While U.S. real estate fades, Middle East booms

One entrepreneur is beating the U.S. real estate slump by taking his itsy-bitsy buildings to the Middle East.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

Photos
Exporting tiny houses Exporting tiny houses Exporting tiny houses
When the U.S. real estate market began cratering, scale-replica maker Real Model shifted its focus to a new and booming market: Dubai.
Are you better off than you were seven years ago during the last economic downturn?
  • Yes
  • No
  • About the same

(Fortune Small Business) -- Edward Leftwich loves to show visitors around the Mohammed Bin Rashid Gardens. It's a massive 4,000-building mixed-use project that he just finished constructing for a client in Dubai, complete with hundreds of waterways, roads, and parks. But you don't have to fly to Dubai to see it - the miniature city fits inside Leftwich's office in Atlanta.

Leftwich, 51, is the CEO of Real Model, a company that creates scale replicas of projects for real estate developers. The replicas can fetch several hundred thousand dollars.

Rather than rely on the troubled U.S. real estate market, Real Model expanded its operations to Dubai, financial capital of the Gulf region. Since opening an office there two years ago, Real Model has seen annual revenues shoot up from $200,000 to nearly $2 million.

Founded in 1985, the company won lucrative contracts during the 1990s housing boom. It built replicas of the Augusta National Golf Course, the Trump (TRMP) Towers in New Orleans, and Atlanta's Olympic facilities. But Leftwich was always wary of a slump.

"One market isn't a feasible business model," he says. "You have to be ready when it stops performing."

In 2006, just as the U.S. building boom started grinding down, Leftwich took a trip to Dubai. The large-scale projects he saw convinced him that the future of real estate lay in the Gulf. Real Model promptly opened a second office in Dubai, hiring 18 local employees. (He still has a staff of eight in Atlanta.)

The bet paid off: Real Model's Middle Eastern sales have soared, while the company's U.S. business has stagnated. The company recently landed deals with major firms such as Emaar, Nakheel, and Dubai Properties.

"In many cases architectural modeling is being replaced with sophisticated computer programs," says Ian Rusk, executive vice president at Zweig White, a construction research firm in Boston. "But replicas are still widely used for high-profile projects, which are concentrated in Dubai."

Real Model's replicas are filled with meticulously crafted touches such as layers of laser-cut Plexiglas, each less than a thousandth of an inch thick, and tiny pedestrians with hand-painted faces. Customers can control hundreds of LED lights via a touchscreen remote. Such attention to detail is how Leftwich aims to compete with his rivals in Dubai, who increasingly outsource their models to China.

"The Chinese prices are lower," admits Reza Khalili, founder of Dubai-based model maker I-CAM. "But the quality isn't as good."

Leftwich hopes to open another office next year in Abu Dhabi - the next hot spot for tiny buildings.  To top of page

What do you think of Leftwich's global strategy? Join the discussion.

Exporting tiny houses: A photo gallery of Real Model projects

Translation software still fails - badly

Doing business across time zones

Jihad or Jobs?: An American entrepreneur bets that economic opportunity can help heal the Middle East.
To write a note to the editor about this article, click here.

Ask a Question



QMy dream is to launch my own business someday. Now that it's time to choose a major, I'm debating if I should major in entrepreneurial studies or major in engineering to acquire a set of skills first. Is majoring in entrepreneurship a good choice? More
Get Answer
- Spate, Orange, Calif.

More Galleries
15 top executives with $1 salaries Some CEOs and founders agree to salaries of just $1 a year. But once goodies like bonuses and stock options are added in, some of those executives end up taking home many millions of dollars a year. More
Mercedes SL65 AMG: 621 horses of topless power Turn heads as you blow by traffic in this roadster convertible from Mercedes. More
Where the middle class is most unequal CNNMoney looks at the five states with the biggest differences in middle class incomes. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.