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Source: http://www.arabianbusiness.com

It was in the late nineties that the government decided to allow foreign ownership of land in Dubai, thereby effectively releasing the biggest genie from a bottle the Gulf had seen since someone, many moons ago, decided to investigate what the black sticky stuff in the sand was.

Robin CashFrom the start, my father was incredibly sniffy about the whole idea. When expatriates were first allowed to buy flats, in towers where the Marina now is, he pointed out that the flats were pokey, and the infrastructure was poor.

Thereafter, on each occasion that I returned to Dubai for university holidays, he would respond to my gasps of amazement about the pace of development in the emirate with grim predictions. “It is a bubble,” he would say. “The whole thing is going to go pop. Who is going to live in these flats? Construction workers? And what happens when they’re finished and go home?”

For ten long years, Dubai and the property market defied my father. While he determinedly stood on the sidelines, millionaires were made daily by the dozen, and the machine became ever more rampant and sophisticated.

Where, at the start of the 2000’s, frowsy housewives used to apologetically show potential buyers around flats, by the second half of the decade the estate agency business was a jungle populated by the same type of sharp-eyed spivs in suits you’d find in any other major city. The developers were the same. There was a gold rush going on, and everyone except my father knew it.

Robin Lohmann, this week’s print issue cover star, certainly knew it. I first interviewed him in March last year, when he was in his pomp. He was a breath of fresh air. In an industry of frantic money-men, Lohmann was a well-mannered model of assured calm. From behind an unbelievably huge desk, in an office whose wall-to-wall windows looked out over the ocean, he spoke quietly and with intelligent certainty. Not only was he making incredible sums of money, but he was happy to talk about how it was done.

He said he had 8,000 global investors, that he could sell entire buildings in two hours, and that construction of his celebrity branded towers would cost 1.5 billion dirhams. He even talked of profit margins of close to fifty percent.

In those days, of course, the world was a different place. We were all on the brink of something massive. To his credit, Lohmann saw it coming, but he thought it would only strengthen Dubai’s property story. He said: “I am quite surprised the stock market is still so stable. I was expecting a worse crash. It will come. Am I worried? No. There is so much money coming into Dubai from the rest of the world, from countries where economies are slowing. From Russia, from India, from Turkey. And then there are institutional investors coming. In America and Europe, you make six percent rental returns, maximum. Here you make up to twelve percent, tax free. This market is a huge, huge opportunity.”

Back then, Lohmann was the poster boy for the Dubai property story. His investors would no doubt beg to differ with me, but there is something sad about seeing him brought so low today by the unwinding of the market. Those investors believe that Lohmann is being frustratingly opaque in his dealings with them – they want to know where their cash has gone. But if what he says in our interview with him is true, then he is as much the victim of a lack of transparency as anyone who has given him money is. This interview is an effort at transparency, and Lohmann deserves credit for being man enough to do it. (I predict many more property developers will soon be spilling their hearts out, too: it’s funny how pressure makes people chatty).

Incidentally, I did eventually persuade my father to come into the market with me. In August last year, we were on the brink of buying a one bedroom apartment in the Marina for 2.5 million dirhams. I lost the mortgage forms at the last moment. We said we’d sort it out in when we returned from our respective holidays. Luckily, we never did.

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