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Emaar The Center of Tomorrow Today Case Solution
This report is an analysis of Emaar which is one of the main real estate players in the UAE market. The company is formed in UAE but is a multinational based on its operations. The report is a strategic analysis consisting of internal and external analysis using different frameworks. The report also analyze the company’s business and corporate strategy and has given some recommendations in the end based on analysis
Following questions are answered in this case study solution
Case Analysis for Emaar The Center of Tomorrow Today
2. Company Background
Emaar properties is an Emirati multinational real estate property development company which was founded in 1997 in UAE (Emaar, 2021). The company sin public and listed in Dubai Financial market. Emaar is associated with dealings of both commercial and residential property and is considered a real estate giant with strong financials and market reputation. While the company is headquartered in Dubai it deals in international property market. It has currently 12,000 under developed units in international markets (Emaar, 2020). Emaar is associated with launching of lots of key landmarks of Dubai including Burj Crown and Burj Khalifa which are a hallmark for company’s innovation (Emaar, 2020).
Below is the brief SWOT analysis of the company.
One of the main strengths of the company is its assets and strong financials. Despite of pandemic Emaar was able to not only maintain but increase its assets (Emmar, 2021). The company is also able to maintain strong cash flows and was able to re bounce quickly after the pandemic.
In addition to strong financials, the company has a strong brand portfolio with diversification into many property avenues (Emaar, 2020). From malls to beach resorts Emaar has experience and skill set to deal with all types of real estate.
Another important strength of the company is its global presence. Emaar has properties in 36 countries which enables it to diversify the market risk (Emaar, 2020).
Emaar has formed various strategic alliances successfully especially in entertainment real estate including the projects like Dubai Aquarium, Opera and VR theme parks (Emaar, 2020).
Emaar strong brand recognition is broadly because of its customer focused strategy and history of delivering consistent results (Emaar, 2020).
The company is positioned itself as a developed of high value added properties with innovation, styles and an element of luxury (Emaar, 2020)
The company is exposure in several markets which might increase its operational risk due to local economic pressures and recessions.
The main focus of the group is solely on real estate property and it has little to no experience in any other related field.
The projects are mainly focused on high end property building for a niche market and the group do not have any products or services for various budgets.
The company is mainly focused on the developed market and UAE it has huge operational potential for emerging economies where it can help in improving the standard of living.
The product portfolio can be diversified to lower and middle income group’s projects which will help I setting new parameter because of company’s experience and skillset.
The new FDI law in Dubai has opened doors for foreign investors (Tbaishat, 2020). Dubai can use this to its advantage by forming joint ventures and strategic alliances with foreign partners.
The threats to the company are mostly related with the environment it is operating in including global economic crises, interest rates fluctuations which can impact the cost of infrastructure as well as revenues.
Property bubble are a real threat to real estate investors which can overestimate the value of any property and result in financial delusions.
3. External Environment
The external environment analysis will be done with the help of PESTEL and VRIO framework. The analysis is mainly done on UAE property market.
UAE is considered as a politically stable country with an average value of 0.82 on political stability index for the period of 1996-2020 which is higher than global average of -0.07 (The global Economy, 2021).
The policies of the government in the real estate sector has been in favor of local investors with less ownership rights to foreigners until recently (Tbaishat, 2020). There is also strong emphasis on the fairness, honesty and transparency practices in the real estate property sector. It has been supported by government.
The real estate property market is a strong sector and large contributor of GDP which has a CAGR of 12.36% and is expected to grow at this rate till 2025 (Mordor Intelligence, 2021). There are few large players in the market including Emaar,Aldar, Nakheel and Damac (Mordor Intelligence, 2021). The demand for luxury, high end, and value added property especially in residential sector is booming. There were around 23,000 new housing competitions in 2019 alone.
The real estate in UAE is highly extravagant both in commercial and residential sector. Apart from warm climate and beaches, the affordable shopping malls, safe environment, taxation laws and fine dining experiences are the causes that have shaped the trends of Dubai real estate (Paris, 2021). Another important factor is the demographics of the country which has up to 90% foreign population which has helped in increasing the reach of the real estate market and has also shaped trends in the market.
Ever since the country has managed pandemic effectively with an internationally renowned drive for vaccination, it has witnessed a new surge in demand of real estate. There has been an average of 5% increase in residential property demands after the pandemic (Kamel, 2021).
Like other sectors real estate is also impacted by technology. The use of VR, AR and 3D printing has become common (Kattan, 2020). In addition to that the ways of working have also change in this industry with the office space has become less desirable and zoom calls have taken the place of traditional meetings (Kattan, 2020). AI software’s can also help in valuations of property including the depreciation and inflation rates impact and can use historical data to predict future trends. The sector has become more precise and certain functions have become automated with the help of technology.
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