Sheikhs, Lies and Real Estate: The Untold Story of Dubai (15 page)

‘Can’t you see I am closing a deal? Please get
other cab, okay?’

‘Are you serious?’

He went back to his call. ‘No, no, no, one
thousand dirham only!’

There was no use. It seemed the entrepreneurial
driver was moonlighting as a realtor, which clearly took precedence over his
taxi duties. I shook my head in disbelief as I got out and flagged down another
cab.  

I eventually arrived at the MOE a little
earlier than planned, so I decided to grab a coffee while I waited for Jamal.
It was still early in the day and the mall was quieter than I had seen it
before. I noticed there were a peculiarly disproportionate number of women here
at this time of day, all dressed immaculately in designer labels, with perfect
tans and blow-dried hair. As I watched them stroll from boutique to boutique,
it hit me that I was lucky enough to be witnessing the gathering of a rare
species in Dubai. It was an exciting moment and I observed with great interest,
albeit from a distance. I had heard stories of their existence, but I had never
actually seen a real one in the flesh before. In all their superficial glory, these
were the infamous Jumeirah Janes.

Jumeirah Jane was a popular term to describe
the hopelessly materialistic wives of wealthy Western expats. They were ladies
of leisure unleashed onto the city with oodles of free time and endless pocket
money to squander. The Janes were real-life ‘Desperate Housewives’. They lived
in large rented villas near the beach, drove gas-guzzling 4x4s and had few
goals in life except collecting designer handbags and looking fabulous. Their
often absent husbands were engineers, bankers, lawyers and project managers on
overweight tax-free salaries whose only means of keeping their demanding wives
happy was to bankroll their lavish lifestyles and excessive spending habits
while they slaved away in the office to maintain the expat lifestyle.

A typical day for a Jumeirah Jane followed a
predictable pattern of dropping off the kids at their $20,000-a-year private
school, followed by a three-hour, gossip-fuelled champagne brunch or coffee
morning with fellow Janes. They would then head to the mall for a spot of
retail therapy, before a personal training session at the gym and a manicure at
the Ladies’ Club. After a swim and a massage, they picked up the kids then
looked forward to a leisurely evening on the couch watching reruns of
Sex in
the City
to unwind after a demanding day. Tomorrow’s schedule was much the
same.

The Janes all employed help around the house,
often a Filipina or Indian maid (the least attractive they could find) who
would take care of all the menial domestic chores that could ruin the French
manicure. Yet the stroppy Janes still constantly complained about being
overworked and unappreciated. In truth they were purposeless, spoilt brats
whose only quantifiable contribution to the expat community was making love to
their hard-working husbands. By doing so, their husbands would be happier at
work hence more productive, and thus add more value to the company’s bottom
line and the economy at large. Dubai therefore needed the Janes and their
service to the country was invaluable.

Jamal showed up an hour late. I spotted him
immediately as he plodded towards me dressed in a crumpled shirt, slacks and
sandals. He looked more like a hobo than the CEO of an investment bank.

‘Sorry I’m late, I got caught up in a meeting
with a couple of dumb-as-shit Saudi investors who, as usual, didn’t understand
a fucking word I was saying. Shall we order? The cheeseburgers here are pretty
special.’

‘No problem. Good to see you again, Jamal. Yes
let’s order...’

‘So did you stick around long at that party the
other night?’ Jamal asked.  

‘No, not much longer after you left.’

‘It was a fucking waste of time anyway. Just
like most things in this stupid city. Waiter!’

 ‘So what’s your story, Jamal? What brings you
out here?’ I asked.

‘Well, I graduated from Harvard and joined one
of the big consultancy firms. They posted me out here for a while to work on a
big telecoms project. I made some connections with some of the big families, so
I started consulting for them privately. Once I was in, I used my
wasta
and managed to get them to back DubCap Investments, which I run now. I actually
have no real background in finance, but they still went for it. An American
accent and a bit of chutzpah is all you need to get them to dance on the table.’

‘Jamal, please don’t take this the wrong way,
but I get the impression that you’re not actually a huge fan of Dubai.’

‘No, no, Dubai is okay. I don’t mind this city.
It’s just the fucking idiots that run the place that piss me off.’

‘Do you mean the Emiratis?’

‘I mean the Arabs in general. They’re a bunch
of lazy, arrogant fools with more money than sense. Don’t get me wrong, I think
the previous generations of Arabs were very smart. Before oil, they were great
merchants and traders. But the money has turned their brain to mush. They have
just gotten too used to having everything done for them. Today they’re more
concerned with buying a new handbag or getting their Bentley gold-plated.’ 

I shook my head in disagreement. ‘Come on,
Jamal, that’s a bit of a sweeping generalisation.’

‘Oh yeah? Okay, let me give you an example.
Last year I was teaching a course in entrepreneurship at the American
University of Dubai. You know, just for the hell of it. My students were mainly
young Emiratis who were being groomed to become the future business leaders of
the country. They were the sons and daughters of wealthy industrial families
and diplomats. It was like trying to teach Satanism to the freaking Pope! They
just didn’t give a shit. Most of them were more interested in fucking around on
their BlackBerrys and booking tables at the Boudoir club on Friday night. Some
of them even used to leave the engines of their Ferraris and Range Rovers running
while they were in my class. Can you believe that? It sums up the modern Arab
mentality perfectly. If these kids are the future, this place is truly fucked.’

‘Jamal, you can’t tell me you’re not impressed
by what they’ve done here. They’ve built an incredible city from nothing. It’s
amazing!’

‘You really think these guys did any of this by
themselves? No freaking way! They just bring in the best architects and
engineers from Britain and the States, pay them a shitload of money and sit
back and watch. Any dumb idiot with bottomless pockets could do that. These
shepherds can’t even wipe their own asses, let alone build a fucking city.’

I couldn’t believe what I was hearing, but I
also couldn’t doubt much of what Jamal was saying. I had seen very few Emiratis
working since I had been in Dubai. The economy depended on the foreign migrant
workforce for everything from serving customers to cleaning the streets to
running entire conglomerates. It was no wonder that many Arabs spent their days
cruising around in their fast cars and smoking
shisha
.  

It was also obvious that Jamal had an ambiguous
relationship with the Arabs. Despite spending much of his professional career
in the Middle East, he had little respect for their ability to do business and
he didn’t hide it. But he also knew exactly how to work them to his advantage.
Where others would suck up to the Emiratis, buy them gifts and pay them empty
compliments to gain their favour, Jamal told them exactly what he thought. If
they were making mistakes, he didn’t mince his words and they loved it. He was
like the mean boyfriend telling his girlfriend she was overweight. He was a
straight talker in a land of bullshit, and this won him their respect. As much
as his comments hurt, his brutal honesty made them even more desperate to win
his affection.

‘So what are you long term plans, Jamal?’ I
asked. ‘I guess you’re not looking to stay here too long?’

He stared into my eyes. ‘Look, as much as I
dislike this place, even I can’t deny there’s a massive opportunity to make
money here right now. You and I are smart guys with professional backgrounds,
but there are some pretty dumb nobodys making a lot of cash in this city right
now. I don’t know about you, but I’m looking to get a piece of this pie and
make a run for it’.

In a way, Jamal and I were birds of a feather:
we were both frustrated professionals who had worked hard for a good education
to get ahead, only to witness cowboys and hustlers become overnight millionaires
in Dubai before our very eyes. A degree from a top-class university had no
value here. To get ahead in this city you needed balls, bullshit and
wasta
.
And as frustrating as it was, we both wanted a piece of that pie. So Jamal
became something of a mentor to me and we began to meet regularly to brainstorm
ways we could make our fortune in the city.

***

We agreed to meet one evening at Cin Cin, a
swanky bar at the Fairmont Hotel on Sheikh Zayed Road, best known for its great
cigar collection and attractive female clientele. After ogling the exotic beauties
taking their seats at the bar, Jamal pulled himself together and we began
today’s lesson.

‘So tell me a couple of entrepreneurs you
admire. Who are your idols?’ Jamal asked.

‘I don’t know, Branson, Trump, Gates...’

‘Okay, good. There is one thing all of these
guys have in common. Do you know what it is?’

‘They all signed a pact with Satan?’

 ‘No, one word, my friend: leverage.’

‘Leverage?’

‘Yes, leverage. They borrowed money, multiplied
it, gave back what they borrowed and kept the rest. And then they repeated the
process. They used a magical principle called OPM.’

‘OPM? Isn’t that what the Beatles famously did
in the bathroom at Buckingham Palace?’

He ignored my silly joke. ‘It stands for ‘Other
People’s Money’. It’s what leverage is all about. The smart people use other
people’s money to invest and it’s what we need to be thinking about too.’ 

It made perfect sense. OPM was the universal
principle on which most serious wealth was created. Everybody knew you needed
to have money to make money, but the smart people weren’t using their own.
Great empires in business, real estate and finance were built on the
foundations of OPM and it was time we did the same.

Jamal continued his sermon. ‘There are two ways
to use OPM: debt and equity. And you know where we are sitting right now? The
Mecca of OPM! Considering we are in one of the most cash-rich regions on the planet,
I have the perfect idea for us to use the immense capital around us to get rich!’

‘And how would we do that?’

‘Two words, my friend: private equity. We
should set up a private equity fund to invest in the real estate market. It’s a
vehicle investors put their money into and we manage it by investing in real
estate assets on their behalf. That way when they make money, we make money. We
both have credible profiles as Western-educated professionals, which is a rare
quality here, so we can use that to sell the fund. And you work with high net worth
investors in the region, so we can utilise your client database. Once we’ve
raised the capital, we extract a 2.5 per cent management fee and a 20 per cent
performance fee and sit back while the money rolls in. It’s foolproof!’

It was one of those rare ‘eureka’ moments. Until
now the Dubai real estate market had been fuelled by private investors, but in
the context of global capital flows they were small fry. The serious capital
was controlled by the institutions: banks, pension funds, insurance companies,
hedge funds and asset managers. Often referred to as the ‘smart money’, these global
institutional investors were usually managing billions of dollars of OPM and
were the largest investors in the world, but none of them had invested in Dubai
yet. With the sheer pace of development and returns that the market was
offering, it was surely only a matter of time before the institutions would be
looking to participate in the growth story. If we could structure a credible
investment fund that offered risk-adjusted access, we could potentially pioneer
a new phase in the evolution of the market and make a fortune in the process.

Within days, Jamal had the analysts at his bank
working on the prospectus, while I began speaking discreetly about the idea to
potential investors from my database at work. Jamal had suggested that we would
need about three-quarters of a million dollars in set-up costs to cover legal
expenses and working capital. I certainly didn’t have the money and it was
unlikely that Jamal would put up all the cash himself, so we both agreed that
we needed an anchor investor to whom we would be willing to give up part of the
General Partnership in exchange for some working capital to get things off the
ground.

A week later, he called me while I was at work.
‘Hey, buddy, can you talk?’

‘Just a minute.’ I rushed into a nearby meeting
room. ‘Yeah, go ahead.’

‘I’m with somebody I think you should meet. He
could be a key player in our project. Can you come to the Burjuman shopping
centre right away?’

‘You mean right now?’

‘Yes, he’s with me now.’

It was the middle of the day at work so it
wasn’t easy for me to leave the office without anybody noticing, but this was
too important. I quietly slipped away and made my way there.

Jamal was sitting at a café near the food court
with a balding, overweight Indian man dressed in a polo shirt and chinos.

‘Glad you could come at short notice,’ said
Jamal as I took a seat at the table. ‘This is Lucky Chanda, an associate of
mine from India.’ The fat man looked me up and down, making me feel a little
uncomfortable. ‘I have been talking to him about our fund idea and he is quite
interested to know more.’

‘Nice to meet you, Lucky,’ I said and shook his
hand.

‘Good to meet you too. Jamal tells me great
things about you.’ His voice was deep and bellowing.