Metropolis of Gold: How Dubai’s treasured steel trade was constructed
(CNN) – As a child, Mihir Vaya helped his father run his young jewelry business in Dubai.
He remembers taking him across Dubai Creek in an Abra boat when he was selling his pieces. He remembers when the Gold Souk, now home to hundreds of retailers, was just a few rickety stalls sticking to the banks of the river like barnacles. But most of all, he remembers helping his father in his workshop. He and his sister held gold wires so that they could be wound into intricate jewelry.
“It was probably nothing, those little jobs. But you felt so important,” says Vaya. “I’ve tended to work there ever since.”
Ashwin Vaya, Mihir’s father, is one of the thousands of Indian gold dealers, jewelers, artisans and businessmen who flocked to Dubai in the later years of the 20th century for their fortune in the burgeoning gold trade. Along with enterprising Emiratis and other immigrants from the region, these are the people responsible for Dubai’s rise to an international center for gold.
Prior to the pandemic, the gold and jewelry market accounted for 20% of the UAE’s total non-oil exports – most of which came from Dubai. An estimated 20% to 40% of the world’s gold stocks pass through Dubai each year.
Rise of the Souk
The labyrinthine alleys and carved wooden roofs of the Dubai Gold Souk have hardly changed in the last century, apart from a few modernizations.
What has changed is its size and scope. Over the years, the souk has grown from around 400 square meters into a huge power plant more than two kilometers wide and three kilometers long.
There are now more than 700 traders here, mainly in the Gold Souk or the Meena Bazaar on the other side of the stream. Many of the businesses here have been in family hands for decades.
When the Gold Souk began in the early 1900s, there were only a handful of local jewelers based on the banks of Dubai Creek, trading along the Spice Route. Things took off in the 1940s as new trade policies encouraged Iranian and Indian entrepreneurs to settle down. But it was in the decades after the 1970s, when the city’s fortunes changed with the discovery of oil, when things really took off.
Mihir Vaya’s father introduced him to the business when Mihir was a child.
City of gold
Jayant Javeri fondly remembers those heady days.
Originally from Mumbai, Jayant came to Dubai with his brother Anil in 1971, the same year the United Arab Emirates was founded. The Javeri brothers grew up in the gold business in Bahrain – their grandfather started a money exchange company that also sold gold bars, and their father helped. But the Javeri brothers wanted to start their own business.
Her first business in Dubai was a general trading company that traded gold on the orders of her grandfather.
In 1990, when the demand for gold in the Gulf gradually increased, they founded Javeri Jewelery, the first gold shop in the Meena Bazaar in Bur Dubai. Today the Meena Bazaar is home to hundreds of large jewelry chains and family-run businesses, which is slightly cheaper for sellers than the Gold Souk. But in 1990 it was just the Javeri brothers and “a few other buildings”.
In the years that followed, as the news spread across India, thousands more turned up in Dubai to mimic the success of those before them. The 1990s were the height of the UAE gold rush.
This sprawling bazaar of gold dealers, diamond dealers, and jewelers took the form it maintains to this day – the glittering displays appear to woo passers-by by dazzling them. You will not see these ads in Macy’s.
Nicknamed the “City of Gold,” Dubai is a relatively affordable destination for buying gold and precious stones – a reputation it has to this day.
This was due to low taxes (5% VAT, introduced in 2018, is the only tax levied on gold here and tourists can claim it back), fierce competition, government regulation and the fact that, unlike anywhere else in the world, jewelry prices in Dubai are not fixed and follow the daily market price of international gold prices. Yes, that means you can haggle – even in a store.
Jayant and Anil Javeri came to Dubai from Mumbai in 1971.
Mihir Vaya and his family’s journey to the UAE was similar to that of the Javeris. Mihir’s grandfather opened a jewelry store in Gujarat, India in the 1940s. He made and sold the pieces himself. His son Ashwin then took over.
Ashwin expanded the business to focus on wholesale jewelry and went to Kuwait to make his fortune. When the Kuwait War broke out in 1990, he went to Dubai.
“We grew up in the jewelry business. We saw Dad go to the souk and get a good price. We took the abra to the Meena Bazaar. There weren’t any big dealers back then,” says Mihir.
Mihir started working full time with his father when he was 21. Over the past few decades, he has watched the gold trade take its current form.
“There is now immense competition and all trends have changed. It used to be all handcrafted jewelry. Now everything is designed on the computer and we have casting machines. It is less personalized and more mass-produced.”
Modern trade is not without controversy. The UAE imports gold from a number of countries involved in artisanal and small-scale gold mining (ASGM), which, while a major source of income for rural communities, is often unregulated and involves hazardous working conditions.
Secret of success
Mehul Pethani has a loyal customer base at Cara Jewelers.
For most gold sellers in Dubai, the secret to success is having a loyal set of regular customers and a relationship built over decades. People don’t tend to look for bargains here. The clientele is not moody.
Mehul Pethani is proof of that.
Pethani can be found at Cara Jewelers in the sprawling gold and diamond park in Al Quoz on most days and usually takes care of one of his loyal customers while a line patiently forms in the background.
The name Pethani is productive in these parts. Mehul alone has three cousins and a brother-in-law who work here. Many more are men he has known since childhood.
It’s not a coincidence. Founders Kiran and Anil Pethani dismantled their hometown of Gujarat so that workers could occupy their first business in 2005.
Mehul arrived in Dubai in 2007, spoke little English and knew nothing about the gold and diamond trade as he had grown up in a farming family.
Fast forward 13 years and he’s one of the most sought-after salespeople in town. He says more than 90% of his customers are repeat customers.
“It’s about honesty and clarity with customers,” he says. “Whatever you sell, you have to tell the truth in order for it to be value for money.”
That doesn’t mean haggling, says Mehul, because regular customers trust him so naturally that they know that they are already getting the best price.
In fact, it’s not uncommon to pick up a piece of jewelry and ask for a lot less than what you’ve stated. This is the element of trust that Pethani speaks of.
The salespeople also don’t work on commissions, which means Mehul works six days a week, 12 hours a day (six on a Friday) for the love of the job.
Sanjay and Vinay Jethwani are the founders of Meena Jewelers.
And while some of the early gold trading companies and jewelry stores like Javeri Jewelers have remained decidedly old-fashioned, others have moved on to expand.
Cara, Damas and Joyalukkas are household names today. Pure Gold Jewelers’ founder and Indian businessman Firoz Merchant has become one of the city’s most prolific philanthropists, spending millions of dirhams freeing expats in prison. Malabar Gold now has more annual sales than Tiffany and Co and has 215 stores around the world.
It is impossible for Jayant Javeri to compete with these great players. Javeri’s prices are higher because they have to be; His business doesn’t buy gold in bulk. He often looks at these competitors and thinks “their business is better than mine”.
However, the larger outlets believe there is room for everyone in the market.
Babu John, founder of Sky Jewelery, grew up in Kerala, India before opening the first Sky Jewelery in Dubai’s Gold Souq in 1988. Today he has more than 20 showrooms in the Gulf. There are three shops within 200 meters of the Gold Souk. But pre-pandemic business was still booming.
The brothers behind the successful Meena jewelers chain, Sanjay and Vinay Jethwani, had been considering a huge expansion of the business in Dubai last year, which they had taken over from their father in 1993. That was interrupted.
Because after decades of rapid growth in the UAE gold trade, it was the Covid-19 pandemic that finally slowed things down.
At its lowest point in 2019, the price of gold was around $ 1,200 an ounce. After hitting an all-time high of more than $ 2,000 an ounce in 2020, it has now fallen to around $ 1,800.
I hope for brighter days
Rajesh Popley is the founder of Al Anwaar Jewelers.
Courtesy of Al Anwaar Jewelers
Mehul says the pandemic wiped out about 40% of his sales. Mihir and his family had a “terrible” six months and weren’t sure they would ever start again. The Javeri brothers experienced a brief rush during Diwali – but when they were interviewed late last year there were almost no stores left.
Rajesh Popley, founder of Al Anwaar Jewelers, hopes for better days.
Popley too grew up in a jewelry family in Mumbai, where his father was a well-known wholesaler of gold and freshwater pearl jewelry. The family moved to Dubai and when Rajesh was only 16 years old, his father opened the business so he could oversee it.
“My parents were not educated, but I could study well. Under the guidance of my father, I sold a lot of gold and pearls,” says Rajesh.
Things have come a long way since then. The once large margins are now narrow. There is more pressure to be the best at everything. It’s a “completely different playing field,” he says.
“There are many, many players, there is too much to offer, too much of everything. Customers are spoiled for choice. But we are a local brand and people pay for the emotions and experiences.”
Rajesh prides itself on the offerings that set him apart – intricate pieces he describes as “art”, pigeon blood rubies, Golconda diamonds. However, he admits that many people are not interested in what they don’t know.
“I love selling the best of the best, but not everyone appreciates it. The store sells good quality products at good prices.”
These days, Al Anwaar has branches in Mumbai and Dubai, including a coveted space in the Dubai Mall.
Rajesh prides itself on its growth. But he’s not sure if it could have happened anywhere else in the world.
“The locals know us, we have grown with their culture and their blessings. This region has done us so much good.”