Yesterday's man
An interview with Paul, a 25-year-old everyman refugee from Dubai’s property market crash.
June, 2009
There he sits on his bespoke sofa at three o’clock on a weekday afternoon. Pale, unshaved and chain-smoking, dressed in a grubby t-shirt and shorts, he doesn’t look like capitalism’s young dream anymore.
This flat, that’s a duplex to you, in the Dubai World Trade Centre Apartments costs AED250,000 ($68,000) a year to rent, and the lease will expire at the end of next month. Paul paid for it – well, almost all of it, but we’ll come to that – upfront. Not bad for a then 24-year-old who left school in Britain at sixteen. Actually, when you think about it, not bad for a young man who before he came to the UAE was working in the high street branch of Carphone Warehouse in Peterborough.
As the sun streams in through the panoramic windows, lurid pop videos light up the wide-screen television in front of him. Paul, who is now gazing at an expensive laptop computer, says: ‘Of course, I haven’t got a pot to piss in anymore.’
But he doesn’t say this as sadly as you might expect.
Why isn’t Paul as sad as he might be? Well, it is only a hunch, but perhaps it is because the optimism that defines him hasn’t yet been entirely walloped out of him by the slings and arrows of the outrageous property crash. Paul hasn’t got any qualifications, you see, unless you count a winning smile and an aptitude for the gab, but last year, in six months, he made over half a million dirhams selling properties in Dubai. Perhaps you’d be optimistic about life and the future, too, if ever life had treated you so kindly.
‘I have read many autobiographies by people who have been on their last legs and about to give up when suddenly all the money comes pouring in. I’m not a pessimist,’ he says of his current predicament, before admitting there is a good chance he would be arrested for his debts if he tried to leave the country.
Paul came to the UAE for the first time when he was twenty. He had a girlfriend who had moved to Abu Dhabi, and he used to come out to visit her.
He says: ‘More and more I was getting into liking the place, the lifestyle and that. And then one time when I was out here on holiday, I made the decision to stay. It was a big decision as that same month I had bought my first house in the UK and the first mortgage payment hadn’t gone out of my account. At the time, I was selling telephones in Peterborough. When I made the decision, I expected a slap on the wrists from my parents, but instead my father said “well, you’ve got more balls than me, and I know you’ll make it work.” So that was nice.’
Not long afterwards, he and his girlfriend moved to Bahrain, where Paul worked as a salesman on an economic analysis project. His pay was ‘about 7,000 dirhams basic’ a month, with accommodation thrown in. He was there for almost two years. After that, a stint selling a media service that was hoping to set up in the emirates (16k basic), and then, ‘for fun, well I was 22, and I’d just done two pretty serious jobs,’ a year working for Heineken ‘schmoozing hotel managers.’ (16k basic).
‘And then, in June last year, I thought to hell with it and went into property. I made a lot of money very quickly.’
Paul was never a ‘flipper,’ the term for the sharps who bought and sold apartments and villas many times over for huge profits before they even existed. Rather, he worked for a company that found buyers for whole floors of apartment and office blocks all over Dubai.
His eyes come alive as he talks about those days: ‘In the first month I got a cheque for AED200,000. The others were for between AED180,000 and AED100,000. It was great. At that point, everything was going fantastic. Actually, it felt a bit surreal. But it just seemed that everyone else was doing that well as well.
‘People just wanted to buy stuff. The atmosphere was amazing. There was money everywhere. It wasn’t a hard sell at all. Russians, Brits, locals, Pakistanis, everyone, people were constantly ringing me and asking what my new project was. And the prices were going up so fast. It was getting silly really. These projects, people just bought the land from the developer, didn’t really do much with it, but sold it on for huge profit.’
Paul, by his own admission drunk on success, did not squirrel the money away for a rainy day. Far from it. In fact, he promptly went in search of more sunshine. ‘I dropped AED40,000 on a no expenses spared week in Ibiza for me and the missus. At the time, I would have been happy paying double because it was such a good week.’ He also put AED100,000 down on his flat, and kitted it out with some style.
He gestures nonchalantly at the furniture and the massive audio system, saying: ‘It’s all from The One, so it was certainly quite expensive.’
His twin brother got married in Mauritius so Paul flew his entire family from Peterborough to Dubai for a few days, and then on to Mauritius, where he put them all up in a five-star hotel. ‘I probably spent more on my brother’s wedding than he did,’ he says with a wistful laugh.
It was in August last year that the first tremors of the coming ructions in the local property market were felt. It started innocuously enough, given what was to follow. Morgan Stanley released a market forecast predicting property prices in the emirates, after years of double digit growth, might come off by ten to fifteen percent in 2009. Many in the market dismissed it as nonsense and continued buying and selling regardless.
‘Back then, the money was still coming in fine and it seemed like no danger,’ Paul says cheerfully. ‘We’d done company analysis on the market and we thought there were a few more years in it. Obviously, the recession cut all that a bit short.’
It was also in August that it emerged there was a problem with the processing of Paul’s visa to work with the company he was then with. He now shrugs and says he never found out what the problem was. Dismissing it as ‘just one of them things,’ he moved on to set up another property company with a partner he now describes as ‘a complete cowboy, a complete Delboy Trotter.’
This time getting a visa didn’t seem a problem, but then ‘we didn’t really push it very hard, to be honest with you. The guy I was working with was very relaxed.’
It would prove academic. The new company was set up, and the property market promptly collapsed. Cityscape, the industry’s annual showpiece trade show/shindig coincided almost precisely with the nosedive in values.
Paul says: ‘At the end of August, through September and October, you could sense that people were starting to think “I need to sell this before I can put money into that”. There were more sellers than buyers. But by November and Cityscape the situation was awful. Cityscape was an absolute bomb. No one was doing any business. It was in November that all the speculators started tearing their hair out and saying “what do we do? Just get rid. Zero premiums”, trying to rescue what money they could. It was a very bad time.’
Judging from the tone of his voice, it was at around this time that Paul started to fall out of love with the property industry. He says: ‘I’d been watching the way some people worked. As an industry it was pretty cut-throat and ruthless. And that is not who I am. I wasn’t trying to screw people. I made good money, but I was fair and honest. Which was quite rare.’
It is all very well being fair and honest, but by the start of 2009, Paul had a sizeable problem. He had no stream of income and he was running out of money, fast. The due date for the last AED75,000 instalment of his rent was also rapidly approaching. Paul was starting to panic. He needn’t have. Without being asked, his current girlfriend, an air hostess, took out a bank loan for the entire amount and presented it to Paul.
‘She is absolutely wonderful, my missus,’ he says fondly. ‘She makes me a bacon sandwich every morning. Nothing tastes as good as a bacon sandwich made by your missus first thing in the morning, does it?’
Since then, trying to get by in a manner markedly different to the flamboyant lifestyle the pair had become accustomed to in the second half of 2008, he has run up debts he says are ‘in the region of AED50,000.’
‘The banks have been pretty understanding. I explained to them that people are losing their jobs everywhere. I was hoping to refinance my debt, but working in real estate, they won’t touch you. I told them: “look, once I get my new company sorted, and my visa, I will be able to pay you back.” They’ve said it is okay. There was one text, about me rotting in jail, from someone who pertained to work for the bank, but nothing else as bad.’
Paul’s new business idea involves working closely with international banks in currency exchange. By putting up a million pounds, he says he can secure currency exchange rates that are preferential to ones available at normal money exchanges. It sounds like a complicated business to be in. Paul nods his head vigorously. ‘I thought it sounded pretty simple,’ he says, ‘but it turns out we have to be FSA-regulated, and that is not straightforward at all.’ Before the interview, Paul says he was trying to read a 180-page manual on what it takes to be FSA-compliant.
I put it to him that lots of people who got their fingers burnt in the property crash skipped the country. Why didn’t he? He says: ‘I don’t want to do a runner. I think this new business is such a good opportunity, and I have invested so much in it personally, it’s not something I want to give up on. To me, it is not about saying “well, the glory days are gone, what am I am going to do? Well, let’s eff off back to the UK and work a nine to five.” There are no jobs in the UK at the moment either, by the way.’
Besides, he says he has found an investor who has pledged a million pounds to his new venture, and that the money is in a bank account, good to go.
Talking to him, it is hard not to like Paul. His is the attitude on which economies turn, regardless of how brilliant or not his business acumen is. Perhaps the money exchange idea won’t work, but you would bet that should it fail Paul would merely dust himself down and try something else. He explains his only regret about what has happened to him is that he ‘didn’t put a bit away,’ but adds he is not bitter. Would he do it all again, if the property market suddenly recovered? He shakes his head.
‘No. It’s too up and down. And besides, where else but Dubai could I be the CEO of a currency company with offices in London and Dubai, at 25? In Europe people have to work their way to the top.
‘I’d like to be in the Middle East for another five years, and then if there’s another emerging market that is safe like Dubai and enjoying an economic boom, I’d like to go there.
‘Do you know where that is?’
This interview was first published in Arabian Business magazine