Then, in 2002, Mr. Farkas had a fateful meeting.
Hotel mogul Butch Kerzner, just four years before he was to die in a helicopter crash in the Dominican Republic, introduced his friend to Sultan Ahmed Bin Sulayem, the chairman of Dubai World.
The introduction was to change the course of both Mr. Farkas’ business life, and, it’s probably not exaggerating to say, that of Dubai World.
The following year, Mr. Farkas sold Insignia ESG to CB Richard Ellis for $415 million, and he founded Island Capital Group, a firm dedicated to building and managing marinas around the world that berth mega-yachts. “I was taken to Dubai by Butch with a tremendous degree of frequency,” Mr. Farkas recalled. “Sultan and I became fast friends. We came to know each other very, very well.”
In fact, so close did he and Mr. Sulayem become that in 2007, the Dubai World chairman accompanied Mr. Farkas to Yom Kippur Neilah services at Central Synagogue on East 55th Street, and then to his father’s house to break fast for both Ramadan and Yom Kippur.
“Andrew saw a real opportunity and a real need in Dubai,” said Robert Lieber, New York’s deputy mayor for economic development, who, when at Lehman Brothers in 1993, helped take Insignia public. “People didn’t know what Dubai was in 2002. Abu Dhabi had more ring to it for a lot of Americans, and even that didn’t mean a lot.”
That would soon change. Mr. Farkas’ friend Butch would embark on Kerzner International’s Atlantis The Palm, Dubai hotel, another development now emblematic of the emirate’s orgiastic excesses. For his part, Mr. Farkas would work hand-in-hand with Mr. Sulayem to develop Dubai’s marinas. In 2003, Mr. Farkas created a funding mechanism to fuel Dubai’s supercharged real estate machine, joining Dubai Islamic Bank and Istithmar in the creation of ENSec, which has issued billions in mortgage-backed securities for developer Nakheel’s Palm Jumeirah, among others.
“Dubai is to the U.K., Europe and Asia as Miami is to New York,” Mr. Farkas explained. “It’s the only place to which people who live in those venues can get under five or six hours where the weather is reliable 10 months out of the year; the waters and beaches are beautiful and pristine; that’s full of five-star restaurants, nightlife, very interesting cultural opportunities and history. It’s a neat, neat place.”
Its ascent, said Mr. Farkas, was bolstered in part by the weak dollar.
“[W]hen they really commenced building what was, in no small part, a tourist-based economy, the dollar was quite weak, and their currency, the dirham, is hard-pegged to the dollar,” he said. “And the result, since the dollar was weak, they were able to build there quite inexpensively. Someone from the U.K., for example, could go there and buy a villa or a condo for $250 to $400 a foot, which when the pound sterling was at two bucks, it was nothing. It was free. And so, capitalizing on that dynamic, the country sort of turned itself into a tourist Mecca, pardon the turn of phrase. And it was very effective. It worked very, very well.”
And so it did. For a while.