Emaar Properties is a real estate development company that was founded in the United Arab Emirates (UAE) in 1997 by business tycoon Mohamed Alabbar. The corporation is responsible for a number of truly iconic buildings and architectural structures in the UAE. These projects and many others have resulted in a revenue of almost 6 billion dollars and propelled the business towards the top of the world’s best-regarded companies in 2019 (Murphy, 2019, para. 3). The purpose of this paper is to analyze Emaar Properties in terms of its competitive position in the real estate development industry.
Apart from a couple of corporations, most of the largest companies in the real estate development industry both in the world and in the UAE were founded in the late 20th and early 21st centuries. This includes Emaar Properties, which was established in 1997 and had its first project three years later – the construction of a human-made marina – with the first residents moving into the neighborhood in 2007. Since then, the Dubai Marina has remained a popular destination for citizens and tourists alike with its residential buildings, hotels, trendy restaurants, and beach promenade.
The next projects of Emaar Properties were the Burj Khalifa and the Dubai Mall. With these constructions, the company pursued a goal that is in line with Mohamed Alabbar’s personal wishes, which is “to build the biggest, the tallest” architectural structures (Eytan, 2014, para. 6).
The Burj Khalifa was designed to be the highest building in the world while the Dubai Mall was constructed to be the largest shopping center. Both projects managed to achieve the desired effect and still hold the records in their respective categories to this day. Other architectural structures built by the Emaar Properties in the UAE include the neighborhood Arabian Ranches, the Dubai Fountain, and the Dubai Opera House.
Many renowned real estate development companies start working in America at some point. Mohamed Alabbar has stated that at the moment, he has no interest in designing buildings in the US despite his love of this nation (Eytan, 2014, para. 5). However, while his company focuses mostly on developments within its homeland, it has had projects in other countries, primarily located in the Middle East and Africa.. The most notable of the overseas architectural structures are the Bibliotheca Alexandria in the eponymous Egyptian city and the HITEC City in the Indian city of Hyderabad. The former is a building, commemorating the long lost Library of Alexandria, while the latter is an urban neighborhood housing a business district.
The Competition in the Industry
When discussing the competitors Emaar Properties has in the real estate development industry, one has to cover companies from both the UAE and the world in general. As mentioned before, most of the biggest corporations in this professional area were founded at around the same time as Mohamad Alabbar created his business. This means that most companies had the same amount of time to propose and realize their architectural projects, as well as make a name for themselves.
While most corporations founded in the UAE do not typically have developments and, therefore, recognition overseas, they are well-regarded in their homeland and the Middle East in general. The biggest competitors of Emaar Properties inside the country include Nakheel Properties, the First Group, Deyaar Properties, Damac Properties, and Azizi developments. When discussing the world leaders in the industry of real estate development, one will most likely mention companies, located in North America.
In fact, six out of the top ten corporations in 2019 were founded in the US with the Canada-based Brookfield Asset Management topping the list (Sharf, 2019, para. 6). Most of these companies build different types of architectural structures all over the world.
Emaar Properties’ Competitive Advantage
Porter’s forces are a tool for assessing the competitiveness within an industry which helps formulate a business strategy for a company within the environment. The five components of this theory include competitive rivalry, supplier power, buyer power, the threat of substitution, and the threat of new entrants (Porter, 1979, p. 137). All of these elements are interconnected, particularly with the latter four constituents greatly influencing and even defining the former one. Supplier power is defined by “the bargaining capacity suppliers have through the means of raising prices or reducing the quality of purchased goods and services” (Porter, 1979, p. 140).
Buyers have an influence as well as they can compel companies to lower the prices. The threat of substitution encompasses the potential danger of consumers finding a replacement for the products, while the risk of new entrants defines the chances of new businesses invading the industry and stealing promising customers. Together, those four components determine the competitive rivalry within the sphere.
When talking about suppliers in this professional area, one typically implies the people who sell substances like clay and stone. The materials which are used to realize architectural projects are typically the biggest expense for companies in the real estate development industry (Goodfellow, 2017, p. 798). Therefore, the step of picking one’s supplier is one where corporations try their hardest to save money. This is generally achieved by buying low-cost materials from undeveloped countries, which can actually cause more problems during the building process and, therefore, cost more money.
However, the recent interest in the problem of global warming has opened up the idea of environmental sustainability in many industries, including the real estate development one (The World Built Environment Forum, 2019, para. 5). The eco-friendly materials typically cost more and, due to the issue gaining traction not too long ago, suppliers raise the prices for their products. Emaar Properties is interested in building structures that are environmentally sustainable and, therefore, do not save money when buying their materials.
Clients, commissioning the projects from the real estate development companies, are also interested in saving money. For them, this can be achieved by asking businesses to use cheaper materials. However, as Emaar Properties is well-known for building record-breaking in size structures that require a lot of planning and sturdy supplies, the company cannot be swayed by potential buyers in terms of the price they ask for.
The Threats of Substitutions and New Entrants
Many buildings, particularly residential ones, are interchangeable and, therefore, the corporations that construct them are under the threat of the buyer finding someone else to realize their project. This risk is especially prominent, with more and more businesses opening up in this professional sphere. However, Emaar Properties’ inclination towards completing unique designs that break records, protects it from this common risk in the industry of real estate development. It is worth noting that some companies ask this UAE-based company for consultation when building large structures as it has had the most success in this area. In this regard, Emaar Properties is irreplaceable as well.
The real estate development industry is a highly competitive industry due to constant demand, the price of materials, the recent inclination towards environmental sustainability, and the sheer number of existing companies. Despite North American corporations being the leaders in this area, the UAE-based Emaar Properties managed to become one of the most well-regarded businesses in the world due to its record-breaking and unique designs. While the Burk Khalifa remains the tallest building in the world, the company will continue to have its competitive advantage in its industry.
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