LONDON: The world is on the brink of a new age of electricity with fossil fuel demand set to peak by the end of the decade, meaning surplus oil and gas supplies could drive investment into green energy, the International Energy Agency said on Wednesday.
But it also flagged a high level of uncertainty as conflicts embroil the oil and gas-producing Middle East and Russia and as countries representing half of global energy demand have elections in 2024.
“In the second half of this decade, the prospect of more ample – or even surplus – supplies of oil and natural gas, depending on how geopolitical tensions evolve, would move us into a very different energy world,” IEA Executive Director Fatih Birol said in a release alongside its annual report.
Surplus fossil fuel supplies would likely lead to lower prices and could enable countries to dedicate more resources to clean energy, moving the world into an “age of electricity,” Birol said.
In the nearer term, there is also the possibility of reduced supplies should the Middle East conflict disrupt oil flows.
The IEA said such conflicts highlighted the strain on the energy system and the need for investment to speed up the transition to “cleaner and more secure technologies.”
A record high level of clean energy came online globally last year, the IEA said, including more than 560 gigawatts of renewable power capacity. Around $2 trillion is expected to be invested in clean energy in 2024, almost double the amount invested in fossil fuels.
In its scenario based on current government policies, global oil demand peaks before 2030 at just less than 102 million barrels/day, and then falls back to 2023 levels of 99 mb/d by 2035, largely because of lower demand from the transport sector as electric vehicle use increases.
The report also lays out the likely impact on future oil prices if stricter environmental policies are implemented globally to combat climate change.
In the IEA’s current policies scenario, oil prices decline to $75 per barrel in 2050 from $82 per barrel in 2023.
That compares to $25 per barrel in 2050 should government actions fall in line with the goal of cutting energy sector emissions to net zero by then.
Although the report forecasts an increase in demand for liquefied natural gas of 145 billion cubic meters between 2023 and 2030, it said this would be outpaced by an increase in export capacity of around 270 bcm over the same period.
“The overhang in LNG capacity looks set to create a very competitive market at least until this is worked off, with prices in key importing regions averaging $6.5-8 per million British thermal units, or mmBtu, to 2035,” the report said.
Asian LNG prices, regarded as an international benchmark are currently around $13 mmBtu.
‘Age of electricity’ to follow looming fossil fuel peak, IEA says
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‘Age of electricity’ to follow looming fossil fuel peak, IEA says
- Global oil demand to peak before 2030 at less than 102 million barrels/day
- LNG demand growth to be outpaced by capacity growth to 2030
Global Future Councils meeting in Dubai focuses on AI, environment and governance issues
- The annual meeting is organised by World Economic Forum and UAE government and runs until Thursday
- WEF chairman Klaus Schwab underlines importance of staying ‘hopeful about the future’
DUBAI: The 2024 Annual Meeting of the Global Future Councils began in Dubai on Wednesday, bringing together 500 delegates and experts to discuss issues related to artificial intelligence, the environment and governance.
Organized in partnership with the UAE government, the event was opened by Klaus Schwab, chairman of the World Economic Forum, who emphasized the need for humanity to rethink its relationship with nature and to stay hopeful about the future.
“We moved from an agricultural to an industrial world, and now we are at the intelligent age. To have a better future we must believe in one and we must design it,” Schwab said, arguing that the abandonment of hope for a better world is one of the biggest dangers to mankind.
Schwab said that technology is not inherently a threat but emphasized that global cooperation is essential in setting boundaries, particularly around AI, to address the challenges facing the world.
The meeting, which runs until Thursday, brings together government officials, futurists and experts from public, private, academic and international sectors in 80 countries. The discussions aim to strengthen cooperation and tackle societal challenges.
More than 500 delegates will engage in 30 councils to address opportunities and challenges in five key areas: technology and AI; environment and climate change; governance; economics and finance; and society.
Mohammad Abdullah Al Gergawi, the UAE’s minister of cabinet affairs, echoed Schwab’s optimism, noting that a better future must be built on hope and an understanding of the past.
“We cannot have a better future without understanding the past,” Gergawi said. “We find ourselves surrounded by rapid changes today and some of our convictions under scrutiny.
“We thought as the world becomes more interconnected, conflicts and military confrontations would diminish. We also thought some global institutions were unshakable but they are also under scrutiny. Instead we have increased societal divisions.”
Gergawi stressed that adaptability is key for governments to navigate these shifts.
“Sustainability and economy can thrive and can be linked to environmental protection. There is no constant in life, governments must remain open to new ideas at the heart of their strategies. Those who master adaptability will master the future,” he said.
The WEF’s Global Future Councils is a network designed to address global challenges through transformative ideas. Its 30 councils, composed of experts from business, government, academia and civil society, aim to generate insights to help address critical global issues.
For the first time, the event features significant private sector participation, with 70 top CEOs from leading global companies offering insights on the future of their respective industries.
The ideas generated at this year’s meeting will contribute to the WEF’s broader mission of fostering cross-sector partnerships to tackle complex global challenges. These discussions will also help shape the agenda for the 2025 annual meeting in Davos and the year-round work of the forum’s 10 centers.
In his speech, Gergawi also addressed the conflicts affecting the Middle East, stressing the importance of moving forward rather than remaining trapped by the region’s past challenges.
“We live in an era where civilizations can change within a few years. The role of governments is to get our society, our education and health sectors ready for the future. We cannot move away and move on from the past that creates conflicts fast enough.”
Saudi residential transaction values surge 25% in Q3: Knight Frank
RIYADH: Residential transaction values in Saudi Arabia surged 25 percent year on year in the third quarter of 2024, totaling SR35.4 billion ($9.4 billion), a new report showed.
According to Knight Frank, the volume of deals also increased by 12 percent, reaching 45,924 deals, highlighting strong demand in the Kingdom’s housing market.
Riyadh led this growth with a 16 percent increase in sale numbers and a 41 percent rise in transaction values compared to the same period of 2023. The city’s strong performance underscores its position as a central hub for real estate activity in the country.
This comes as Saudi Arabia’s Vision 2030 aims to boost homeownership to 70 percent by 2030, driving extensive residential development.
Many of these projects are undertaken by ROSHN, a $20 billion initiative from the Public Investment Fund aimed at delivering over 200,000 homes across the Kingdom.
“With a current supply of 3.5 million units across the Kingdom’s five major cities, we forecast the residential supply to reach nearly 3.7 million units by the end of 2026,” stated Knight Frank.
This anticipated increase aligns with the Kingdom’s broader urban development goals and Vision 2030 initiatives aimed at meeting housing demand driven by population growth and economic reforms.
Further supporting the market’s momentum, the report highlighted that Saudi banks issued SR55.7 billion in residential mortgage loans during the first eight months of the year, marking a 3 percent increase from the previous year.
This growth in mortgage lending signals steady demand for homeownership and real estate investment.
This follows a continued increase in demand over the last several quarters, as the Kingdom experiences growth in both local and expatriate populations amid efforts to attract investment and advance diversification projects.
In a separate report in September, Jones Lang LaSalle noted that mortgage contracts in Saudi Arabia reached 24,482 in the second quarter of the year, reflecting a 12 percent year-on-year increase.
The total value of these agreements amounted to SR18 billion, marking an 8 percent rise compared to the same period last year.
The report emphasized that the growth in mortgage activity highlights sustained demand for residential properties and aligns with the government’s efforts to promote homeownership among citizens.
Middle East’s green bond issuances reach $16.7bn for 2024: S&P Global
RIYADH: Saudi Arabia and the UAE are expected to continue leading the Middle East’s sustainable bond market, after posting $16.7 billion in issuances in the first nine months of 2024.
A report from US-based credit rating agency S&P Global noted that the value of sustainability bonds offered to the market from January to September fell 18 percent compared to the same period of 2023.
The analysis highlighted that while sustainable bond issuances in the region surged in the first half of this year, they dropped in the third quarter.
This decline was attributed to higher interest rates and a normalization following the COP28 halo effect in November 2023.
“The UAE and Saudi Arabia will likely continue leading the region’s sustainable bonds issuances, despite increased activity elsewhere. Sustainability bonds lead the share of issuance, as more banks fuel issuances,” said S&P Global.
Saudi Arabia’s Public Investment Fund was the first sovereign wealth fund globally to issue sustainable bonds, raising $3 billion through a multi-tranche green bond in 2022 and a larger $5 billion offering in 2023.
In its latest Allocation and Impact Report, PIF stated it allocated $5.2 billion of the $8.5 billion raised to environmentally focused projects as of June 2024.
Reflecting on the decline in issuance in the three months to the end of September, S&P Global said: “In the first two quarters of 2024, sustainable finance activity in the region improved better sequentially compared with global trends. However, this changed in the third quarter, where activity was muted despite continued bond issuances in the region.”
According to the report, sustainable bond issuance in the Middle East may be needed to accelerate the implementation of net-zero policies, alongside increased alignment with sustainability strategies and regulatory reforms.
The US-based firm also noted that issuance of these financial products in the region is sensitive to economic growth, inflation, and interest rates.
Sustainable sukuk outlook
The report further indicated that the total volume of sustainable sukuk globally reached $7.1 billion in the first nine months of 2024, down 11 percent compared to the same period last year.
In the Middle East, the total sustainable sukuk volume reached $6.1 billion in the same period, relatively unchanged from a year earlier.
Green sukuk, which are Shariah-compliant investments in renewable energy and environmental assets, have gained traction as markets shift toward sustainable financing.
S&P Global added that the share of sustainable sukuk in the region continues to increase, constituting close to 35 percent to 40 percent of sustainable bond issuances so far in 2024, compared to 25 percent to 30 percent by the end of 2023.
In September, another report from Moody’s projected that the issuance of these sustainable Islamic finance products will accelerate in the coming months as Middle Eastern countries roll out energy transition plans and renewable targets.
It also noted that sustainable sukuk appeal to both Islamic and conventional investors seeking to execute sustainable investing strategies.
Dubai’s warehousing and industrial rental rates surge 13% YoY
- Abu Dhabi’s market has also seen a steady yet moderate rise in rental rates
- Growth of e-commerce and logistics sectors, the expansion of oil and gas companies, and the entry of new firms into the market have fueled demand
RIYADH: Dubai’s warehousing and industrial rental rates have increased by 13 percent year on year, underpinned by strong demand, a new report revealed.
According to the latest UAE Industrial Market 2024 analysis by commercial property estate agent Cushman and Wakefield Core, areas including Dubai Investments Park and Dubai Industrial City witnessed the highest rental increases of 25 percent and 21 percent, respectively.
Abu Dhabi’s market has also seen a steady yet moderate rise in rental rates, particularly in areas such as Mussafah and the Industrial City of Abu Dhabi, averaging a 5 percent year-on-year surge across the city.
This comes as a significant imbalance exists between demand and supply as the requirement for warehousing and industrial facilities has consistently outstripped availability, leading to a steady absorption level and higher rental rates.
Various factors, including the growth of e-commerce and logistics sectors, the expansion of oil and gas companies, and the entry of new firms into the market, have fueled demand.
This also aligns with the projection that the UAE residential real estate market will register a compound annual growth rate of more than 8 percent during the forecast period, 2022-2027, according to market research firm Mordor Intelligence.
“The potential for strong returns and the opportunity to meet the increasing demand for high-quality warehousing and industrial spaces are key factors attracting institutional investors and non-industrial developers to the industrial sector,” said Prathyusha Gurrapu , head of research and consultancy at Cushman and Wakefield Core.
“As warehousing and industrial assets continue to offer attractive yields and stable demand, more developers and investors are recognizing the value in diversifying their portfolios to include warehousing and industrial facilities,” Gurrapu added.
The report further said that Dubai and Abu Dhabi are seeing significant industrial development, with rental rates rising and strong demand in key hubs such as Dubai South, Jebel Ali Free Zone, and Abu Dhabi’s KEZAD Al-Mamourah.
Gurrapu said the UAE’s industrial and warehousing market is witnessing a transformative phase, with the convergence of technology, sustainability, and strategic expansion reshaping the landscape.
“As demand continues to outstrip supply, particularly for Grade A facilities, we anticipate sustained rental growth and heightened investor interest in the sector through 2025 and beyond,” Gurrapu said.
“Looking ahead, we see continued growth in the UAE’s industrial market, driven by the expansion of infrastructure such as Etihad Railway and the ongoing development of Al Maktoum International Airport. These infrastructure projects will enhance connectivity and increase the demand for warehousing and logistics spaces,” she added.
The UAE’s vision of becoming a smart city leader is transforming its industrial landscape.
Warehousing and logistics centers increasingly incorporate cutting-edge technologies like automation, artificial intelligence, and the Internet of Things for enhanced operational efficiency.
The demand for sustainable, energy-efficient facilities is also growing. Green buildings and eco-friendly warehousing solutions align with the UAE’s broader goals of reducing carbon footprints and promoting sustainable development.
ADQ to acquire 96% stake in Turkiye’s Odeabank from Bank Audi Consortium
- ADQ’s acquisition is aligned with its strategic commitment to enhancing innovation within the financial services sector
- The deal followed a series of additional ADQ investments in Turkiye
RIYADH: Abu Dhabi’s investment and holding company, ADQ, has signed an agreement with Bank Audi to purchase 96 percent of the share capital in Odeabank, the Turkish subsidiary of the Lebanese institution.
According to a press release, the transaction involved the sale of Bank Audi’s stake in Odeabank, along with shares held by other investors, including the International Finance Corp., IFC FIG Investment Co. Sarl, and the European Bank for Reconstruction and Development.
Odeabank, established in 2012, is Turkiye’s 13th-largest private financial institute by loans and deposits, with 41 branches in 15 cities. It focuses on commercial lending and is expanding its retail and wealth management services. As of June, it had about 1,300 employees, the press statement said.
Mansour Al-Mulla, deputy group CEO at ADQ, highlighted the significance of the acquisition in advancing the institute’s broader strategy in the financial sector.
“The acquisition of Odeabank reinforces our commitment to investing in assets that lay the foundation for the sustainable development of our portfolio companies as well as the wider economy,” Al-Mulla said.
He emphasized the benefits Odeabank will experience as part of ADQ’s portfolio, including access to new capital and synergies within the group.
“We are confident that this will accelerate the execution of Odeabank’s growth plans while driving technological innovation in the financial services sector,” the CEO said.
According to the statement, ADQ’s acquisition is aligned with its strategic commitment to enhancing innovation within the financial services sector.
The deal followed a series of additional ADQ investments in Turkiye.
In 2022, the investment entity launched a $300 million fund in partnership with Turkiye Wealth Fund to invest in companies focused on developing or improving technologies in key sectors. That same year, ADQ acquired the Turkish pharmaceutical company Birgi Mefar Group, which was integrated into ADQ’s global life sciences holding company, Arcera.
The sale of Odeabank is also aligned with Bank Audi’s focus on its core markets, particularly in Lebanon and Europe.
Khalil El-Debs, CEO of Bank Audi, said: “This transaction aligns well with Bank Audi Group’s present strategic focus on its home market as well as its presence in Europe. We are pleased to have attracted the interest of a global institution like ADQ in acquiring Odea Bank A.S., our Turkish subsidiary.”
Under ADQ’s ownership, Odeabank is expected to further enhance its position in the Turkish market, leveraging the institute’s expansive portfolio, which spans “key sectors of Abu Dhabi’s rapidly diversifying economy, including energy and utilities, food and agriculture, health care and life sciences, and transport and logistics, among others,” the press statement said.
The completion of the transaction is subject to customary regulatory approvals, including clearance from the Banking Regulation and Supervision Authority and the Competition Authority in Turkiye.
J.P. Morgan served as the sole financial adviser to Bank Audi on the transaction and provided a fairness opinion, as explained in the press release.
