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Pretty
impressive for a company founded fewer than 10 years ago
in an Emirate of just over 1 million people – of whom
around 80% are immigrants or guest workers.
In 2005 the company posted profits of over AED4.7
billion, almost treble the 2004 level. In the first
Quarter of 2006 they announced a 14% uplift in profits
on the same period last year, wholly in line with
analyst forecasts. And the local stock market reacted
with disappointment.
But Dubai is not a ‘normal’ market and EMAAR is not a
‘normal’ company. On any given day EMAAR & Amlak (40%
owned by EMAAR) between them represent 60-70% of both
value and volume of the Dubai Market. They are both
pretty volatile and lead where others later follow.
Professional analysts have been saying for some time
that EMAAR shares look cheap and should be trading at a
fair value of Dh20-22. Towards the end of April they
were standing at around Dh14.5 close to the 52 week low
of Dh14.05.
It would be mind numbingly simple to fill the rest of
this article with a list of EMAAR’s more striking
projects but that would defeat the point. The company
does not need the advertising. But we should look at
some of the innovations introduced, bearing in mind that
where they led others have or will follow:
First to offer Freehold property in Dubai
Downtown Dubai, including the Dubai Mall (world’s
biggest) & Burj Dubai (world’s tallest)
Arabian Ranches, around 10km2 of freehold
properties in a community including a golf course, polo
ground and riding club and retail outlets, all created
from scratch in just a few short years.
Many other gated, managed communities including The
Greens which had its ‘rent-to-buy’ scheme making it
EMAAR’s fastest selling development, and all built in
what was until recently simply open desert.
Dubai Marina, one of the world’s largest planned
waterfront communities built around a vast man made
marina in the rapidly developing ‘New’ Dubai area.
Recently the company announced it has teamed up with
Giorgio Armani S.p.A to build and manage 10 Armani
hotels and resorts across the world, including in the
Burj Dubai tower of course.
International projects continue apace and include the
King Abdullah Economic City development in Saudi Arabia,
a project that will eventually provide employment for
half a million people – apart from those of course
involved in the construction itself.
EMAAR has stretched into retail development as well now
both in Dubai and abroad, including the previously
mentioned Dubai Mall and developing around 100 malls in
the MENA region as a whole.
The list could go on but these examples serve to show
the extraordinary scale and diversity achieved in such a
brief period. Moreover the company seems to have real
substance and Vision, despite the fears of some external
commentators that the whole edifice could come tumbling
down at any time.
So we ask ourselves - how can they maintain it all?
The name could tell us much: “Entrepreneurial
Management of Assets for Accelerated Returns on equity”
(lifted from their Web site). This concept has shone
through everything we see them do – every day. They
could easily use it as a Mission Statement.
Apart from anything else the company has shown itself to
be genuinely innovative; in creating new concepts,
picking up and running with established ones and
sweating the existing assets. Their strategy is well
publicised and documented and there seems to be wide
agreement in both the business community at large and
among analysts that they are successfully implementing
it.
We see a four pronged attack using their Dubai successes
as a starting point:
A move away from a culture of simple cost control to one
that it calls ‘Total Productivity’. It means looking at
items like responding to customer driven need rather
than an internal drive for expansion per se. It means
looking at added-value per employee rather than cost.
It means focusing management on the areas with the
greatest returns for the company gained by satisfying
the most needs for the customer.
This is a brave step for a National company as it is
counter-cultural in many ways. It is also rather
different from what we see of US/Northern European
business culture of quoted companies where the mindset
is for shareholder value first and customer value
second. EMAAR’s reversal of this thinking could prove a
smart move.
The company is using its brand to good effect. The
Marketing and PR within the organisation uses the brand
values – particularly the ideas of being World Class and
Innovative and Fast Moving – to enhance the messaging
for its products and services. It uses things like the
drive for Emiratization within UAE to support its own
marketing and thus attach belief in the growth of the
Country to belief in the growth of EMAAR.
In a recent interview chairman Mohamed Ali Alabbar, told
the International Herald Tribune "I am quite keen (on
investments in luxury goods Brands around the world) and
am looking at several organizations seriously" a move,
like his partnership with Armani, which would enhance
perceptions all round.
True to the acronym that is its name EMAAR works hard to
ensure that the organisation uses its entrepreneurial
skill and spirit to be “…different as well as better…”.
The recent announcement of a high tech Command and
Control Centre for remote management of all its
properties might be a good example of this. It shows a
focus on serving the customer whilst at the same time
using technology to good commercial effect and serving
their own needs.
A senior source inside EMAAR recently made the point
that over 80% of their operations will be overseas in
less than 5 years. They have said that the process of
internationalisation will be in discrete steps, leaps
into new areas followed by consolidation and
strengthening. But the speed of change and the speed of
growth lives well up to the concept of Accelerated
Returns so prominently espoused in their name.
Management seems to have recognised the reality of
eventual saturation in the local market. Regardless of
innovation or creativity EMAAR’s core business remains
property development. It is easy to see that this has
given the company huge basic strength and clever
management, creative marketing and entrepreneurial
spirit have combined to exploit that natural advantage
the world over.
Growth and riches on the scale of EMAAR’s also brings
with it responsibilities and difficulties. We all see
that much of the construction work in Dubai is carried
out by low paid workers living in difficult conditions.
Recent riots by workers for Al-Naboodah Laing O’Rourke,
working on EMAAR’s flagship Burj Dubai project,
highlight some of social effects of Dubai’s phenomenal
growth. EMAAR to its credit was not the target of these
recent attacks and works visibly to mitigate the worst
of their results. However, as much as the positive
marketing enhances their reputation, this kind of thing
hurts them.
Again though, swift response by management and marketing
cleared the air and the relentless march continues.
And as they spread around the world we can recognise
that not all markets are as friendly or as responsive as
our local one.
If EMAAR can replicate the success of its growth in
Dubai on a global scale, stick to its strategy and not
repeat the mistakes of other global giants then truly
they will be a World Class business managing
Out-of-this-world growth – to the benefit of all of us
living and working here in Dubai. | 
