The First Group Dubai – Stop Scammers

Short intro in TFG

The First Group is a company established in Dubai, owned by Aurum. It presents itself as a property developer and manager, especially in commercial real estate like hotel business. It features several hotels developed so far, operated by hotel chains, but also many other projects in development. They look for investors into their properties, promising great returns on investments in their sales pitch and hotel presentation. They will also present themselves as a wealth management program, but…

The Reality

With few hotels in operation, many other are still in development phase, hit with delivery delays of not months, but years! Meanwhile, investors gave their money and that money produce no returns in all these years. Don’t be SCAMMED by The First Group – read on for details:

Sales Pitch ROI

Furthermore, TFG presents in their sales pitch some impressive returns based on hotel occupancy rate in Dubai. But the returns on investment presented are not what you get!! Take a moment to calculate:

• what is the going rate for a room in Dubai (check on hotel booking websites for a hotel in similar area and star rating);
• now deduct from that price the reservation fee of the booking website (can be between 10-20%), deduct Dubai VAT rate (another 5%), deduct Dubai city tax (another 7%) – you will end up with a net room revenue per night at 70%-75% of listed reservation price;
• THE CATCH: you do NOT get 100% of net room revenue per night: 40% of it goes to hotel operator (to cover costs of staff, utilities etc), 20% goes to TFG as property managers, and you guessed it, you will get the rest of 40%;
• Now calculate by multiplying number of nights expected to be rented during a year with your own hotel room net revenue (and please do not count 365 nights in a year, but check the Dubai hotel occupancy index which is somewhere at 70%)
• RESULT: you will probably get around 1% to max 2% returns per year (you recover your invested money in 50-100 years!!). I think putting your money in a bank account would generate better returns than this, not to mention other investments opportunities.

Therefore with your 100% invested money, you will end up with only a percentage of the actual returns, having to share those returns with hotel operators (we say fair percentage) and TFG (outrageously a lot of money for doing nothing and delaying delivery due to bad management and deceptive sale presentation).

🚩 RED FLAGS

When dealing with TFG, there are many red flags along the way so we don’t expect you not invest with TFG because we say so, but we hope your analytical skills will come to this conclusion after noting these red flags:

• The Sales Pitch: note the Return on Investment presented and how they leave out what your actual net return will be (they will always say that the ROI is 7-10% per year, but they always fail to say that you will get 40% of it after deducting taxes and their share of the revenue – check Sales Pitch above for a break down)
• The Sales Pitch: ask clear questions about your potential investment and make notes of what their representative tells you. Ask for written confirmation of all that you were interested (email from them from an official email address) – you will see they will avoid giving such confirmation and that the official narrative is very different from what you are presented during the sales pitch. Potential questions: when will the hotel be ready (the hotel you are looking to invest in, and make clarification that you mean hotel operations, not building completion)
• The Sales Pitch: ask clearly about when the hotel you are looking to invest in with them will be ready. You will see they will always say a certain date (referring to building completion), but I am sure you would be meaning to when the hotel will be in operations, because that is when you would start making money of your investment. They will always push the completion date, but note that after building construction it would take for another 2 years for furnishing and hotel authorization, time your investment would not make money, but actually extra costs
• The Sales Pitch: at the end of the tour, you will most likely be taken to their office where a very intimidating push for you to sign will take place (🚩 red flag!). You will be asked to pay a reservation fee of $10k, money you will never see again if you end up paying. The contract for such a consistent investment will be 2-3 pages (🚩 another red flag because you will not be clear what you are getting into), but at point 7. of the contract you will be told that a later sales agreement will be given to you which you will have to sign – so they force you at this stage to sign something you do know what it consists. On point 4 of the contract you will see that only they (TFG) have the right to terminate the contract with them keeping the $10k fee, you have no such right (🚩 red flag again – be careful what you will sign – do not accept to sign such thing if they say “of course you would have the same right to terminate the contract..” – if it is not in the contract, you will not be covered).
• The Sales Pitch: they (TFG) will most likely offer you something of value if you buy into their hotel business. Most heard of is a Rolex, but also latest gadgets like iPhones etc. 🚩 Again a red flag – you will not see any of these things – if it will not be pointed in the contract that you will get something from TFG, after you give them the money, they will suddenly forget or give no answer to your emails. Not to mention that even if you get something, we hope you understand that it is still you that is paying for that from the overpriced investment.
• The Sale and Purchase Agreement: non-disparagement – with this SPA clause they assure you will not be able to say anything negative/derogatory about them even if it their fault entirely and they have no interest in fixing the situation. And as you will read on the TFG reviews – there are many negative comments towards this scam company. Based on this contractual clause, they are entitled to take action against you should you fail to abide.



• The Sale and Purchase Agreement: utility costs can be passed on to investors – as you will see from below contractual clauses, if they fail to deliver the business (hotel investment) on time due to any cause, even their poor management, you will be liable to pay utilities and other charges for a property you can make no use of (lets be clear, if you buy a room in a hotel, you will not be able to use it if the hotel has not started operations)

Together, we can STOP SCAMMERS like The First Group in Dubai. It is further unfortunate TFG ruins Dubai’s reputation as an investment opportunity simply because there are many real options out there in real estate for example (note that a precaution on this level is also required, from whom you buy and where you buy).