GCC construction leaders must learn from the UAE's real estate JVs
The recent JVs formed by Aldar Properties and Emaar Properties, as well as Shurooq and Nakheel, indicate that a paradigm shift is under way in the UAE’s real estate sector
Although I haven’t built much more than Lego structures and the odd sandcastle at Jumeirah Beach, even I know that being a real estate developer is as gruelling as it is glamorous.
As the Gulf’s property markets mature, builders are compelled to ensure that their projects deliver quick returns on investment and long-term sustainability – both environmental and economic.
These quotidian challenges are an intrinsic part of the job, and can also foster adaptability and dynamic business strategies. This is evidenced by some of the Gulf’s largest development firms, which in the last few weeks appear to have grown the reach and influence of the region’s real estate market exponentially.
The most significant of these advancements have been made in the UAE. On 20 March, Abu Dhabi’s Aldar Properties and Dubai’s Emaar Properties created a joint venture (JV) worth $8.1bn (AED30bn). HE Mohamed Khalifa Al Mubarak and HE Mohamed Alabbar, respectively the chairmen of Aldar and Emaar, signed an agreement to formalise the partnership. The JV will initially focus on two projects in Abu Dhabi and Dubai. Its pipeline will also include national and international projects.
The desire to create a long-lasting legacy is not new. Speaking to Construction Week in 2010 (Construction Week #324), Emaar’s Alabbar, commenting on the launch of Burj Khalifa and the world’s first Armani Hotel, said: “When you start building something, you can either build the same boring environment or you can do more. What’s important is whether that single piece of stone is really affecting human life.”
Doing more is clearly a priority for the UAE’s real estate leaders. Last week, Nakheel formed a JV with Sharjah Investment and Development Authority (Shurooq) to develop its first project outside Dubai. Shurooq and Nakheel will collaborate on a $20.4m (AED75m) retail centre in Sharjah, for which design work is already under way.
Both these JVs are momentous, primarily because they are likely to present opportunities for greater inter-emirate collaboration within the UAE’s construction sector – a trend that Emaar’s Alabbar said he hoped would gain traction locally. However, and perhaps more importantly, these JVs also indicate that a paradigm shift is under way in the Gulf’s real estate market. Masters of their respective markets, these partnerships will offer greater opportunities for all four developers to grow in new geographies, cater to new audiences, and find new models of sustained economic growth.
After signing the JV agreement with Al Mubarak, Emaar’s Alabbar said that the partnership was “a powerful message” that not only highlighted the “unbreakable bond” between Abu Dhabi and Dubai, but also reiterated the UAE’s role as a shaper of global real estate trends.
Both JVs will undoubtedly achieve their stated targets, but they may also pave the way for similarly collaborative ventures. For the UAE’s construction and development community, that can only be a good thing.