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Emaar Case Study


Emaar Properties Public Joint Stock Company opened its doors to the public in 1997 with a view to shaping landscapes and lives in the Emirates. It has injected new life into building homes by developing value-added, master-planned communities that fulfill the expectations of the homebuyers’ full range of lifestyle needs.

As a pioneer of innovative community-living concepts, it is a prime mover of the Emirates’ real estate and construction sector and is a listed company.

Emaar has diversified its operations to become a multi-national enterprise, spanning the Middle East, North Africa, UAE, Saud Arabia, Syria, Lebanon, Jordan, India, Pakistan, turkey, china, the US, Canada and the United Kingdom (www.emaar.com). Currently, it has six business segments and over 60 active companies (www.emaar.com). The company has adopted a two-fold approach in expanding its operations further.

First, it extends its expertise in creating master-planned communities to international markets. Second, Emaar is venturing into hospitality and leisure, education, healthcare and financial services (www.emaar.com). This is an evolution from its integrated approach to customer service and property development.

Emaar’s mission is to be transformed into a one-stop, global solution provider for lifestyle. It aspires to provide quality lifestyle world-wide. It envisions itself as one of the most valuable lifestyle developers in addition to real estate development.

It has adopted a corporate strategy of business segmentation to create different business units functioning as different growth engines. The growth engines are expected to develop into a single entity known as Emaar Group PJSC.

However, Emaar faces various challenges to its aspiration of becoming a world class business enterprise. The challenges include the recent global credit crunch, political instability in the Middle East and North Africa – areas with great potential for Emaar- and rampant unemployment and poverty in these regions.

Other challenges include: increased cost of operation as it employs expatriate labor force; stiff competition from other well-established real estate developers; and archaic investment laws laid in some countries like India (TAIB, 2009).

Emaar’s strategic direction

For Emaar to realize its vision and remain afloat in the fast-changing corporate world, appropriate strategies have been adopted. Quite a number of plans have been implemented in order to achieve increased growth and profitability.

First, Emaar has made forays into various sectors. In order to strengthen its product sale competencies, market reach and best practices, it is engaged in strategic acquisitions and joint ventures (www.emaar.com). It acquired the John Laing Homes, America’s second largest privately owned home-builder, in 2001.

This strategic move relieved the company from the pressure of stiff competition it was facing from other large home-builders such as the John Laing Homes. Emaar is also able to enjoy the market that was held by the acquired firm. It is able to make valuable inroads into the expansive US market; hence boosting its sales. Emaar has also taken over Hampton International, a UK-based premier realtor and property management consultant.

This strategic venture also guarantees a substantial market share in the UK. It also denotes a reprieve from the stiff competition that previously existed when Hamptons International was operating as a separate entity. To exert its presence in the global corporate world, Emaar undertook a joint venture with the US-based Turner International. The joint venture ameliorated its execution capabilities.

In addition to the acquisitions and joint ventures, Emaar has made forays into other crucial sectors of the economy. It acquired Raffles Campus, a premium education provider based in Singapore, through its subsidiary, Emaar Education (www.emaar.com). In the field of hospitality and leisure, Emaar entered a joint venture with Giorgio Armani and Accor Hotels.

It was an important decision since it effectively ushered Emaar into the arena of hospitality and leisure. Furthermore, plans were hatched to launch ten luxury Armani Hotels and Resorts worldwide and 100 Formula 1 hotels in India (www.emaar.com).

In October 2007, Emaar realized another joint venture with Bawadi’s extensive hospitality development in Dubai. The move effectively established its presence in Dubai.

In the same month, Emaar pumped USD 20 million into a project that would see the setting up of four residential and leisure resorts in Algiers (TAIB, 2009). This was a clear indication of its determined resolve to spread its wings far and wide. This move firmly established its presence in Africa.

These forays were hugely successful in that by the end of 2007, Emaar was able to churn out 21,000 residential units to its loyal customers (TAIB, 2009). During the same year, the company’s land bank reached a staggering 504.9 million square meters including the joint venture with Bawadi, but excluding the Algiers’ enterprise (TAIB, 2009).

So successful were the ventures that Emaar received an A3 rating of a long-term currency, both foreign and local from the auspicious Moody’s Investors Service (TAIB, 2009).

Standard and Poor’s assigned it a clean A-. The same year, the company recorded a net profit of AED 6.58 billion compared to the AED 6.37 billion realized the previous year (TAIB, 2009). This was an improvement of 3.2%. Consequently, basic earnings per share increased from AED 1.05 to AED 1.08 (TAIB, 2009).

Second, Emaar has constructed its management team to suit the emergent need of diversifying growth and enhancing its profitability. It is common knowledge that in order to achieve its vision 2010, proper management structure was needed.

In line with this, Emaar established the Corporate Office in Dubai and created a strong management team to man its numerous international subsidiaries and business segments (TAIB, 2009). In 2007, Emaar’s leadership was strengthened via a two-pronged strategy.

Seven senior executives were inducted into the management team of chief executive officers, chief operating officers and general managers, giving it the momentum required to fuel the growth in its international ventures (TAIB, 2009).

The Corporate Office has been beefed up with a team of Regional Managing Directors. Each Regional Managing Director is assigned a specific geographical area and is expected to drive market expansion in the area under his/her jurisdiction (TAIB, 2009).

The Corporate Office is generally tasked with facilitating Emaar’s businesses, ensuring the successful replication of its business model in Dubai abroad and instilling the company’s corporate culture in its international operations.

To achieve this goal, a number of posts have been created. These are the positions of the Chief Information Officer and Director and Customer Care. Their roles are to catapult Emaar into the forefront of information technology and customer care.

Emaar also adopted the management by objectives policy (TAIB, 2009). This was implemented in order to ensure that all Emaar people maintained a sense of focus and team work when working in an environment that is fast changing. It was also informed by the need to develop a framework by which to compare its achievements against the most successful and esteemed companies of the world.

The management by objectives strategy incorporates all the different businesses and environments in which Emaar finds itself today, that is, expansion into malls, hospitality and leisure, education, healthcare and financial services, to geographical expansion to other regions of the continent (TAIB, 2009).

Third, Emaar has fully operationalized the business segmentation strategy. It has been divided into various business units as it diversifies into other viable sectors of the economy.

In a message to the shareholders, the chairman reported that the company was in the final stages of the construction of its key assets, the Dubai Mall and the Dubai Marina Mall (www.emaar.com). The two were scheduled to open their doors to the public in the third quarter of 2008 (www.emaar.com).

Another business segment is the Emaar Hospitality Group, which opened three hotels in Downtown Burj Dubai: Al Manzil, Qamardeen and the Palace, and the Old Town, in 2007 (www.emaar.com). Four additional hotels were also opened in Dubai.

They were Burj Lake Hotel, Dubai Mall Hotel, Dubai Marina Hotel and the Armani Hotel (www.emaar.com). In essence, Emaar Hospitality Group gathered an asset port folio of more than AED 3.5 billion (www.emaar.com).

Emaar has also cut its niche in the segment of education. The successful birth of the Emaar Raffles International School in Singapore, the first of the Emaar schools opened to the public at Umm Suqeim in September, pioneered its education segmentation (TAIB, 2009).

At its inauguration, it received 500 students. This was quickly followed by its intention of expanding into the tertiary education sector in the Middle East and the North Africa region (TAIB, 2009). Consequently, a University of Arts was established in a well concerted effort to turn Emaar into a world class provider of education services.

The choice of arts as an area of specialization was strategic because there was a growing demand for local arts education, but of international standards in the Middle East and the North Africa Region as well as the Indian sub-continent (www.emaar.com).


Emaar Properties is targeting a number of prospects both at home and abroad. This is why it has adopted various strategies for growth. Harnessing of the various prospects presents an opportunity for Emaar to grow its revenues from expanded markets and diversified operations.

Emaar can realize increased growth by venturing into Ijara Sukuk. Ijara Sukuk is the latest product in the capital markets. This has great potential particularly in the MENA (Middle East and North Africa) regions. This is because Ijara Sukuk has gained acceptance in Islamic financial institutions as it has been given a green light by shariah scholars (Ali, 2005).

Initially, the cost of issuance used to be high due to the uncertainties associated with a new product. However, the situation has since changed, reducing the cost of issuance since the sukuks are now rapidly selling (Ali, 2005). This is, therefore, a viable venture for Emaar Properties.

There is still great potential for real estate developers like Emaar in India’s Chandigarh tri-city and suburbs. These places have sufficient human resource, healthy environment, access to quality education, conducive government policies and relatively cheaper running costs. This is clearly a profitable area for real estate developers (PropertyVerical.com, 2007).

The place also has posted increased income per capita; thus, empowering the locals economically. In addition, Chandigarh is accessible from other big states like Haryana, Himachal Pradesh and Punjab (PropertyVerical.com, 2007). This provides ready market for real estate property. The city also offers substantial opportunity in hospitality.

As companies and business enterprises converge in the city to tap into its profitability, the demand for hospitality and leisure services will shoot through the roof, so to speak. Establishments that have already pitched tent in this region include Omaxe, Anzal, World One, Westend and Parsvnath (PropertyVerical.com, 2007).

This leads to an increase in the salaried population that can easily consume hospitality and leisure services. This implies that Emaar stands to gain significantly if they venture into hospitality and leisure in Chandigarh city.

There are good future prospects for real estate establishments in Mohali. This is as a result of the extension of the Mohali into a Greater Mohali and the development of the Kharar-Landran-Chandigarh road. Such developments are major pullers of both developers and buyers into a region. Moreover, the presence of complimentary industries in Mohali has also served to pave the corporate way for real estate developers.

The area already has IT and ITS industries, which offer crucial services to the populace. It is common knowledge that many people, both entrepreneurs and commoners, prefer living in a place that has access to IT services.

Presently, companies and industries occupy premises that are well wired into internet connectivity for the purposes of communication. Consequently, the presence of IT companies offers business opportunities for real estates. Mohali also offers good rates for both flats and residential land.

China too presents great business potential for Emaar. There is a growing interest in China from experts the world over. This is because China is considered as one of the most attractive economies for foreign investment. This could be attributed to availability of skilled labor and large market due to China’s large population.

Consequently, China has attracted the largest foreign direct investment over the years in the Asia-Pacific region. In fact, in 2005 the foreign direct investment struck a new high of AED 264 billion (Home, 2006). As a result, China’s economy was projected to grow by 10% in the last quarter of 2006 (Home, 2006).

China is a fertile ground for foreign investment because its government policies are designed to permit market forces to control economic activity. This gives a lot of room for maneuver for the private sector and substantial foreign investment.

The Chairman for Emaar is cognizant of this fact after carrying out extensive market research (Home, 2006). Emaar is in a position to invest in China and stands to gain substantial corporate mileage.

Substantial business potential also lies in North African countries that are predominantly Islamic. These countries have begun to welcome Islamic banking institutions on their home soils. The financial industry is concentrated at present, which allows for the growth of Islamic financial services sector, including Islamic commercial banking and shariah-compliant insurance, investment and micro-finance (Hassoune, 2008).

North African regulators approach to Islamic banking and finance has been on the upsurge in recent years. The benefits of Islamic financial intermediation have dawned on the regulators and banking practitioners. The benefits include attracting foreign direct investment and incorporating more citizens into the banking system (Hassoune, 2008).

Emaar may, therefore, venture into the Islamic financial services in North African region and stand to reap handsomely. This is because there are a number of asset-based industries in the region such as tourism; real estate and infrastructure are wholly eligible for shariah compliance. Therefore, the company would not be in danger of conflicting with the tenets of Islam, in which usury is conservatively unethical (Hassoune, 2008).

The rise of Islamic investment banks has made it possible for Gulf investors to convert their excess liquidity into profitable assets that are in tandem with financial Islam. This is particularly viable in a region that is promising and under-explored.

A sign that the North African region bears business potential is the joining of the International Finance Services Board (IFSB) of the central bank of Morocco, Bank Al-Maghrib (Hassoune, 2008). The IFSB has its headquarters in Kuala Lumpur, Malaysia.

It is a standard setting establishment that provides suggestions and recommendations for best practices to regulators for the supervision of the Islamic financial institutions in their respective area of jurisdiction (Hassoune, 2008). Consequently, in 2007, Bank Al-Maghrib allowed Moroccan commercial banks to provide shariah-compliant financial services.

However, this was limited to leasing, buy-and-sale contracts and co-ownership financing (Hassoune, 2008). In the same year, Tunisia followed suit by allowing a foreign Islamic institution to be established in the country with full rights to participate in financial trade.

The international institution is mandated with providing impetus to business relations between the Arab economies across Maghreb and Mashreq countries. This is a good business prospect for expanding institutions like Emaar.

There is a substantial business potential at home for Emaar. This is because real estate is the centerpiece of UAE’s economy. This has been driven by rising population, an influx of expatriates and legal and financial deregulations by the government. The Ministry of Economy reported a 16% growth in real estate in 2007 (TAIB, 2009).

Consequently, the country’s GDP also hit the AED 698 billion mark (TAIB, 2009). Population is expected to increase to 6.88 million by 2011, compared to 5.19 million in 2007 (TAIB, 2009). Dubai is expected to attract about 50% of the new expatriates. Indeed, there is great potentiality for growth of real estate in UAE (TAIB, 2009).

Emaar plans to pump $ 1 trillion into the flourishing leisure industry in the Middle East, followed by Abu Dhabi and Saudi Arabia (TAIB, 2009). This is a fair portion of the $3.63 trillion to be invested in tourism and transport sectors (TAIB, 2009).

This encompasses the purchase of cruise lines, hotels, aviation and supporting infrastructure. In line with this, several mega projects are in the pipeline. They include Dubai Waterfront, Burj Dubai, Hydropolis, Old Town, Madinat, Al Arab and Dubai Marina (TAIB, 2009). Clearly, Emaar is set for greater heights.


Emaar has seen great success in its business ventures and has expanded greatly since its inception in 1997. However, it has faced many challenges in its day-to-day operations. The challenges have, to some extent, impacted negatively on its performance. Various outstanding challenges are discussed as follows:

One of the most notable challenges faced by Emaar is oversupply of completed units. According to TAIB (2009), the problem of oversupply was set to continue even beyond 2010.

If UAE maintains its existing currency peg for the next one year, rental yield is expected to further decline over the next four years even as real estate prices adjust upwards, TAIB (2009) further indicates. Presently, the average rental yields in UAE stands at 7.7%, which is higher than that of countries with the same income levels (TAIB, 2009).

Second, Emaar faces debilitating labor issue. This arises from the fact that UAE outlawed labor unions and as such there are no proper channels of addressing worker grievances. The grievances are mostly about poor working conditions and low wages, especially to the large number of expatriate workforce (Human Rights Watch, 2006: 37).

As a result, labor disputes, protests and strikes occur, tainting the international reputation that Emaar has been struggling to build. In July, 2010, an American businessman took Emaar to court, accusing the Chairman and the company of falsely imprisoning him for two years and subjecting him to torture in the prison (Reuters, 2010).

In this $61 million-dollar suit, the American businessman further alleged that Apartheid was being practiced within the company’s precincts, which was a gross infringement on human rights (Reuters, 2010). Negative publicity is what Emaar collected from this debacle, and this is not good for business.

The Human Rights Watch (2006) further reported that Emaar’s workers are exposed to safety and health hazards, which are not mitigated as they work in construction companies. This was considered as the most worrying trend as it has led to an unknown number of deaths and injuries among the workers in accidents at construction sites.

The issue is worsened by the apathy on the part of the relevant government authorities and the companies involved. This is evidenced in the discrepancy in the figures given by the company and the government. It is clear that UAE may not have the interests of the workers within its borders at heart. Emaar, therefore, suffers from negative publicity and this inhibits growth both locally and abroad.

Third, the global financial melt-down witnessed in the recent years has complicated matters for Emaar. The global recession affected many multinational companies due to the constriction of markets both at home and overseas. This resulted into reduced profits.

The situation was further aggravated by increased costs of operation, which drove their expenditures up while the incomes continued to dwindle. The melt-down also drove the stock markets into the doldrums; thus, worsening the performance of most companies, including Emaar.

Fouth, Emaar faces stiff competition from many other established real estate companies across the globe. Its attempts at acquiring and merging with some companies have not fully addressed the situation.

For instance, its forays into India have been checked by the presence of other real estate developers like Anzal, Omaxe, World One and Westend (PropertyVerical.com, 2007). Its ventures into Ijara sukuks have not yielded much due to other services being offered by rival companies.

Other impediments to investment in India have been documented as limited market history of property, which puts a limit to the number of customers attracted to real estate companies. There are also procedural and title complexities in India due to the archaic laws put into place.

Such laws include the Urban Land Ceiling Act, which puts a cap on the amount of land and the buildings that one should develop in urban centers. To aggravate matters, India is yet to open up to title insurance, making the business environment very unhealthy. Then, there is observable lack of urban planning, which renders estate development almost redundant.

Fifth, political instability that has swept through the MENA region is also a great drawback for Emaar. There have been uprisings in the Arab world, which have left many businesses smarting from unprecedented losses.

Countries such as Syria, Egypt, Tunisia and Libya have been rocked by political violence orchestrated in the name of demonstrating against political leadership. Such activities usually lead to destruction of property and disruption of business activities. Political instability also scares away potential investors, reduces the market size due to the displacement of populations, and clamps down on economic growth.

Sixth, widespread poverty and rampant unemployment has hindered expansion prospects for Emaar into Africa and the Indian sub-continent. These regions are characterized by low purchasing power and, therefore, people cannot afford the extravagance offered by Emaar. It is obvious that the high cost services and products offered by Emaar are technically out of reach for most citizens in these regions.

There is also the issue of overpopulation in the MENA across the MENA region. Apart from leading to overcrowding and congestion, it puts pressure on land resources making them scarce. This is a major setback for real estate developers since they need sufficient land resources to model their products and services.

Seventh, government policies in some countries have impacted negatively on the growth of Emaar. This includes even the UAE itself where there are no clear guidelines governing the welfare of workers.

Trade unions were banned and as a result, the plight of workers is not comprehensively addressed. As a result, local skilled labor seeks employment in other countries with proper labor laws. Emaar has to contend with expatriate labor, which at times is rather expensive.

Eighth, Emaar faces increased running costs. This has come about as a result of increased workforce after undergoing a management paradigm shift. With the establishment of the Corporate Office in Dubai, seven senior executive posts were created and consequently filled.

These were the positions of chief executive officers, chief operations officers and senior managers. This was in a bid to handle the company’s diversified operations. This was a high-powered team that required an enhanced remuneration; hence, costing the company a sizable chunk of its income.

Ninth, the problem of reduced service is also real to Emaar. Growing disenchantment among the company workers and employment reflects on their morale and attitude towards work and the company.

Disenchanted employees will most likely render their services with apathy and this may impact negatively on the performance of the company. The problem could be caused by poor remuneration to junior and subordinate staff, coupled with a harsh working environment as is the case in UAE.


Emaar Property Public Joint Stock Company has put a lot of effort into transforming it into a veritable multinational company. This has seen the drafting of various strategies that drive growth and ultimately, increased profits. Such strategies have included the setting up of the corporate office to effectively cater for its international subsidiaries.

The company has also dealt with the issue of stiff competition by acquiring or merging with other prominent companies in the field of real estate. This has also seen it expand its markets both locally and abroad. To increase its presence in the corporate world, Emaar has made determined forays into other areas of the economy, including healthcare, education, hospitality and leisure, and financial services.

The company has a bright corporate future due to availability of various business prospects across the MENA region and other parts of the world. In UAE, real estate is fast gaining prominence due to increased population and a steady growth of the country’s GDP. Availability of steady skilled expatriate labor is another boon for Emaar.

Emaar faces various obstacles in its path to international recognition. These obstacles include stiff competition from rival firms, high running costs especially in employee salaries in the new management strategy and bad publicity from disgruntled employees or high death rates at their construction sites.

Other challenges are the political instability rocking most countries in the MENA region- where Emaar has made heavy investments, and dwindling global markets. These are just but a few of the setbacks experienced by Emaar.

Nevertheless, Emaar has to remain afloat and keep its dream of becoming a world class provider of real estate products and services alive. In view of this, necessary measures need to be taken in order to fully address most of the challenges it is facing.

The problem of stiff competition should be dealt with urgently. The management could consider establishing new markets by venturing into places not exploited before. Merging with existing companies is also a worthwhile move.

The management should also take into account the well-being of its workforce to avoid negative publicity and apathy. The company should look into the safety and health standards of its workers and possibly improve on the working conditions.

An internal welfare committee may be formed to look into the plight of its employees and provide a medium of communication between the management and the employees. If these measures are implemented, Emaar could achieve more growth.

List of References

Ali, S., 2005. Islamic capital market products: developments and challenges. Occasional Paper No. 9 1425H/ 2005. Jeddah, Saudi Arabia: Islamic Research and Training Institute/ Islamic Development Bank.

Hassoune, A., 2008. Moody’s global banking: Islamic finance explores new horizons in Africa. Special Comment for Moodys Investors Service. Web.

Home, K., 2006, Emaar strides into China. UAE: AME Info.

Human Rights Watch, 2006. Building towers, cheating workers: exploitation of migrant construction workers in the United Arab Emirates. A report for UAE Human Rights Watch, vol. 18 (8E).

PropertyVerical.com, 2007. . Research Report. Web.

Reuters, 2010, Emaar Properties dismisses charges in US lawsuit, . Web.

TAIB, 2009. Emaar Properties (EMAAR.DFM). GCC Equity Report. Web.

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