Source : Business Times – 11 Jun 2009
Sheik Sulaiman al-Fahim is at the centre of a storm over persistent delays involving Hydra Village
The Middle East property boom has produced more than its share of dream-spinners and dealmakers, whose brash attitudes eventually dwarfed the villas and towers that they promised to build.
Few, however, have made as much of a splash as Sheikh Sulaiman al-Fahim, a television personality from Abu Dhabi whose flashy lifestyle and acquisitive strikes into Britain’s premier soccer league have overshadowed his work as a real estate developer.
Now, as he is about to complete his biggest deal ever – the purchase of the Portsmouth soccer team in Britain – Sheikh Fahim finds himself at the centre of a controversy over persistent delays involving one of his development projects, Hydra Village.
Started in 2007, when property prices were at their peak, Hydra Village promised to transform a desert tract outside Abu Dhabi into a lush ‘eco-village’ of lakes, pools and 2,500 villas. It was to be completed by the end of this year; Sheikh Fahim now says that the project will be finished by 2011.
But with the development hardly begun, Hydra Village investors, most of whom are foreigners living in this oil-rich emirate, are in no mood for promises. Instead, they have started demanding that Sheikh Fahim prove that he has adequate funds to follow through on this project. The protest has become a public embarrassment for the publicity-shy Nahyan family, which rules the United Arab Emirates.
Whether he’s squiring Pamela Anderson around or bragging about his Lamborghini Versace sports car, Sheikh Fahim comes across as an anomaly in this cautious, slightly plodding city-state, where even the country’s most powerful sheikhs prefer to operate behind a cloak of anonymity.
And while Sheikh Fahim, who is 32, has deep ties to the ruling family, some experts wonder how much longer his flamboyant ways will be tolerated.
‘The ruling family needs to project an image of caution and conservatism – al-Fahim is more a symbol of an earlier era of excess,’ said Christopher Davidson, a professor at Durham University and author of the coming book Abu Dhabi: Oil and Beyond. ‘He has been a flashy front man for their money, but I am not sure for how much longer.’
Sheikh Fahim declined to be interviewed and would not comment on any aspect of this article. An executive at Hydra, Ahmed Khalil, said: ‘Hydra is on the right track under the leadership of Dr Sulaiman al-Fahim.’
Sheikh Fahim was little known before the founding of Hydra Properties in 2006. Since then he has cultivated his image, writing a book called Brand Builder and travelling as a goodwill ambassador for the United Nations.
According to Prof Davidson, Sheikh Fahim’s business has benefited from close connections to the ruling family in Abu Dhabi. Hydra is owned by the Royal Group, an investment conglomerate headed by Sheikh Tahnoon al-Nahyan, whom Sheikh Fahim has described as a mentor and who is a son of the former ruler Sheikh Zayed al- Nahyan, who ruled Abu Dhabi until his death in 2004.
On the Hydra website, Sheikh Fahim describes a vision that includes grand projects in Libya; Mexico; and Lahore, Pakistan – none of which are near completion – in addition to proposed developments in Abu Dhabi and Dubai.
‘At Hydra Properties, we believe that real property should go beyond the physical requirements of brick and mortar, of concrete and steel,’ his statement declares. ‘It must capture the essence of the human element and radiate the beautiful glow of life itself.’ But underneath the flowery prose, all may not be as advertised – whether that be Sheikh Fahim’s resume or the more pressing question of how he intends to complete his projects. For example, he has made it clear that he prefers the honorific Dr – or Doc, to his friends – in deference to the PhD in real estate investment that he says he received from the Kogod School of Business at American University in Washington.
Records at American University show that Sheikh Fahim was awarded an MBA, but there is no record of him receiving a doctorate there – the university does not even offer an advanced degree in real estate.
A lawyer for Hydra, responding in writing to questions, said that Sheikh Fahim received two MBAs from Kogod, one in finance and one in real estate.
The questions are particularly pointed about the Hydra Village project.
The construction area, on a stretch of desert on the outskirts of Abu Dhabi, is protected by a high wall. A colourful billboard with an alluring panorama of a woman meditating and children frolicking in green fields bears the Hydra slogan: Building beyond possibilities.
But a peek inside reveals the rough beginnings of about 50 of the planned 2,500 villas and beyond that, nothing but desert.
The Abu Dhabi property market has not suffered the sharp drop that has afflicted Dubai. In contrast to its sister emirate, Abu Dhabi sits on about 8 per cent of the world’s oil reserves; and while real estate prices have come down, tight government controls have prevented a steep decline.
While other big projects in Abu Dhabi have been delayed, they are in a much more advanced state than Hydra Village and other Fahim projects.
According to an internal Hydra spreadsheet viewed by The New York Times, the company is having difficulty collecting payments on its slow-moving projects. The document lists more than 1,000 investors who are late paying what they owe – a total sum of more than US$65 million.
In part, this may be because of the inability of Sheikh Fahim’s small office to keep pace with his frantic deal-making.
Jeffrey Craig Hoskins, who went from a stint on Sheikh Fahim’s television show to a brief job in Hydra’s accounts department, describes a chaotic work environment. ‘I was shocked how disorganised everything was – there is no way that they meet their deadlines,’ said Mr Hoskins, who is now a student in Cincinnati.
Prepaid real estate investments are high risk by nature, and some here hold the view that investors – who in many cases plunked down money without even signing a contract – are getting their due.
‘You are buying something that has not been built and then relying on the good offices of the developer to build it,’ said Matthew Hooton, a real estate lawyer in Abu Dhabi. ‘People need to take responsibility for their own decisions.’
In recent weeks, Sheikh Fahim has met with disgruntled investors. This month, he promised them financial concessions and better customer service.
Such promises are small comfort for Anne Birks, an English language teacher who, like many others, was so swept away by Sheikh Fahim’s vision that she sent him US$45,000 – without signing a contract – as a deposit to secure a lakeside villa in Hydra Village for her retirement.
Now, in addition to the delay, Ms Birks said that she had been told that there would be no lake.
‘I just wanted to end my years here,’ said Ms Birks, who insisted on being identified by her maiden name because she did want not to jeopardise her job in a government-owned university. ‘I had good faith – it just didn’t occur to me that an enterprise sponsored by the royal family could end up like this.’
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