Sheikhs, Lies and Real Estate: The Untold Story of Dubai (16 page)

‘All good things, I hope.’

‘Of course! He told you me that you are a
graduate of Oxford University and that you are working for Imperial Bank. Very
impressive.’

‘So, Lucky, why don’t you tell Adam a little
about what you do?’ said Jamal.  

‘Well, I am a real estate developer here in
Dubai. We specialise in residential projects around Jebel Ali. Most of our
investors are wealthy Russian statesmen and prominent businessmen.’ As he
reached for his coffee cup, I noticed that his solid gold watch was studded
with at least a hundred gleaming diamonds. 

‘I have told Lucky about the fund and he is
interested in becoming a seed investor. He will also bring us investors through
his own contacts, and can provide us with a pipeline of projects that we can
invest in once it’s up and running.’

‘I would like you guys to come and pitch the
idea to my team at our offices later this week. I think we can do a deal
quickly,’ said the Indian.

‘I told Lucky that we are looking to begin with
a fund size of $100 million,’ said Jamal. ‘We have discussed a deal for working
capital of $1.5 million in exchange for a 5 per cent stake in the General
Partnership.’

It sounded too good to be true. Was this
wealthy stranger willing to bankroll our project and find us investors without
having looked at a pitch book or a prospectus? We still hadn’t even formalised
the strategy for the fund, how much we wanted to raise, nor where we would
invest. As much as I trusted Jamal’s judgement, there was something untoward about
Lucky, although I couldn’t put my finger on it.

The following week, Jamal and I made our way to
Lucky’s offices on the Sheikh Zayed Road to make the pitch. As we walked into
the small lobby of the thirty-second-floor office, we were greeted by an
attractive Moroccan receptionist who led us down a long corridor and towards a
large oak door. After a knock, a familiar voice shouted ‘Enter!’ and we
followed the receptionist in.

It felt like I had just walked into a scene
from
The Godfather
. The room was dark with oak panels and mahogany
sofas, as the streams of light shone through the slits in the half-shut blinds
over the windows. I noticed Lucky first, sitting in the corner on an old brown
leather sofa. Behind an oak desk sat an older Emirati man with silver, slicked-back
hair and a goatee, who watched us intently through the smoke billowing from the
fat cigar he puffed. To his right was a younger Indian man, wearing thick
glasses and an ill-fitting suit.

‘Welcome, gentlemen,’ said Lucky, as he stood
up to greet us. I shook his hand and scanned the other figures in the room.

‘Let me introduce you to everybody: this is
Mohammed, our chairman, and Niraj, our accountant.’

‘Nice to meet you all,’ said Jamal on behalf of
both of us.

‘So, Lucky tells me that you are both bankers,’
said Mohammed, staring at Jamal with beady yellow eyes.

‘Yes, that’s right.’

‘Very good. I’m looking for a loan, can you
help me out?’ He started to laugh but Jamal failed to see the humour.

‘I’m not that kind of banker I’m afraid,’
replied Jamal, and Mohammed took the hint.  

‘As you know,’ Lucky continued, ‘these gentlemen
are here to present the fund idea that we have discussed. Jamal, please begin
when you are ready.’

Jamal handed out copies of a pitch book that his
analysts had created for the meeting. ‘As you know, we are setting up a new real
estate private equity vehicle that will revolutionise the property industry
here in Dubai. Please turn to page one...’

He immediately launched into the most impressive
sales pitch I had ever heard. He explained how the fund would work, how it
would be structured and ultimately how we would make money.

‘...The vehicle will be structured as an
offshore Cayman Limited Partnership, which will ensure limited liability and
complete confidentiality for institutional investors…’

His presentation was as slick as any investment
banker on Wall Street. He used graphs, figures and charts, and he threw in the
right financial terminology to confuse, amaze and intrigue his captivated audience.

‘...Our unique origination capabilities and
diverse capital base will ensure inherent value in our portfolio, which will be
realised at attractive multiples and projected IRRs...’

He wasn’t just selling an investment
opportunity. He was making a solid case for why missing this opportunity would
be committing financial suicide. Jamal was like a masterful hypnotist, except
he was using financial jargon instead of a swinging pocket watch to captivate
his audience and gain access to their chequebooks.

‘Any questions?’ asked Jamal as he finished.
The room was silent. Lucky slowly got up and walked over to whisper something
in Mohammed’s ear. Mohammed whispered back and nodded. 

‘Bravo. Very good, Jamal. An excellent
presentation indeed,’ said Mohammed. ‘I think we have all the information we
need to make a decision. Lucky will be in touch with you shortly.’

Nothing more was said. We shook their hands and
were shown out of the building by Lucky. Jamal didn’t say a word until we got
into his car outside, but I was dying to get his view on how he felt the
meeting had gone.

‘So what do you think?’ I asked eagerly as we
drove away.

Jamal looked at me and smiled. ‘We’ve got them
by the freaking balls, dude!’ He revved his engine as we darted towards the
Sheikh Zayed Road. ‘We’ve got them!’

Jamal called me after midnight with some urgent news. ‘I
just got a call from Lucky. He has invited us to join him for dinner tomorrow
tonight.’

I jumped up from my bed and rubbed the
weariness from my eyes. ‘Okay, great, I’ll be there. Do you know if there is
any news yet?’

‘No idea. He didn’t say. He just told us to be
at the Burj Al Arab at nine sharp. See you there and don’t be late.’

The Burj Al Arab! I couldn’t contain my
excitement. Mere mortals were seldom considered worthy to enter Dubai’s most
exclusive hotel, so an invite like this was a rare privilege. At last, I was no
longer destined to be among the curious tourists vying for a glimpse of its
mysterious opulence from a distance. For one night only, I would be elevated to
privileged status to dine with Dubai’s social elite. Lucky sent a car to pick
me up from my apartment, and as I jumped into the back seat I could hardly
contain my excitement.

The magnificent sail-like structure of the Burj
Al Arab could be seen for miles along Jumeirah Beach. Translated as ‘Tower of
the Arab’, the Burj was Dubai’s answer to the Eiffel Tower or Sydney Opera
House: a tribute to the Emirate’s maritime heritage and an unmistakable symbol
of Brand Dubai. The hotel boasted world-class opulence and seven-star service,
and its five-thousand-dollar-a-night rooms were strictly reserved for its exclusive
clientele of Russian oligarchs, world leaders and rock stars. As our car pulled
up to the entrance, a huge gush of water shot up from the fountain to indicate
the arrival of a VIP guest. I was playing in the big league now, and it felt great.

I entered the hotel lobby through the giant
revolving glass doors and was warmly greeted by three striking-looking Oriental
women with hot towels, Arabian perfume and rose-petal finger bowls.

‘Welcome to the Burj Al Arab, sir,’ said each
of them with a smile.

Refreshed and smelling fabulous, I thanked them
and ventured inside. The striking lobby lounge was an instant onslaught on my
vulnerable senses. Like the inside of a kaleidoscope, a multitude of colours
and textures clashed to create a striking explosion of bright reds, blues and
golds, merging in a psychedelic tapestry of patterns and shapes. The walls on
either side of me were giant aquariums full of exotic fish, and a dancing water
fountain leapt all the way up to the mezzanine floor. It was gaudy and
excessive, but unquestionably spectacular.  I stepped onto the escalator and
looked up at the huge canvas atrium above. Floor by floor, it went on and on, until
I had to steady myself as it made me a little dizzy. 

A text message came through on my phone. It was
Jamal:

We are at the Al Mahara restaurant. About to
start. Where are you?

I looked at my watch and remembered he had
specifically asked me not to be late. It was time to get a move on.

‘Good evening, I am a guest at Lucky Chanda’s
table,’ I said to the maître d’ at the entrance to the restaurant. His bulging
muscles, tight-fitting suit and no-nonsense demeanour made him look more like a
henchman in a James Bond movie.

He checked his list carefully. ‘Of course, sir.
Please follow me to the submarine.’

I hesitated. ‘Sorry, did you say submarine?’

‘Yes, submarine, sir. You have to take a
submarine ride to the restaurant.’

‘Is it a real submarine?’ I asked, curious.

He rolled his eyes. ‘No, sir, it’s just pretend,’
he whispered, so as not to ruin the illusion for the other guests.

‘So can’t I just take the stairs?’

‘No, sir. I’m afraid you have to take the
submarine.’

I reluctantly did as I was told and stepped
into the small chamber of the ‘submarine’. As I made myself comfortable, I
greeted my crew mates, a Russian man with two surgically enhanced blondes
dressed in mini-skirts and stilettos. As the chamber door closed, we were
suddenly ‘plunged’ twenty thousand leagues into the ‘ocean’, past sharks,
blowfish and octopi. It was a little cheesy but enjoyable, although,
considering I was now running quite late, slightly inconvenient. Finally, as
the capsule door opened at the bottom, a tall woman greeted me to usher me to
the table.

‘Welcome to Al Mahara. Please come with me,
sir.’ I followed her through a giant gold tunnel into the main dining room.
There were dozens of tables arranged in a circle around a massive aquarium
whose brilliant blue waters illuminated the room. Thousands of tropical fish swam
frantically around inside as their less fortunate brethren were devoured on the
plates of the elite clientele.

‘Glad you could make it,’ said Lucky as I
approached the table. ‘Let me guess, you got stuck in the submarine, right?’

‘Yes, something like that,’ I replied.

‘Ha-ha, happens every time!’

To Lucky’s left sat Niraj, who I remembered
from the meeting at their offices. Jamal sat to his right, already tucking into
the breadsticks, and opposite the men were three Eastern European-looking
models dressed in tiny cocktail dresses, all appearing rather bored. 

‘Meet Christina, Natasha and...’ Lucky pointed
at the best-looking and most scantily dressed of the three and paused. ‘What
was your name again, darling?’

‘Veronica,’ she replied, rolling her eyes and
refusing to unfold her arms like an insolent child.

‘Veronica, yes. How could I forget? But
something tells me I will remember your name by the morning.’ He laughed, but she
wasn’t amused. ‘Why don’t we order?’

The Michelin-starred menu consisted of an
impressive selection of the finest seafood dishes from around the world. I
couldn’t pronounce most of them, but decided to go for the fresh Fine de Claire
oysters baked in the shell with champagne sabayon. It was the most impressive-sounding
dish on the menu and I assumed, perhaps naively, that I wouldn’t be paying. As
I made myself comfortable, I glanced at the surrounding tables. The Russian man
and his two glamour-model friends from the submarine were now sitting at the next
table. The women competed for his attention as he poured oysters into their
mouths one by one, washed down with a bottle of Dom Pérignon champagne.

Lucky stood up and raised his glass. ‘Now that
we are all here, I would like to propose a toast to our new business partners.’
Jamal’s eyes lit up. ‘I am glad to confirm that we will be making a seed
investment into your real estate fund of a million dollars.’

I couldn’t believe my ears.

‘Wow, that’s great news, Lucky,’ said Jamal,
who looked overjoyed by the good news. ‘We won’t let you down.’

‘Of course you won’t, or I will come and find
you and break your legs,’ said Lucky with a stern look. Jamal turned white and
the table fell into an awkward silence, until Lucky burst into uncontrollable
laughter. ‘I had you there, didn’t I?’ Jamal nodded sheepishly. ‘May we make
shitloads of money together, all buy huge yachts and sail around the world with
beautiful topless supermodels.
Salut
!’

‘Cheers!’ We raised our glasses.

‘Now, let’s tuck into our amazing, overpriced,
unpronounceable food. Enjoy!’

I began my beautifully crafted dish, keeping
one eye on the fierce stingray that seemed to be watching my every mouthful
from the tank above, making me a little uncomfortable. I glanced over at Jamal
who was completely engrossed by his sea bass and truffle main course.

‘Jamal, this is the first time you have shut
your mouth since I’ve known you,’ said Lucky. The table erupted with laughter,
except Veronica, who didn’t seem to get the joke.

Lucky turned to confront her. ‘What, you don’t
find my jokes funny?’ he asked her. She stared at him nervously like a
remorseful schoolgirl. ‘You are not having a good time?’ Still no reply. ‘When
everybody smiles, you smile!’ The tables around us fell silent as many of the
diners turned around to see what the commotion was about. ‘I am paying you
enough for the night, so the very least you can do is smile!’ shouted Lucky,
jumping to his feet in anger. ‘Now smile, you bitch! Smile for my friends!’

Veronica was almost in tears, but out of fear
she forced her mouth into the faintest of smiles. As the tears began rolling
down her cheeks, I felt sorry for the poor girl, but I had no intention of
crossing Lucky, who looked possessed with rage. Her compliance seemed to
placate him and he began to calm down. ‘Good. Now finish your soup,’ he said,
and sat back down to finish his meal. 

As the restaurant slowly returned to normal, I tried
to ease the tension. ‘So Lucky, how is business going for you at the moment?’

He smiled before he answered. ‘Adam, I drive a
customised Aston Martin DB9, I have a fifty-metre yacht in the marina, and I
live in a ten-bedroom mansion. How good do you think business is, my friend?’
He laughed. ‘This city is a fucking cash cow.’

‘Point taken. But what is the secret, Lucky?
What are you doing right that others aren’t?’

He put down his cutlery and looked directly
into my eyes. ‘I am a successful real estate developer in the fastest-growing
market in the world. It’s really that simple.’

‘Come on, Lucky. Surely there’s a lot more to
your success than being in the right place at the right time?’

He noticed the hidden compliment and smiled. ‘Okay,
let me explain how this game works. If I want to construct a building, what is
the first thing I need? Land, right? So I approach the master developer,
Nakheel for example, and tell him I want a plot for let’s say a thirty-storey
residential building. I will make an offer, put down a 10 per cent deposit on
the plot, and I’m ready to start selling my project. Then I hire an architect,
design some nice brochures and DVDs and I am ready to sell. Make sense?’

‘So far, yes,’ I said.

‘To sell my building, I just need to call up a
few of my closest customers to a buy a floor each. They put down 10 per cent
each as a deposit, and within a couple of weeks my building is sold out and I
now have enough money to start construction. If I like, I can buy back from my
investors and resell to the broader market by throwing a launch party or using
a property agent. Every few months I collect another 10 per cent from my
investors, and they fund the construction without me having to put in any more
money. In the meantime, I can launch my next building and repeat the process. It’s
like taking candy from a baby.’ Lucky had just made Dubai property development
sound as easy as baking a cake.

‘Okay, that makes sense,’ I said. ‘But let’s
put some numbers on this: how much money are you guys actually making per
project?’ The mere mention of money made the girls play close attention.

‘Well, I can pick up a plot in a second-tier
location like Jumeirah Village South directly from Nakheel for, say, a hundred dirhams
per square foot, or about thirty dollars. Add another three hundred dirhams for
construction and another hundred for marketing costs, so total costs of five hundred
dirhams per square foot. Before even laying a brick, I can sell that building
in this market for twelve hundred dirhams per square foot with my eyes closed.
But for argument’s sake, let’s say I sell for a thousand. Just to be
conservative. That’s still 100 per cent profit margin. Not too bad, I think.’

It seemed the key to the success of Dubai’s
developers was off-plan sales. They could sell an entire building based purely
on the sales brochure years before any development was scheduled to begin.
Their initial outlay was a simple deposit to purchase the land and the
marketing costs to create the sales materials. As the actual construction costs
would be financed by the investors on a phased payment schedule until
completion, developers could make huge margins for minimal risk in a market
where demand was far outstripping supply and prices were going through the
roof. It was the ultimate example of OPM.

We finished our meal and to my relief Lucky
took care of the bill. He didn’t even glance at the number, which was certainly
substantial considering the amount of food and champagne we had consumed. He
simply pulled out his American Express Centurion card and handed it to the
hovering waitress who gladly took care of it. It was getting late now, and
after a great meal I was looking forward to crashing in my bed. But Lucky, it
seemed, had other plans.  

‘So, are you guys ready to party?’

‘What do you have in mind?’ asked Jamal.

‘It’s a surprise. Just wait and see!’ He was
clearly excited by what was in store. As we made our way out of the restaurant
and the Burj, we were ushered into two pearl-white, chauffeur-driven Rolls-Royce
Phantoms waiting outside. I got into one of the cars with Lucky, Veronica and
Christina, and Jamal and Natasha stepped in the other with Niraj. Our convoy
sped down the Sheikh Zayed Road, through Bur Dubai and the Shindinga tunnel
into the heart of Deira, the old part of the city. We eventually pulled up at
an old, inconspicuous hotel called the Carlton Towers. It hardly looked like a
party hotspot, but I had a feeling there was something big in store for us.

‘You like Indian music?’ asked Lucky as we got
out of the car.

‘Sure, why not?’ I replied.

‘And do you like Indian girls?’

‘Erm, I guess so.’ 

‘Good! Then you’re gonna love this place. It’s
owned by my good friend and we are his personal guests tonight.’

We followed Lucky into the dated lobby and down
a staircase towards the basement. The fading wallpaper and cracked marble
floors were a far cry from the grand lobby at the Burj. Unsavoury-looking
Indian men with side partings and moustaches were sitting on filthy sofas
smoking cigarettes and staring at us through their boozy eyes. Veronica was now
rather tipsy and struggling to walk in a straight line, oblivious to the groups
of men gawping at her every stumble. We arrived at a large door with the words
‘Hollywood, Bollywood’ in pink neon lights above. Muffled Indian pop music
could be heard inside.