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Nakheel v Emaar

emaar, nakheel

Emaar Properties, established in 1997 with a capital of $274 million, is a public joint stock company (PJSC) 32 percent owned by the Dubai government. Emaar recorded an impressive yearly profits growth of 35 percent in 2006 with $ 1.735 billion, and posted $1.317 billion profits for the first nine months of 2007. The developer, that holds a 30 percent equity in Dubai Bank, also owns Emrill (a joint venture with UK-based Carillion that provides property and facilities management services) and entered a $16 billion joint venture with Bawadi, a member of Tatweer, the largest hospitality and leisure development in the world, located in Dubailand. In January 2006, in line with its Vision 2010 plan, Emaar (that already has a significant presence in 36 markets) decided to expand its investments into the education and healthcare businesses.

Privately owned Nakheel Properties, also known as Nakheel Corporation, currently has $30 billion worth of major projects under development. Founded in 1990 in Dubai, Nakheel generated $70.1 billion in revenues in 2006. Upon completion, its various waterfront projects will have added more than 1,000km of shoreline to Dubai’s coastline.

Emaar and Nakheel also established their own dedicated Islamic home financing companies that now lead the mortgage market, controlling about 85 percent of it: Amlak Finance is a subsidiary of Emaar; Tamweel is a joint venture between Dubai Islamic Bank (DIB) and the state Istithmar investment holding group that is affiliated to Nakheel.

While Emaar has long been listed on the Dubai Financial Market (with 59,000 shareholders), competitor Nakheel is also thinking about an IPO in the third quarter of 2009.

Product

With more than 15,000 homes, Emaar’s portfolio of real estate projects includes 2sqkm Burj Dubai Downtown, residential Emirates Hills (that hosts bucolic-named communities the Lakes, the Views, the Greens, the Meadows and the Springs), the Dubai Marina project, the Umm Al Quwain Marina, polo and golf resort the Arabian Ranches, Emaar Towers and the Emaar Business Park (where its head office is based). The company also established in 2001 the Gold and Diamond Park that houses gold, jewellery and diamond retail and manufacturing businesses.

Nakheel has a portfolio of hotels, shopping and retail projects, but is best known for its man-made Palm trilogy (Jumeirah, Jebel Ali, Deira), The World islands and Dubai Waterfront. Onshore projects include The Gardens, Jumeirah Lake Towers, Discovery Gardens, Lost City, Jumeirah Islands, Jumeirah Village, The International City, Jewel of the Palm, The Palm Golden Mile, Palm Trump International Hotel and Tower, and Ibn Battuta Mall.

Nakheel also joined hands with Kerzner International to develop Atlantis, The Palm, a 2,000-room resort and water theme park with a capacity for 7,000 visitors a day.

Positioning

Both Emaar’s and Nakheel’s projects aim to cater for a wide range of investors, providing one bedroom apartments to seven bedroom villas as well as super prime residential property, such as Emaar’s Armani Residences at Burj Dubai. Besides, with more than 80 percent of the 4.5 million UAE population being foreigners, the opening up of the housing market to non-UAE nationals in 2002 - in designated new projects built by three fully or partly government-owned developers among which Emaar and Nakheel - has led to a tremendous market growth. Emaar’s The Springs for instance have a majority of western residents.

Price

According to the standing and the nature of the projects, prices may vary widely, from rental with fixed rents at up to 50% below the prevailing market level at Emaar’s The Greens, up to around $15 million for one of Nakheel’s islands, without any property even built on it.

Promotion

Real estate branding in the region is quite challenging in that locations are often virtual: they often haven’t been created yet. Positioning being a major real estate asset, developers can’t answer potential buyers’ questions as basic as: “Is it easily accessible?” At the latest Cityscape edition, Nakheel released a set of past, present and future images of Dubai’s landscape and coastline.

Still, developers get round this obstacle by adopting some kind of “Guinness Book of Records’ strategy”: the tallest towers, the most luxurious accommodation, the newest design. This superlatives-led dynamic is best shown in Emaar’s 154 floors (and counting) and 531 meters Burj Dubai, the tallest in the world to date that should be completed by 2008. Such iconic developments are still considered the best illustration of the developer’s stature. Prestigious partnerships are also an preeminent marketing tool: Emaar - that was awarded ‘Best Developer in the UAE’ in 2006 for the second consecutive year at the Euromoney Real Estate Awards - teamed up with Giorgio Armani to build and manage ten Armani hotels and resorts across the world (Milan, London, Shanghai, New York and Tokyo), including a luxury collection of 144 home units in Burj Dubai in Emaar’s flagship Burj Dubai tower. The concept is expected to “provide a complete lifestyle experience”.

Similarly, Nakheel partnered up with the Trump Organization to develop extensive real estate offerings throughout the Middle East, including exclusive rights for 19 countries in the Middle East region and 17 major brands, and starting with the Trump International Hotel & Tower and The Palm Jumeirah.

Place

In order to diversify their risks, now that the UAE market is well in hand, both Dubai-based developers are stretching their reach beyond the UAE’s borders, mostly in emerging markets. Emaar, a Financial Times Global 500 company, has invested around $131 billion, usually for customized projects, in Pakistan, Saudi Arabia, Algeria, India, Turkey, Morocco, Bahrain, Syria, Jordan, Lebanon and Tunisia. The developer also announced plans to expand the retail sector with investments of over $4 billion to develop approximately 150 malls in the MENA region and the Indian subcontinent, and acquired in 2006 John Laing Homes, the second largest privately held homebuilder in the US, for $1 billion. Emaar’s international operations will contribute to revenue and profitability by mid-2008. Under its subsidiary Nakheel International, Nakheel Properties is also planning for its first overseas ventures, but hasn’t disclosed any yet.

 
 

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