Spotting the dodgy operators saves time and money

In an executive interview with AME Info, Amlak Finance CEO Mohammed Ali Al Hashimi has warned buyers of Dubai property to beware of real estate projects where the developer does not have a finance company on its signboard.

This is not merely a ploy to deter clients away from developers who are not associated with Amlak. It is a very wise comment. For any finance company will first do a 'due diligence' test on a developer before becoming associated with a multimillion dollar project. And if finance companies will not do business with a developer should you?

It makes sense also to stick with known names, or even better quasi-government or government developers. With the latter at least there is a guarantee that an entity will never flee the country and that your money is being handled by honest bureaucrats.

For the danger in any booming property market is that the international sharks arrive, a Diaspora of dodgy businessmen who float from one market to another dreaming up schemes to relieve excess liquidity from the local inhabitants.

At the personal level there are the annoying, 'foot-in-the-door' independent financial advisers whose techniques range from cold telephone calls to random emails. There must be poor souls who actually respond or they would not do it.

Here short-term promises may quickly turn sour, and in the worst case scenario the entire investment scheme on offer is a worthless scam. Or more typically things will not work out as expected over a longer period of time and various charges and fees erode performance to the benefit of the scheme and its agents.

As with the real estate example, just be careful who you trust with your money. Do they have blue-chip financial names involved? Who are their auditors and lawyers? Or are the firms ones that you have never heard of before and acting out of an offshore financial centre with a questionable reputation?

It is very hard for governments or central banks to police these matters, and in a free market economy the onus is on the individual concerned to do his or her own 'due diligence'. But in cases of outright fraud the competent authorities will do their best albeit often falling between different regulatory regimes.

Be vigilant. The Middle East is prospering at present. However, the old adage that 'a fool and his money are easily parted' is worth remembering, if only to make sure that you are not that fool.