With one press of the send button on his fax machine in February last year, the New York property magnate Andrew Farkas immediately became an outsider in Dubai.
Until that moment, he had enjoyed years of unrivalled access to the upper echelons of the emirate's business elite and its biggest conglomerate, Dubai World.
The fax, according to people familiar with the matter, was sent to Istithmar and exercised an option in a contract drawn up when Mr Farkas's company and the Dubai World investment outfit jointly invested in 450 Lexington Avenue in New York City in 2006.
The option forced Dubai World to buy out Mr Farkas's share with no argument even though the property market was in freefall.
"It was quite a shock," one source said of the moment the fax arrived, describing how staff rushed around to figure out if all the joint investments included such clauses, called "put options".
The souring relationship ended later that year with Mr Farkas liquidating nearly all his co-investments with Dubai World and selling his UAE marina business to a company linked to the head of Qatari Diar, one of the country's biggest investment arms.
It was a dramatic turn of events for the heir to a department store fortune, a yachtsman and property millionaire who had discovered the ambitions of Dubai in 2002. After being introduced to Sultan bin Sulayem, the chairman of the newly created Dubai World conglomerate, Mr Farkas quickly rose to become a major adviser and dealmaker for the emirate over the next seven years.
"He was the connections man," Muneef Tarmoom, the former chief executive of Istithmar, said of Mr Farkas. "He knew everyone in New York. Whatever introduction he did, he usually would get a cut on it."
Indeed, Mr Farkas made introductions for Dubai to some of its biggest business scions, including Donald Trump, who later agreed to advise and lend his name to a Nakheel project, and the corporate raider Carl Icahn, who convinced Dubai to invest more than US$2 billion (Dh7.34bn) in Time Warner during a failed takeover bid.
While he helped Dubai to earn millions with an investment in a trophy New York building, 230 Park Avenue in Manhattan, he also played a role in Istithmar's bold strategy to stake a claim for itself on the global stage that contributed to the massive debt obligations it is now in the final stages of restructuring.
Mr Farkas showed an acumen for business from an early age, founding a database management company at the age of 16. As the grandson of the founder of Alexander's department store in New York, he was attuned early on to the often tough world of profits and losses, he has said in interviews.
After graduating from Harvard University, he took a job at Salomon Brothers but soon left and founded his own property investment company, Metropolitan Asset Group. The company eventually became Insignia Financial Group, one of the largest owners and operators of multifamily housing units in the US.
The company controlled some 350,000 homes and 200 million square feet of commercial space.
It was during this time that he first ran into Andrew Cuomo, the candidate for governor who was the son of the former governor of New York, and at that point the secretary of housing and urban development under Bill Clinton. Mr Cuomo had investigated Mr Farkas's company for alleged kickbacks and operating housing projects with "abysmal" conditions.
The case was later settled and Mr Farkas sold the apartment business for $910 million in 1998. In 2001, Mr Farkas and Mr Cuomo met again and forged an unlikely friendship that culminated with Mr Farkas being appointed as the finance chairman in Mr Cuomo's current campaign.
In 2002, Mr Farkas made another crucial connection. Sol and Butch Kerzner, the hotel magnates from South Africa, introduced him to Mr bin Sulayem. At the time, Mr bin Sulayem was overseeing an increasingly ambitious portfolio for the Dubai Government that led to the creation of a single conglomerate, Dubai World.
Just three years after tht meeting, Mr Farkas and Istithmar forged their first property deals in New York and embarked together on a marina venture in the US Virgin Islands called Yacht Haven Grande. Istithmar also bought 29 per cent of Mr Farkas's marina development and managment company, Island Global Yachting.
Mr Farkas did his first property deal with Istithmar in November of 2005, buying 230 Park Avenue for $705m. It was sold in 2007 for $1.15bn, netting hefty profits for both Istithmar and Mr Farkas.
After that successful deal, Istithmar partnered with Mr Farkas to buy 450 Lexington Avenue for $600m in April 2006. They also joined forces to buy the W Hotel Union Square in October of that year for $285m, and purchased 73 per cent of the Mandarin Oriental at Columbus Circle in December in a transaction that valued the property at $340m.
Istithmar still holds a stake in all of those buildings aside from the W Hotel, which it lost in foreclosure proceedings this year.
Mr Farkas also helped set up the Emirates National Securitisation Company (ENSeC), a joint venture between Island Capital Group, Istithmar World and Dubai Islamic Bank tasked with developing a market for securitised mortgages in the Gulf. That company was later closed down in the midst of the financial crisis.
Flush with cash from his investments with Dubai and previous business successes, Mr Farkas bought a townhouse on East 73rd Street from JChristopher Flowers, the famous banker, for $23m in 2007. By 2008, though, the heady days of Dubai investment were coming to a close.
Island Capital said in a statement that it urged Istithmar to liquidate their joint investments in 2008 as the crisis began to spread into the UAE.
"450 Lexington and the W Hotel would have been successful investments had everyone agreed to sell the properties when we suggested that they be sold," it said. "We were vetoed on that decision by Dubai, which had a longer term perspective. We asked that Dubai monetise our minority positions in light of our different perspectives."
The one deal that Mr Farkas said was not successful was Island Global Yachting (IGY), which he says fell apart because of the downturn in the Dubai economy.
"When that happened and all development ceased, [IGY's] contract to design and develop 40,000 berths was no longer viable," he said. The contracts were cancelled and Mr Farkas sold the remainder of the business in the Middle East to Ghanim Bin Saad al Saad and Sons Holdings of Qatar. Within seven years, the relationships founded in the boom era had all but dissolved, save for one last joint investment in the Mandarin Oriental. Istithmar is in the midst of restructuring its investments and Island Capital bought one of the largest commercial-mortgage-servicing specialists in the US in March.
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The specs
Price: From Dh180,000 (estimate)
Engine: 2.0-litre turbocharged and supercharged in-line four-cylinder
Transmission: Eight-speed automatic
Power: 320hp @ 5,700rpm
Torque: 400Nm @ 2,200rpm
Fuel economy, combined: 9.7L / 100km
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
Results
STAGE
1 . Filippo Ganna (Ineos) - 0:13:56
2. Stefan Bissegger (Education-Nippo) - 0:00:14
3. Mikkel Bjerg (UAE Team Emirates) - 0:00:21
4. Tadej Pogacar (UAE Team Emirates) - 0:00:24
5. Luis Leon Sanchez (Astana) - 0:00:30
GENERAL CLASSIFICATION
1. Tadej Pogacar (UAE Team Emirates) - 4:00:05
2. Joao Almeida (QuickStep) - 0:00:05
3. Mattia Cattaneo (QuickStep) - 0:00:18
4. Chris Harper (Jumbo-Visma) - 0:00:33
5. Adam Yates (Ineos) - 0:00:39
Tax authority targets shisha levy evasion
The Federal Tax Authority will track shisha imports with electronic markers to protect customers and ensure levies have been paid.
Khalid Ali Al Bustani, director of the tax authority, on Sunday said the move is to "prevent tax evasion and support the authority’s tax collection efforts".
The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. As of May 1, importing any type of cigarettes without the digital marks will be prohibited.
He said the latest phase will see imported and locally produced shisha tobacco tracked by the final quarter of this year.
"The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," he said.
As with cigarettes, shisha was hit with a 100 per cent tax in October 2017, though manufacturers and cafes absorbed some of the costs to prevent prices doubling.
COMPANY%20PROFILE
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
THE SPECS
GMC Sierra Denali 1500
Engine: 6.2-litre V8
Transmission: 10-speed automatic
Power: 420hp
Torque: 623Nm
Price: Dh232,500
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
THE SPECS
Touareg Highline
Engine: 3.0-litre, V6
Transmission: 8-speed automatic
Power: 340hp
Torque: 450Nm
Price: Dh239,312
The Light of the Moon
Director: Jessica M Thompson
Starring: Stephanie Beatriz, Michael Stahl-David
Three stars
The biog
Favourite food: Fish and seafood
Favourite hobby: Socialising with friends
Favourite quote: You only get out what you put in!
Favourite country to visit: Italy
Favourite film: Lock Stock and Two Smoking Barrels.
Family: We all have one!
Biog:
Age: 34
Favourite superhero: Batman
Favourite sport: anything extreme
Favourite person: Muhammad Ali
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Key changes
Commission caps
For life insurance products with a savings component, Peter Hodgins of Clyde & Co said different caps apply to the saving and protection elements:
• For the saving component, a cap of 4.5 per cent of the annualised premium per year (which may not exceed 90 per cent of the annualised premium over the policy term).
• On the protection component, there is a cap of 10 per cent of the annualised premium per year (which may not exceed 160 per cent of the annualised premium over the policy term).
• Indemnity commission, the amount of commission that can be advanced to a product salesperson, can be 50 per cent of the annualised premium for the first year or 50 per cent of the total commissions on the policy calculated.
• The remaining commission after deduction of the indemnity commission is paid equally over the premium payment term.
• For pure protection products, which only offer a life insurance component, the maximum commission will be 10 per cent of the annualised premium multiplied by the length of the policy in years.
Disclosure
Customers must now be provided with a full illustration of the product they are buying to ensure they understand the potential returns on savings products as well as the effects of any charges. There is also a “free-look” period of 30 days, where insurers must provide a full refund if the buyer wishes to cancel the policy.
“The illustration should provide for at least two scenarios to illustrate the performance of the product,” said Mr Hodgins. “All illustrations are required to be signed by the customer.”
Another illustration must outline surrender charges to ensure they understand the costs of exiting a fixed-term product early.
Illustrations must also be kept updatedand insurers must provide information on the top five investment funds available annually, including at least five years' performance data.
“This may be segregated based on the risk appetite of the customer (in which case, the top five funds for each segment must be provided),” said Mr Hodgins.
Product providers must also disclose the ratio of protection benefit to savings benefits. If a protection benefit ratio is less than 10 per cent "the product must carry a warning stating that it has limited or no protection benefit" Mr Hodgins added.
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
Name: Peter Dicce
Title: Assistant dean of students and director of athletics
Favourite sport: soccer
Favourite team: Bayern Munich
Favourite player: Franz Beckenbauer
Favourite activity in Abu Dhabi: scuba diving in the Northern Emirates
Miguel Cotto world titles:
WBO Light Welterweight champion - 2004-06
WBA Welterweight champion – 2006-08
WBO Welterweight champion – Feb 2009-Nov 2009
WBA Light Middleweight champion – 2010-12
WBC Middleweight champion – 2014-15
WBO Light Middleweight champion – Aug 2017-Dec 2017
UAE%20medallists%20at%20Asian%20Games%202023
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Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
