudah Development Project, another mega initiative with an investment of SR14 billion.
“This is in the forest-covered mountains of Asir, where there’s going to be, again, development of hotels and residences, high-end for the most part, in six different areas within Al Soudah,” he said.
Both projects are expected to remain under development through 2030.
Al-Dabbagh noted that smaller-scale projects are also in the pipeline which some slated for completion by 2025.
He further discussed the role of the Asir Investment Co. in spearheading mega developments across the region.
“AIC has a number of iconic projects in a number of areas, not just within Abha, but in other regions on the coast, in the north, on the mountain ridge, and of course, in Abha as well,” he said, adding that these projects “are going to be announced formally in the next months, in 2025.”
Al-Dabbagh highlighted that the region’s strategy is focused on transforming Asir into a year-round destination for visitors.
“The formal target for Asir is 9.1 million annual visitors by the year 2030. I expect this target to be raised,” he said, explaining that the unofficial number of visitors to Asir in 2024 already neared 7.8 million.
Additionally, he pointed to the broader national tourism target for Saudi Arabia, which was recently increased from 100 million to 150 million visitors, suggesting that regional goals, including Asir’s, are likely to be adjusted upward.
“Without a doubt, this is going to have an impact on the economic development in the region and on the number of jobs,” Al-Dabbagh added.
He noted that Asir has traditionally been an exporter of workforce to other parts of Saudi Arabia, such as Riyadh, Jeddah, and Eastern Province, due to limited job opportunities in the region.
However, he emphasized that the tide is turning. “Now with everything that is happening in Asir, we find that there is a reverse migration, if you like,” he said.
Al-Dabbagh added that he has observed this shift firsthand within the Asir Development Authority and through reports from larger investment projects, as more local residents are choosing to return to Asir to work on the new developments.
He noted that Saudi Arabia only opened its doors to international tourism a few years ago, meaning that due to the country’s prior restrictions, “the vast, vast majority” of tourists in Asir were domestic visitors, along with some travelers from Gulf countries, he said.
Al-Dabbagh added that, while the majority of tourists to Asir are expected to be from Saudi and the Gulf region, the proportion of international visitors is anticipated to grow significantly — from around 1 percent to approximately 10 percent, even as the total number continues to rise.
Closing Bell: Saudi main index sheds, Nomu gains
RIYADH: Saudi Arabia’s Tadawul All Share Index dropped on Monday, losing by 13.27 points, or 0.11 percent, to close at 12,372.89.
The total trading turnover of the benchmark index was SR7.1 billion ($1.9 billion), as 91 of the listed stocks advanced, while 147 retreated.
The MSCI Tadawul Index also dropped by 6.80 points, or 0.44 percent, to close at 1,538.59.
The Kingdom’s parallel market Nomu increased, gaining 118 points, or 0.38 percent, to close at 31,014.29. This comes as 40 of the listed stocks advanced while 45 retreated.
Jabal Omar Development Co. was the best-performing stock of the day, with its share price surging by 10 percent to SR25.85.
Other top performers included Knowledge Economic City, which saw its share price rise by 9.89 percent to SR16.66, and Makkah Construction and Development Co., which saw a 9.84 percent increase to SR106.
Taiba Investments Co. and Jadwa REIT Al Haramain Fund also saw a positive change, with their share prices surging by 9.81 percent and 5.78 percent to SR51.50 and SR6.59, respectively.
Raoom Trading Co. saw the steepest decline of the day, with its share price easing 5.18 percent to close at SR183.
Nice One Beauty Digital Marketing Co. and Al-Baha Investment and Development Co. recorded declines, with their shares slipping 4.92 percent and 4.26 percent to SR56 and SR0.45, respectively.
ARTEX Industrial Investment Co. also faced a loss in today’s session, with its share price dipping 4.06 percent to SR16.08 while Lumi Rental Co. saw a 4.01 percent drop to settle at SR76.60.
On Nomu, International Human Resources Co. saw the highest gain, with a 10.95 percent increase, reaching SR5.98.
Knowledge Tower Trading Co. followed with a 9.28 percent increase to SR17.42, while Enma AlRawabi Co. reached SR24.44 — a 6.26 percent growth.
National Building and Marketing Co. and AME Co. for Medical Supplies were also among the top performers, with 5.44 percent and 5.14 percent increases to reach SR189.80 and SR122.80, respectively.
Mulkia Investment Co. was Nomu’s worst performer of the day, witnessing a 9.86 percent decline to settle at SR33.35.
Albattal Factory for Chemical Industries Co. and Arabian Food and Dairy Factories Co. also saw declines of 6.25 and 5.91 percent to settle at SR60 and SR94, respectively.
Academy of Learning Co. and Leaf Global Environmental Services Co. saw drops of 5.71 and 5.08 percent to settle at SR9.58 and SR112.
Qatar official calls for GCC real estate boom to drive sustainable growth beyond oil
RIYADH: Oil-dependent countries in the Gulf Cooperation Council should focus on strengthening sectors such as real estate and tourism to ensure sustainable development, according to a Qatari official.
Speaking at the Real Estate Future Forum in Riyadh on Jan.27, the president of the Real Estate Regulatory Authority-Aqarat, Khaled Al-Obaidli, said that Saudi Arabia’s success in the property sector exemplifies the growth of the entire GCC region in developing a thriving market.
These comments regarding the Kingdom’s expanding property sector come just days after the nation reported a 3.6 percent year-on-year increase in its real estate price index.
Saudi Arabia’s Real Estate General Authority expects the country’s property market to reach $101.62 billion by 2029, with an expected compound annual growth rate of 8 percent from 2024.
“The success of Saudi Arabia in the real estate sector is the success of all GCC countries because we see them as one,” said Al-Obaidli.
He added: “Most of our countries are oil-based economies. It is very important to diversify the resources across sectors like real estate and tourism. We (Qatar) are not just a country that depends only on oil, we are now trying to affirm our presence in sports, and tourism, and we are also developing high-level universities.”
Aligned with its Vision 2030 program, Qatar established the Real Estate Regulatory Authority-Aqarat in 2023 to enhance transparency and clarity of information as well as encourage investment in the country’s property sector.
“The Real Estate Authority in Qatar was created to enhance the sector and we also try to make it more attractive to generate more investments,” said Al-Obaidli.
Regarding the Real Estate Strategy launched by the authority in December, Al-Obaidli said that the initiative has five pillars, with the first one being developing a comprehensive national real estate plan and introducing policies that promote sustainable development.
The second focuses on strengthening Qatar’s regulatory frameworks to support the sector, while the third aims to improve industry standards by enhancing real estate valuation governance.
The fourth pillar focuses on driving digital transformation in the industry, while the fifth aims to boost real estate investment and position Qatar as a global destination for family living.
“Technology is one of the most important tools to develop the real estate sector. Technologies like artificial intelligence and virtual reality can be used to enhance the customer experience. The experience of customers should be easy and seamless,“ said Al-Obaidli.
He added: “In our countries, most of our doors are open. People get inside here without feeling uneasy. This is part of the real estate. If you want to retire, so, you have the regulations, health systems, and service products.”
The Qatari official added that the country now hosts nearly all major international universities, allowing students to pursue higher education without traveling to Western countries.
Al-Obaidli also hinted at the plans to establish an institute of real estate in close cooperation with national universities.
“We are about to establish an institute for real estate in close cooperation with the private sector and some universities. So, it gives you the ability to get engaged in the sector, and you will also get a license specialized in this,” said Al-Obaidli.
He added that people who receive real estate licenses from the institute can pursue part-time jobs in the property sector after completing their day jobs, which could boost the market.
Al-Obaidli further said that both citizens from the GCC nations and foreign countries have sufficient opportunities to own residencies in Qatar.
“The GCC citizens have privileges such as they can own a piece of land up to 3,000 sq. meters for residential and housing purposes in Qatar. Also, they can own their own land for their own entities or establishments for other businesses or factories. There are some regulations where we can increase these privileges for GCC citizens,” said the Qatari official.
He added: “For foreigners, if you have $1 million, you can have a permanent residence and it will also have some features. This can be done through the Real Estate Authority.”
According to the Aqarat website, permanent residency benefits are available for properties valued at $1 million or more, covering areas such as health, education, and investment.
Al-Obaidli further said that Qatar is not just trying to promote its own real estate sector, but it is also trying to accelerate the growth of the industry in other GCC nations.
“We want our countries to be the best, as one of the good destinations for real estate development. Our ambition is to come to a stage that is very much high. We are promoting GCC countries, not just Qatar. We want to be integrated, where opportunities will be ample,” concluded Al-Obaidli.
In November, a report released by Statista projected that the real estate sector in Qatar is expected to grow at a compound annual growth rate of 1.96 percent from 2024 to 2029, reaching a market value of $492.10 billion.
Earlier this month, another report released by Qatar’s Ministry of Justice revealed that the country’s real estate sector recorded sale contracts worth $284.6 million in December.
The ministry data added that 283 real estate transactions were recorded during December, with the number of properties sold recording an increase of 12 percent compared to November.
Saudi Arabia’s National Housing Co. sees robust sales in 2025 amid lower interest rates
RIYADH: The CEO of National Housing Co. stated that lower interest rates in 2025 are expected to help the company exceed its 2024 achievements, with the reduced rates likely to boost sales.
During a session titled “Enhancing Quality of Life: The Role of Real Estate in Community Development” on the opening day of the Real Estate Future Forum in Riyadh, Mohammad Al-Buty highlighted that despite the challenges posed by higher interest rates in 2024, NHC successfully delivered high-quality products to meet market demand.
This achievement aligns with NHC’s ambition to become the leading real estate developer in the region, positioning itself at the forefront of the industry. It also supports the company’s commitment to delivering 300,000 housing units by 2025 and 600,000 by 2030, addressing the diverse needs of all societal segments.
“We’ve doubled our sales in 2024, and with the expected lower interest rates in 2025, we anticipate an even greater positive impact on the real estate market,” Al-Buty said. “Our goal now is to surpass what we achieved in 2024. We expect the reduction in interest rates to further boost sales."
“In 2023-2024, interest rates had an impact on mortgage demand for us,” he explained. “While 2024 saw the highest interest rates, it also recorded the highest sales. We were able to navigate these challenges by offering high-quality products that could effectively accommodate the higher rates.”
The CEO further emphasized that NHC does not focus on developing units for specific segments, but instead designs for entire communities, catering to all classes and segments.
“We develop based on market needs, using data to identify the desires and demands of our customers. We conduct thorough market studies,” Al-Buty explained.
He also highlighted: “Our pricing is highly competitive compared to neighboring countries for housing units.”
During a separate panel discussion titled “New Frontiers: Balance and Innovation in the Real Estate Landscape,” Qatar’s Municipality Minister Abdullah Al-Attiya highlighted that the World Cup was already integrated into the country’s Vision 2030, long before it was announced or hosted.
“The World Cup accelerated the execution of our plans, driving progress and resource allocation toward developing world-class infrastructure, ultimately positioning us as a global leader in infrastructure,” Al-Attiya explained.
Also participating in the panel, Maldives Minister of Construction, Housing, and Infrastructure Abdulla Muththalib addressed the significant challenges his country faces, noting that tackling environmental issues and providing essential services to the population come at a considerable cost.
“We need to build safer islands to address the environmental challenges we're facing, which will involve relocating people— an expensive process for us,” Muththalib said.
“Given that our GDP is under $10 billion per year, it requires a significant investment for a country like ours to protect the islands and build homes for those who need to relocate,” he added.
The minister went on to explain that the government has launched an ambitious plan to reclaim a nearby lagoon near the capital city, covering an area of 1,100 hectares.
“We plan to build a city for over 200,000 people, focusing on relocating residents from smaller islands. We must do this because, with climate change, we know we can’t sustain all these islands in the long term,” Muththalib said.
Ahmed Dangiwa, minister for housing and urban development of Nigeria, who was also part of the panel, discussed the National Social Housing Fund currently being developed in Nigeria. The fund aims to ensure that vulnerable populations, those with no income, and the underprivileged can access affordable housing.
“When the fund is complete, Nigerians will be able to access funding for housing, with some homes priced low enough for even low-income individuals to afford,” Dangiwa explained.
He further emphasized: “Building materials will be sourced locally, reducing the need to import them, making the houses more affordable for the population.”
