Sheikhs, Lies and Real Estate: The Untold Story of Dubai (12 page)

As Jerome broke the news to me, I sat and
listened without saying a word. I was past anger. As soon as he finished
speaking, I simply got up and walked out of the café.

We never spoke again after that meeting. I
never called him, and I guessed he was too embarrassed to get in touch with me.
It wasn’t the collapse of the deal that upset me so much;  I was more hurt that
Jerome had not been open with me from the beginning. He cared so little about our
friendship that he had allowed me to risk my reputation without considering how
I would look if the deal went sour, and the impact that would have on my relationship
with Saff. 

I had always heard the old adage about the
perils of mixing business and friendship, but this was my first lesson in why it
was so true. And so I had lost not only a potential business partner but a
close friend too. I was angry with myself for not seeing the signs: the lack of
clear information, Jerome’s reluctance to discuss the deal and the unexplained
delays. I promised myself that I would not be so naive and trusting in the
future, and that next time I would smell the bullshit early on.

But despite the painful lesson I had learned,
one good thing had come out of all of this. I had proved to myself that I was
credible, I was professional and I could make things happen. All I needed was a
break and I would surely be on my way to earning some real money.

I was now more determined than ever to make my
mark. 

Few things thrilled Sheikh Mohammed as much as his horses.
As a boy the young prince would often share his breakfast with his favourite thoroughbred
on the way to school; and riding in his first race aged just 12, the future sheikh
quickly earned a reputation for his impressive ability to tame wild stallions.
While at Cambridge, Mohammed lodged with an English family where horse-racing
heritage was often discussed at the dinner table. He was proud to tell his
hosts that the most influential sire in British racing was an Arabian horse
known as Godolphin, a name that would stay close to his heart. Away from his
public duties as crown prince, Mohammed continued to invest in bloodstock. It
wasn’t long before the famous maroon and white colours of his Godolphin stable
were carried to countless victories, earning great praise and adoration across
the racing world.

But just as the sheikh’s stallions competed for
his favour, so did his business investments. The state-backed property
developers Nakheel and Emaar were the undisputed thoroughbreds of Dubai’s
property industry. They competed fiercely between 2002 and 2008 to create the
biggest and most ambitious new projects, vying to outdo each other to grab the
headlines and transform the Emirate’s skyline for ever. Together they became
the bellwethers of the booming real estate industry, and as they battled
ferociously to win the favour of the demanding sheikh, a new city emerged in
their wake. 

Under the leadership of the charismatic
Mohammed Ali Alabbar, the US-educated son of an illiterate
dhow
captain
and one of the sheikh’s most trusted young companions, Emaar was launched as a
publicly listed company in 1997. Success did not come easy for the development
company, as its first major villa project, the Emirates Hills, struggled to
sell many units the following year owing to its limited leasehold status. It
was only after the freehold property law of 2002 that matters quickly turned
around. As soon as the Emirates Hills was relaunched as a freehold project, the
properties were snapped up in a matter of hours by investors and expatriates
looking to take early advantage of the city’s promising investment prospects. A
real estate success story was born.

Emaar ploughed ahead with plans to build the
world’s largest manmade marina surrounded by dozens of high-rise luxury
condominiums. This was to become the Dubai Marina, and would eventually house
forty thousand new residents. Emaar quickly followed up with villa communities
the Springs, the Greens and the Meadows, which catered for every budget of
Dubai’s rising expat population.  The launch of the second phase of the Meadows
saw a queue of a thousand people at the ballroom of the Emirates Towers and all
seven hundred villas were sold in a matter of hours. Emaar had initiated a
modern land grab as keen speculators saw the opportunity to flip their
investments on the back of growing demand, and foreigners sought to buy a piece
of the desert to call home.

But if Emaar was the reliable workhorse of the
Maktoum stable, Nakheel was undoubtedly its wild stallion. Translated from Arabic
simply as ‘Palm’, Nakheel was created by royal decree in 2002 and soon became
known for some of the more ambitious and outrageous projects in Dubai. The
reins of the company were entrusted to Sultan Bin Sulayem, the CEO of Dubai
World and one of Sheikh Mohammed’s closest confidants. His brief was simple: to
make the impossible possible and to turn the sheikh’s wildest dreams into
reality. With an estimated portfolio of thirty billion dollars’ worth of
projects under development at its peak, Nakheel perfectly personified the
dynamic spirit of the city.

The first of its grand projects was the iconic
Palm Jumeirah, a $1.6 billion manmade palm-shaped island of reclaimed land off
the coast of the city. It was rumoured that Sheikh Mohammed had sketched the
original idea for the Palm on a napkin, which he had presented to Bin Sulayem
with a direct order to build it no matter what. Nicknamed the Eighth Wonder of
the World, the Palm emerged a few years later and became a global symbol of
Dubai’s lofty ambitions. As word of this unprecedented feat of human endeavour
reverberated along the newswires, it was no surprise that its seven thousand
beachfront villas were sold out in days. Nakheel soon announced a second
island, the Palm Jebel Ali, planned to be 50 per cent larger than the first, with
six marinas, a water theme park and boardwalks that would circle the ‘fronds’. The
ultimate showpiece of the Palm Jebel Ali would be an Arabic poem written in
sand by Sheikh Mohammed himself in the ocean surrounding the island. It would
read:

Take wisdom from the wise

It takes a man of vision to write on water

Not everyone who rides a horse is a jockey

Great men rise to greater challenges.

Nakheel’s obsession with reclaimed islands was
only just beginning. In 2004 it announced a third island, the Palm Deira, which
would be eight times larger than the Palm Jumeirah and five times larger than
the Palm Jebel Ali, housing one million new residents. Together this ‘Palm
Trilogy’ would add a total of 520 kilometres of coastline to the city of Dubai.
The mega-projects kept on coming. Later in 2004, Nakheel announced the launch
of The World, an archipelago of three hundred islands constructed in the crude
shape of a map of the landmasses of the earth. The company promoted the islands
as ‘a blank canvas’, providing investors with the freedom to create their own
vision of utopia where the globe could literally revolve around them.

Nakheel’s legacy was a tough act to follow, but
Emaar came back strongly with the launch of Downtown Dubai, a mega-district that
would become the new epicentre of the city and would feature as its centrepiece
the planet’s tallest building, the mighty Burj Dubai. Downtown Dubai offered an
unprecedented standard of living to future residents in what was promised to be
the ‘most valuable square mile in the world’. The clamour for Emaar’s property
launches in the Downtown district was so great that the developer was forced to
resort to a lottery system just to allow investors to gain access to the
projects and put down a deposit. With demand at fever pitch, a secondary market
for these lottery tickets soon emerged and investors were paying small fortunes
just for the privilege of attending the launch event, before a penny had even
been spent.

On the back of the great success of these two
titans, a plethora of new private developers flooded into the market to compete
for a piece of the frenzy. But despite the competition, Emaar and Nakheel
remained the undisputed leviathans of the industry, and as prices spiralled to
dizzying heights, they commanded higher and higher premiums for their properties.

The pace for the great race had been set and as
the punters placed their bets, a clear leader was yet to emerge.

***

‘Good morning, folks, you’re listening to Dubai FM 94.5
and it’s finally here, the one you’ve been waiting for, day one of Cityscape
Dubai! Make sure you have your chequebooks ready to snap up those property
bargains, because it’s going to be a fish market in there today...’

The hype around Cityscape had reached fever
pitch. Newspapers, radio shows and billboards had been building up to the
exhibition for weeks and investors were rubbing their hands eagerly as opening
day approached. Staged at the colossal Dubai International Convention and
Exhibition Centre, Cityscape provided a platform for Dubai’s plethora of real
estate developers to showcase their newest projects. Since the first show in
2002, the exhibition had grown from strength to strength to become an annual marker
of the health of the city’s real estate industry. At last year’s show a total
of $160 billion of transactions had been completed, and this year was expected
to shatter that record.

I arrived at the Exhibition Centre soon after
the doors opened and things were already in full swing. The enormous atrium was
brimming with punters, all itching to get inside and grab a piece of paradise.
After collecting my wrist tag from the front desk, I walked into the main
exhibition hall like an awestruck child entering the gates of Disneyland. I was
dwarfed by giant property stands of different shapes and sizes, all vying for
my attention. There was pandemonium in the halls as hundreds of punters rushed
through the aisles, grabbing brochures and any other freebies they could get
their hands on. Dozens huddled around intricate miniature models of skyscrapers
and villas, each crafted to microscopic detail with trees, street lamps, boats
and sunbathing bikini babes. Over a thousand exhibitors were present, competing
aggressively to push their awe-inspiring projects as the biggest, newest and
most groundbreaking investment opportunity, and the punters couldn’t get
enough.

The press had reported that a staggering $200
billion of new real estate projects were set to be launched at Cityscape this
year alone. It was impossible to keep track of all the stands. I passed a
luxury villa development called Flamingo Creek within the $80 billion Lagoons
district that boasted ‘stunning views of the Ras Al-Khor bird sanctuary’. The
Manhattan luxury apartment complex within the Jumeirah Village development was
inspired by the ‘urban residences of 1930s New York’. And the four-billion-dirham
Bay Square presented a ‘new age community project offering a stress-free
lifestyle’.

But I soon gathered that not everybody was at
Cityscape to buy. The crowds could be divided into two broad categories – the
browsers and the investors – and each developer’s sales teams were well trained
to tell the difference. The browsers were here to soak in the atmosphere,
marvel at the spectacle and collect free pens and brochures. They had not come
with any serious intention to buy, but could always be swayed to make a small
investment if a sales agent managed to pitch them right. Developers didn’t care
too much for the browsers, who they saw as making up the numbers and building
the hype. The investors, on the other hand, were a different breed completely.

Oblivious to the pomp and paraphernalia,
investors were here for one reason and one reason alone: to buy low and flip
high. Armed with chequebooks and suitcases of cash, investors didn’t care for
small talk and giveaways. All that mattered to them were the numbers: the price
per square foot at which they were buying, and the premium at which they could
sell. For them, Cityscape was nothing but a marketplace, an exchange where buyers
and sellers could meet and trade. They knew what they wanted and they were
there to buy big.

The biggest deals at Cityscape were closed out
of view from the crowds. Each property developer’s stand had a VIP section that
could only be accessed by an inconspicuous staircase protected by muscular bouncers
and velvet ropes. This was the ‘closing room’, a private area where the real
business happened. While salespeople battled with indecisive browsers over the
merits of purchasing a studio flat, multimillion-dollar transactions were
taking place confidentially upstairs in the closing room, and nobody knew anything
about them.

The important investors were usually wealthy
Saudis, Kuwaitis and Emiratis, as well as some Russians and Africans. Trays
full of stuffed dates, Belgian chocolates and the finest baklava were ushered in
for their enjoyment as they put their feet up and sunk into the soft leather
sofas in the closing room. Senior sales executives flattered and massaged their
already inflated egos while subtly communicating the merits of their offerings.
And as their targets sipped on fresh mint tea and freshly squeezed fruit juices,
the sales team stealthily moved in for the kill.

I had already wandered around for hours when I
spotted a familiar name ahead of me. Darius Developments was launching a brand
new project in the Business Bay, and a crowd had developed around a scale model
of the tower. It seemed they had found their plot after all, which made me a
little upset. I spotted Saff in the closing room upstairs, engaged in
conversation with two important-looking Arab men. I decided it probably wasn’t
appropriate to say hello so hurried quickly past the stand, hiding my face and
avoiding making eye contact despite the desperate attempts of the eager
salespeople to hand me a brochure. ‘He’s probably just browsing anyway,’ I
heard one of the girls say as I rushed past.

As hard as Dubai’s developers pushed their new
projects, it seemed that Cityscape was not just a competition for who had the
biggest tower. It was impossible to ignore the fact that every stand I passed
was brimming with beautiful women. Most of them wore revealing outfits that tested
the limits of decency, much to the delight of the salivating male visitors. A
developer called Faraz Properties was leading the race so far with an army of a
dozen six-foot blondes sporting hotpants and red stilettos. The stand was more
like a party at the Playboy mansion than a sales effort, but the tactic was
certainly working, as crowds of curious men loitered aimlessly to get a decent
eyeful. As I walked past, I spotted one of the girls standing alone and looking
rather bored, so I took the opportunity to give her some company. 

‘Hi, I have a question. Can you help me?’ I
asked.

‘Of course, sir,’ she replied in a seductive
European accent.

‘What is the completion date for this project?’

‘I think it is expected to be handed over in
2012, sir. But I will need to check...’

‘No, that’s fine! What’s your name, by the way?’

‘Anastasia,’ she replied with a smile.

‘Anastasia. That’s a nice name.’ I shook her
hand. ‘Where are you from, Anastasia?’

‘I’m from the Ukraine.’

‘I see. And your friends?’ I asked, pointing at
the other models.

‘We are all from the same modelling agency in
Ukraine. We were flown here together by private jet a few days ago for the show.’