Dubaiโs Real Estate Giants Go Global: Emaarโs Strategic Expansions
Emaar Properties is at the forefront of the Dubai real estate developers, through the successful delivery of landmark projects in Dubai, such as Burj Khalifa, The Dubai Mall, and Downtown Dubai. With Dubaiโs domestic real estate fundamentals appearing strong, including enormous foreign investment inflows into Dubaiโs real estate market, Emaar is beginning to capitalize on its reputation through a global expansion strategy.
This global expansion strategy from Emaar will focus not on new developments, but on acquisitions of established neighborhood developers in other important markets like the US, India, China, and Europe, all of which would not only lower the startup risk of any overseas initiative but provide immediate access to local supply chains and demand for its offerings.
Emaar Properties has also tested the waters of international markets by developing its brand in overseas markets and developed its position by understanding regulatory differences and the overall demand for Emaarโs brands.
Additionally, these experiences have influenced future development approaches, prioritizing scalable acquisitions with established development businesses due to Emaarโs stronger balance sheet and lower debt levels. This considered approach clearly helps differentiate why Emaar Properties expansion is being held out by many as a benchmark for other Dubai real estate developers seeking international growth.
DAMACโs Bold Bets: From Luxury Homes to US Data Centers
DAMAC has long been synonymous with luxury real estate in Dubai with branded residences attached to global luxury brands including Cavalli, Versace and de Grisogono. DAMAC is expanding its focus beyond the traditional luxury segment of housing. Additionally, with its $20 billion aspiration to build advanced data centers in the United States, primarily in Texas, Arizona and Oklahoma, it is entering new concepts. This is an example of DAMAC investing in technology based infrastructure through its existing luxury property portfolio.
The expansion into the US provides DAMAC with a distinct platform within a digital transformative space, with property real estate remaining as the primary revenue. In addition, DAMAC is expanding its profile as a global luxury brand. DAMAC has a number of property investments globally including luxury resident development in England, along with luxury tourist resorts in the Maldives with Mandarin Orient and more lifestyle based offerings targeting ultra high net worth clients. They have each added property brand allure to competing global markets and attracted international buyers back to Dubai. DAMACโs two old approach with property on the luxury side and on the other side diversifying its investments into nonproperty products is illustrative of how important markets are for
Sobha Realtyโs Craftsmanship Abroad: Targeting US and Australia
With its innovative bed-to-boardroom model and focus on the vertical supply chain, Sobha Realty has established a strong track record of providing high quality residential developments across Dubai such as Sobha Hartland and Sobha One. Sobha wants to take that reputation to a global level and is heavily focused on international opportunities, particularly in both the US and in Australia.
Sobha has opened its US office and is actively targeting rapidly growing states such as Virginia and Texas. The goal is steep, projecting US$1 billion in sales in the first year and up to US$10 billion in sales over the course of the next 10 years. But it is not just about the sales backlog it is meant to replicate the tighter control of a vertically integrated model a la Dubai.
Content with its current development plans for Sobha Realty Australia launch, the developer plans to capitalize on the rising number of wealthy investors and ex-pats looking to buy branded homes in more established international markets. As Australians show increased interest in foreign luxury homes and overseas developers, it is well timed for Sobha to announce its entry.
Risks and Rewards: Why Overseas Growth Defines Dubai Developersโ Future
The international growth of Dubai developersโ US expansion is a case of necessity and opportunity. While Dubai is still a top destination for international buyers, developers know the need for geographic diversification to ensure continued growth. Some benefits of expansion overseas include:
The ability to enter larger real estate markets across the US, Europe and Australia.
Strengthened brand recognition in an increasingly global presence.
The ability to generate a diversified income base and reliance on Dubaiโs cyclical property market.
The opportunities to cross sell Dubai projects to overseas buyers attracted to the developerโs new projects.
However, there are also some important risks to consider:
The burden of cross border regulations and legal frameworks.
Cultural nuances that impact consumer behaviour.
Operational issues (supply chain and partnerships).
Increased capital requirements and over extension risk.
Despite these risks to overseas expansion, we note there is a trend shown in both Emaar Properties expansion, DAMAC overseas investments and Sobha Realty expansion into Australia, Dubai real estate developers seem to no longer be satisfied with being the regional real estate developers selling into other markets. They are now willing to take on the risk of being global real estate developers in exchange for potential gains overseas.
