Executive Summary
Emaar Properties has an advantage in the Dubai real estate market, which is also its domestic market. As a UAE company that has government affiliations, it enjoys a favorable brand reputation and has adequate experience in hotel, office, residential, and retail space development in Dubai.
The opportunities that it can capitalize on include the development of a one-stop-shop for foreign investors keen on entering various industries in Dubai. The main marketing plan for Emaar is to enhance its brand reputation by continuing to take part in art, culture, sport, and leisure event sponsorships, branding, as well as maintaining its environmental policy on green development. This marketing plan highlights the present demand for real estate in Dubai and places Emaar in the context of the competition.
Introduction
Emaar Properties is a real estate company in the Middle East, with its headquarters and operations based in Dubai, United Arab Emirates (UAE). The Dubai government, through its ownership, has affiliations with Emaar Properties. However, Emaar Properties operates as a wholly private company. It is a profit-making organization with short-term and long-term business goals.
The company started operations in 1997. It is now responsible for many iconic and large-scale projects in the UAE, with most of them being in Dubai. The company had a net operating profit of AED 3.35 billion in 2014, which was a 30 percent improvement on its AED 2.56 billion made in 2013 (Bloomberg Business, 2015).
Company Analysis
Emaar has been working to satisfy the housing demand in Dubai since its inception. In the last few years, the company has expanded its scope to include other markets in the UAE, as well as foreign markets in the Middle East and North Africa.
The company includes several subsidiaries that operate in real estate, leasing, and related activities, as well as hospitality. It develops properties, leases, and manages properties, including malls and residential spaces. Some properties are sold as whole units, while others are sold as subunits (Blythe, 2013).
Market definition
The real estate market in Dubai consists of residential and commercial properties. The market for Emaar Properties is the high-end income group segment for residential properties and corporate office supply and management of the business segment (Halaf, 2011).
Market potential
The Dubai real estate market has a lot of potentials. The region has been on a recovery path since the 2009 financial crisis that affected property demand and capital inflows negatively. Currently, many previously stalled developments are complete or near completion and ready to take in new occupants. The market is maturing; thus, an increase in the niche management of properties is emerging. Therefore, companies can either develop or manage properties and still be able to meet their growth prospects in the Dubai market.
With the increased relevance of Dubai as a destination for capital inflows in the global real estate industry, many companies are opting to enter or expand their portfolios in the country. They grow the industry in the process, thereby allowing companies like Emaar to enjoy distributed economies of scale and gain quickly from value-added services (JIL, 2014).
At the same time, the UAE government is taking measures to improve businesses by providing capital for establishment and expansion under different state schemes, mostly in partnership with private organizations. The support assists local, small, and medium companies to afford office spaces and other facilities needed for their growth. Meanwhile, real estate companies continue to experience a boom as the flow of funds into Dubai increases the overall demand for their products (Jobber & Fahy, 2009).
Market demand
The commercial retail segment in Dubai has been experiencing a surge in demand in the last year. It is expected to keep on improving in the coming few years. Lower oil prices that have a significant adverse effect on petroleum export earnings for the UAE have not caused a significant impact on the Dubai real estate sector.
Experts expected the Dubai residential market to have an additional demand of 15,000 at the beginning of 2015, which would grow to reach 17,000 units by the end of the year (JIL, 2014). The apartment-style of residency has seen a considerable increase in demand in the residential market, with a year-on-year sales increase of 40 percent and retails increase of 27 percent.
At the same time, the residential villa segment has a year-on-year sales increase of 23 percent and a retails increase of 11 percent (JIL, 2014). Dubai currently supplies about 7.4 million square meters of office space. Moreover, it is expected that there will be an additional demand for 0.7 million square meters in 2015. The office segment of the real estate market has been showing positive signs that encourage investment. Its vacancy rate has been on a consistent decline since 2013.
The vacancy rate was 31 percent in 2013. It was expected to reduce to 25 percent by the end of 2014 (JIL, 2014). The rental income that companies are earning from their properties in prime locations around Dubai, especially in the central business district, has been on the increase. The average rent per square meter was AED 1,720 in the second quarter of 2013. It had risen to AED 1,860 a year later (JIL, 2014).
In addition to commercial space and residential space, there is an extraordinary demand for retail space, which is a sub-segment of the commercial real estate that deals with the provision of facilities for shopping. It includes the construction and management of shopping malls. The segment had a vacancy rate decrease of 5 percent between 2013 and 2014, while rents for primary retail space were AED 5000 in 2013 and AED 7,700 in 2014 (JIL, 2014).
Meanwhile, secondary retail space attracted rent rates of AED 1724 in 2013, which increased to AED 2,360 in 2014. Growth in demand was also experienced in the hotel segment, where the occupancy rate remained the same in 2014 as it was in 2013, but the average daily rate increased marginally from USD 267 in 2013 to USD 276 in 2014 (JIL, 2014).
Vacancy rates are falling in many preferred locations and buildings in Dubai, as companies position themselves to take advantage of the growing economy. On the other hand, the residents are taking up mortgages and other financial products to purchase or rent.
Competitor analysis
The main competitors of Emaar Properties are the Majid Al Futtain Group, Nakheel PJSC Company, and the Saudi Binladin Group (Bloomberg Business, 2015). They are Emirati companies with enough capital to take on Emaar, but they focus on different states and markets to provide healthy competition to Emaar, without being too threatening to its market share (JIL, 2014).
Customer analysis
The primary customers of Emaar Properties are businesses seeking to establish hotels in Dubai, school operators looking for appropriate infrastructure in high-income population areas in Dubai, businesses seeking prime office locations, and sport and leisure service companies seeking development partners for their attractions throughout Dubai. The Dubai City population has conservative Muslims, who are mainly UAE citizens.
There are also non-conservative people of other different religions, who are mainly foreigners living and working or visiting Dubai (Festivals, 2011). In the first segment, there is a high demand for prime offerings in real estate because of higher disposable incomes.
On the other hand, the foreigner population in Dubai has mixed-income fortunes. Some expatriates and businesspersons have high incomes and drive the real estate market demand, while others are factory and construction industry workers moving to Dubai to look for jobs (Halaf, 2011).
Emaar Properties is keen on availing real estate solutions to the wealthy Emiratis and expats and provide adequate office and other commercial spaces for their business operations at the same time. It also serves real estate demand for the Dubai and UAE governments. Thus, customers are both individuals and corporate clients.
Dubai continues to attract a high population of expatriate workers, who have contributed significantly to the Westernization of the Dubai social lifestyle. The social environment makes it appropriate for more travelers and business people from around the world to stay longer and contribute to real estate demand (Emaar, 2015).
SWOT Analysis
Strengths
Emaar has a strong government backing that allows it to expedite land deals for development. The option to work with less stringent regulations compared to its rivals and the optional support of the government as a client for new projects gives Emaar an upper hand in marketing (Paliwoda & Thomas, 2011).
Emaar’s business model has been a source of success for the company, allowing it to create a lifestyle that makes its products unique and easy to differentiate from other market offerings. The company is also eyeing foreign markets and learning from its challenges to enhance its local strategy. The presence in foreign markets is also a boon for Emaar, which is looking to have worldwide recognition for the highly internationalized real estate market in Dubai (Jobber & Fahy, 2009).
Another high point for Emaar is the solid partnerships that the company maintains with a range of public and private partners to grow its business.
Weaknesses
The main weakness of the company is its overexposure to the Dubai market, which makes it vulnerable to any negative factors affecting the market. At the same time, the operations and funding strategy employed by Emaar can be a hindrance to its marketing success. The company relies on its parent corporation and its global financial rating to acquire affordable credit (Felix, 2012).
Any negative effect on the rating will affect its ability to fund its operations directly and jeopardize its prospects of succeeding (Hulbert, Capon, & Piercy, 2010). Lastly, the real estate sector faces environmental challenges, as it inherently upsets landscapes and cultural scenarios. The nature of the business presents many avenues for conflict with special interest groups. These conflicts can cause unwanted attention to the company’s brand (Kotler, Keller, Brady, Goodman, & Hansen, 2009).
Opportunities
Emaar has a chance of consolidating its presence in the Dubai market to provide a one-stop-shop for its current different offerings. It can go on to replicate its app offering into a real-world business strategy, where clients have to deal with one sales point only to get all their needs. This will enhance its reputation for timely delivery and a few nuisances to customers.
The company can also use the internationalization efforts to grow cultural diversification in Dubai to position itself as the most preferred provider of real estate development and management solutions to foreign businesses that are set up in Dubai (Peter & Donnelly, 2004).
Threats
Economic protectionism that the UAE government may practice on local companies to shield them from the competition can cause them to be less innovative and lose their market appeal. At the same time, Dubai remains connected to the global economy. Any slump in demand in the emerging countries’ real estate markets can lead to reduced demand for Dubai’s offerings. This can affect Emaar Properties negatively (Pride, Ferrell, Lukas, Schembri, & Niininen, 2012).
Product and brand management
Emaar Properties takes a comprehensive approach to manage its brand reputation. It implements an environmental policy that seeks to make it compliant with local and global environmental regulations. At the same time, it uses the policy to come up with value-added services in its real estate developments to entice its customers into choosing it over the competitors’ offerings.
Emaar establishes itself as a pro-environment company through the inclusion of micro wetlands, recycling facilities, greenery, and other landscaped facilities. It also relies on environmentally friendly designs and materials whenever it is undertaking new projects, thereby impacting the company’s image positively. The company wants to sustain communities and has a corporate approach to managing environmental risks. The method also works as a corporate social responsibility strategy (Emaar, 2015).
Emaar is also a recipient of various awards for excelling in different areas. The company is proud of its achievements and uses the recognition to elaborate its brand value to potential and existing customers.
In 2014, its Emaar Community Management (ECM) received the first Green Facility Management Organization award, while one of its hotel developments, the Address Downtown, received the best business hotel award from Travel & Leisure Awards India. Another hotel development, the Armani Hotel Dubai, was also a recipient of the “world’s leading landmark hotel” award at the World Travel Awards ceremony.
Meanwhile, direct placement of the brand in the market happens through sponsoring events around the UAE. Emaar has a renowned reputation for being a patron of art, culture, sports, fashion, and talent. The brand has earned a reputation by supporting events that celebrate beautiful aspects of life.
The company connects with the local communities in Dubai closely, both in the business and social levels. Dubai has many events that attract tourists and other travelers from all over the world. It also hosts globally televised events that provide Emaar with advertising opportunities. An example is the combination of Emaar and Lotus Formula1 team as an official partner, allowing the company to have a branding stake at the most popular Motorsport in the world.
Pricing
Emaar will continue to embrace a premium business model, where it quotes above-market prices for its properties and management services. In return, it will offer excellent solutions that allow clients to obtain value for their money and return on investments in the shortest time possible.
Emaar also cultivates strong long-term relationships with clients seeking to spread the shock of the initial high pricing to other business offerings that differentiate its primary offerings. The company also moves into lucrative locations or develops some sites to become profitable so that it can enjoy first-mover advantages. This allows it to charge higher prices because of the lack of competition (Youseff & Piane, 2013).
Distribution
Emaar does not deal with distributable commodities, as seen with fast consumer goods or other consumer products. Instead, it offers services and non-movable assets. Nevertheless, it still relies on some aspects of distribution to ensure that clients get what they want in their preferred locations. The company actively scouts for real estate locations and enters into exclusive development deals, which may increase leasing and purchasing land for development.
It enters into lease-and-operate agreements in the case of established buildings and other facilities. Consequently, the company will continue to build a broad portfolio of office, hotel, leisure, sporting, and residential properties for letting and selling to satisfy different clientele demands. It works in close collaboration with its development partners to provide the necessary infrastructure that allows it to charge higher prices for its offerings.
Communication
Emaar recently launched an app for use on smartphones and tablets. Its customers and potential clients can navigate the app to get an office or residential quotes and financing arrangement details of the various properties they are searching for. As a result, the company does not have to rely on brochures and other traditional marketing communication methods to reach out to potential clients.
All it currently does is to promote the Emaar app on a variety of online and mainstream media channels to get as many people as possible to work with the app on their phones. As a result, Emaar is also able to collect client intelligence on demand and interest in its properties, which inform its other marketing strategies (Smith & Taylor, 2006).
Emaar is also a major participant in industry-related exhibitions around the world, mostly in Dubai. It also takes sponsorship titles for some events to cement its position as a leading player in the Dubai real estate market (Piercy & Rich, 2009). The company should continue being a major user of exhibitions and trade shows to reach out to expatriates, business leaders, luxury clients, and other potential customers who are living in the UAE and those who are visiting (Festivals, 2011).
Implementation and control
Implementing the marketing plan will require tightening the present strategies to make sure the organization does not incur unnecessary costs due to the planned improvements. Emaar will aim to have a better focus on its high-end market, where it derives most of its business. However, given that the competition is likely to toughen as more entrants join the Dubai real estate industry, Emaar will be looking to identify the new avenues of building close relationships with customers to avoid recurrent marketing costs.
The company will rely on its budgeting process to allocate funds for marketing. Moreover, it will be measuring profit margins in relation to the overall revenues and costs as a way of influencing management and employee decisions on prioritizing campaign programs (Piercy & Rich, 2009). Eventually, the company should be able to retain a marginal increase in marketing costs, even as it takes on more opportunities for brand image enhancement.
Conclusion
The Dubai real estate market is booming; thus, Emaar Properties is in a good market position to enhance its offerings. This report evaluated the current condition of the company and its market. It then made proposals on how to improve the business through marketing. Emaar needs exposure to stakeholders, where it can cultivate healthy client relations to improve its brand and increase the occupancy of its prime properties.
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