Table of Contents
Introduction Emaar Properties The rivalry within the industry The Competitive Advantage of Emaar Properties Supplier Power Buyer Power The Dangers posed by Substitutions and New Entrants References
Introduction
Mohamed Alabbar started Emaar Properties in the United Arab Emirates (UAE) in 1997. Emaar Properties is a real estate development company. In the United Arab Emirates, the firm is responsible for a number of truly outstanding buildings and architectural features. These initiatives and many others have resulted in a revenue of about 6 billion dollars and drove the company to the top of the list of the world's most prestigious businesses in 2019. (Murphy, 2019, para. 3). The objective of this research is to assess Emaar Properties' competitive standing within the real estate development market.
Emaar Properties
Except for a few organizations, the majority of the world's and UAE's largest real estate development companies were created in the late 20th and early 21st centuries. This includes Emaar Properties, which was founded in 1997 and completed its first project three years later – the construction of an artificial marina – with the neighborhood's first residents moving in in 2007. With its residential towers, hotels, contemporary restaurants, and beach promenade, the Dubai Marina has remained a popular destination for both locals and visitors.
Emaar Properties' subsequent projects were the Burj Khalifa and the Dubai Mall. With these buildings, the business pursued a goal consistent with Mohamed Alabbar’s personal aspiration to “build the largest and tallest architectural structures” (Eytan, 2014, para. 6). The Burj Khalifa was meant to be the tallest structure in the world, whereas the Dubai Mall was built to be the largest retail mall in the world. Both initiatives achieved the anticipated results and continue to hold the records in their respective categories. Emaar Properties also constructed the neighborhood Arabian Ranches, the Dubai Fountain, and the Dubai Opera House in the United Arab Emirates.
Numerous notable real estate development firms begin operations in the United States at some point. Despite his passion for the United States, Mohamed Alabbar has declared that he has no interest in designing buildings there at the moment (Eytan, 2014, para. 5). However, while his organization concentrates mostly on domestic initiatives, it has also undertaken projects in foreign nations, notably in the Middle East and Africa. The most noteworthy architectural structures abroad are the Bibliotheca Alexandria in the city of the same name in Egypt and the HITEC City in the city of Hyderabad, India. The former is a structure commemorating the long-lost Library of Alexandria, and the later is an urban area with a commercial center.
The rivalry within the industry
When considering Emaar Properties' competitors in the real estate development sector, it is necessary to include both UAE and international firms. As previously stated, the majority of the largest companies in this industry were started around the same time as Mohammad Alabbar's company. This means that the majority of firms had the same amount of time to propose and execute architectural projects, as well as establish their reputations.
In spite of the fact that the majority of UAE-based companies do not flourish internationally, they are highly valued in the UAE and the Middle East in general. Emaar Properties' largest competitors in the country include Nakheel Properties, the First Group, Deyaar Properties, Damac Properties, and Azizi projects. When addressing the global leaders in the real estate development sector, it is likely that North American companies will be included. In fact, six of the top ten firms in 2019 were created in the United States, with Brookfield Asset Management, headquartered in Canada, leading the list (Sharf, 2019, para. 6). The majority of these companies construct diverse architectural constructions across the globe.
Competitive advantage of Emaar Properties
Porter's forces is a technique for measuring the competitiveness of an industry, which aids in the formulation of a company's environmental business plan. This theory has five components: competitive rivalry, supplier power, buyer power, the threat of substitutes, and the threat of new entrants (Porter, 1979, p. 137). All of these constituents are interrelated, with the latter four significantly impacting and even defining the first. Supplier power is described as "the bargaining capacity suppliers have by increasing prices or decreasing the quality of purchased goods or services" (Porter, 1979, p. 140). Customers have power and can persuade businesses to reduce their pricing. The threat of substitution comprises the possible risk of consumers discovering a substitute for the items, whereas the risk of new entrants describes the likelihood of new enterprises entering the industry and stealing valuable customers. These four factors collectively determine the competitive rivalry within the field.
Supplier Power
When discussing suppliers in this industry, one often refers to those that sell resources such as clay and stone. The cost of the materials necessary to complete architectural projects is often the greatest expense for businesses in the real estate development sector (Goodfellow, 2017, p. 798). Therefore, organizations make every effort to save money throughout the supplier selection process. This is typically accomplished by purchasing low-priced components from developing nations, which can actually pose additional complications throughout the construction process and cost more money. Recent attention in the issue of global warming has, however, introduced the concept of environmental sustainability to other industries, including the real estate development industry (The World Built Environment Forum, 2019, para. 5). Typically, eco-friendly materials are more expensive, and due to the issue gathering momentum in recent years, providers have increased the pricing of their products. Emaar Properties is focused in developing environmentally sustainable projects and hence does not purchase materials at a discount.
Buyer Power
When commissioning projects from real estate development firms, clients are often interested in cost savings. For them, this can be accomplished by requesting that businesses use less expensive materials. However, because Emaar Properties is well-known for constructing record-breaking in size skyscrapers that need extensive planning and solid materials, the company cannot be influenced by prospective purchasers' pricing requests.
The Dangers of Alternatives and New Entrants
Numerous buildings, particularly residential ones, are interchangeable; as a result, the firms that construct them face the possibility that the buyer will find someone else to complete the project. This danger is heightened by the expanding number of enterprises operating in this industry. Emaar Properties, however, is protected against this typical danger in the real estate development sector by its propensity for completing innovative projects that break records. Notably, some corporations seek advice from this UAE-based company while constructing massive projects, as it has the most success in this field. Emaar Properties is also irreplaceable in this regard.
Conclusion
Due to ongoing demand, the cost of materials, the new trend toward environmental sustainability, and the sheer quantity of existing enterprises, the real estate development sector is a highly competitive industry. Despite the dominance of North American corporations in this industry, the United Arab Emirates-based Emaar Properties has become one of the most esteemed companies in the world due to its innovative designs. As long as the Burj Khalifa is the tallest skyscraper in the world, the firm will maintain its competitive edge in its industry.
References
Eytan, D. (2014). Five things you may not have known about the architect of the world's highest structure. Forbes. Web. Goodfellow, T. (2017). Real estate and late urbanization in Kigali and Addis Ababa, Journal of Urban and Regional Research, 41(5), 786-803. A. Murphy (2019). The world's most prestigious corporations, Forbes. Web. Porter, M.E. (1979). How competitive factors influence strategy, Harvard Business Review, 57(2), pages 137-145 . Sharf and S. (2019). The world's largest real estate firms in 2019 are led by Brookfield. Forbes. Web. Forum for the World Built Environment (2019). Sustainable real estate investing. RICS Forum.
[supanova question]