Operation and Supply Chain Management at Emaar Properties

Posted: August 25th, 2021

Operation and Supply Chain Management at Emaar Properties

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Operation and Supply Chain Management at Emaar Properties

            Emaar Properties is a renowned real estate company founded in 1997 and based in Dubai. It has demonstrated its superiority through quality building, design excellence, and timely delivery (Emaar Properties, 2019b). Thanks to the company, a sizeable portion of Emirati people and urban landscape has been transformed. Emaar majors in the creation of master-planned and value-added communities that satisfy numerous lifestyle needs. Under the leadership of chairman Mohamed Alabbar, Emaar Properties aims to rank among the most admired, valuable, and innovative real estate companies in the world (Emaar Properties, 2019b). The company takes pride in being the pioneer in the domain of master-planned communities in Dubai. Emaar’s constant pursuit to stand out has created a strong footing for the company to be a champion in the UAE and beyond and set the standards in the area of property development for other real estate companies. Emaar Properties is known for delivering exceptional results, and it has been recognized globally for its all-round excellence (Emaar Properties, 2019a). In particular, its commitment to quality standards and operational excellence has caught the attention of local, regional, and international award givers. Emaar is in the process of entering such new international markets as the Gulf region, India, North Africa, Canada, and the USA.

Key Services and Service Process

            Emaar is a property and development brand that operates in four business segments; namely, Property Development UAE, Malls & Retail, Property Development International, and Hotels Resorts & Hospitality. Firstly, Property Development UAE is a segment that deals with the purchase of land, financing of real estate contracts, creating projects, and overseeing the entire process of construction. Although this is a risky endeavor, it is also very rewarding since the company is known for professionalism. Secondly, Emaar ventures into Malls and Retail line of real estate. The Dubai Mall, one of the world’s largest malls, was constructed by Emaar’s malls and retail subdivision (The Economist, 2014). Today, The Dubai Mall is ranked as one of the largest entertainment and shopping destinations. In fact, this facility hosted 54 million visitors in 2011 and 92 million in 2015 (Companies History, 2019). Moreover, Property Development International has helped to put Emaar Properties on the global map by expanding its expertise to a number of countries. For instance, Emaar India, a subsidiary of Emaar Properties, has masterminded and supervised the construction of numerous projects. Other project highlights include the Samarah Dead Sea Resort in Jordan and Beit Misk in Lebanon. Lastly, the Hotels Resorts & Hospitality segment has proved profitable for Emaar. This company has built world-class hotels in the UAE, including Burj Khalifa, and beyond (Emaar Properties, 2019c). Through the four segments, the company has transformed Dubai’s skyline and expanded to abroad markets. Emaar’s key services include providing premier lifestyles, facility management, and commercial and residential property development.

            Emaar’s ability to bring fantasy into reality is based on an excellent service process. Similar to other real estate companies, Emaar sources inputs and converts them into useful products. This value-addition process is extra enriched so that the company projects have a touch of luxury and excellence. Emaar’s operations necessitate the presence of different inputs. Land is an essential prerequisite, as the company’s grand properties have to stand on some stable ground. It should be noted that for business purposes, Emaar prefers purchasing land which is situated in strategic locations. Construction materials and equipment are also essential inputs in Emaar’s project development. Apart from that, buildings are assemblies of materials such as concrete, steel, tiles, metal, treated wood, fiberglass, concrete mixers, and cranes, just to mention few. Expert personnel is also a vital aspect for Emaar. The real estate industry brings together different professions that must work in cooperation to create successful projects. Some of the experts that work for Emaar include architects, designers, contractors, electrical, civil, structural, and geotechnical engineers. While the designers create the concepts, the rest of the stakeholders collaborate to bring the architect’s vision to life. Most importantly, monetary resources are major inputs, as without funds, Emaar cannot undertake its mega projects. Since any real estate company requires these inputs, Emaar’s unique operations are what makes the difference when it comes to the production process. To deliver unmatched value and satisfaction, the company works with the best inputs. For instance, it has contracted Elie Saab to help in the design work of a landmark property in Emaar Beachfront (Kadrou, 2019). The culmination of Emaar’s input sourcing and conversion operations are world-class developments ranging from skyscrapers, hotels, villas, master-planned communities, resorts to malls. Many of these achievements are the reason why Dubai has a modern outlook.

Figure 1: Input-conversion-output for Emaar Properties

Competitive Capabilities

            The operational performance of a given company can be scrutinized using several methods. While the net profit made is one approach, it is not always reliable for holistic performance evaluation (Jitpaiboon, 2014). Thus, putting the competitive capabilities of Emaar on the spotlight is the best way to measure the level of its success.

Speed

            The speed parameter measures how fast a company can complete its production process. In the case of Emaar, is the speed of building and making projects ready for renting or sale. Completing projects in a timely manner is a principle that Emaar’s top leadership cherishes (Emaar Properties, 2019b). Considering that the company has been in operation for slightly over two decades, it has accumulated the art of fast-tracked construction. As observed previously, Emaar completes projects in a timely manner. After ground-breaking in 2004, the Burj Khalifa was ready for occupation in 2010. While it took 6 years to construct the world’s tallest skyscraper, it took approximately 8 years to deliver the world’s second tallest building, the Shanghai Tower (Wenting, 2016). This example demonstrates Emaar’s ability to deliver even the most sophisticated of projects in record time.

Cost

            Constructing and renting out properties is a profitable line of work, which is even more beneficial for companies such as Emaar that specialize in high-end real estate. The company has taken measures to ensure that all its projects are top quality and futuristic, for which they employ the best designers and contractors. They also construct elegant commercial and residential buildings in attractive locations such as beachfronts. Apart from that, regardless of the mounting costs, the investments are worthwhile as they usually pay back with dividends upon completion.

Quality

Quality in real estate is an appraisal of how a building measures up to the predetermined specifications and the current construction trends. How desirable the building’s features are, its durability, how well it serves the intended purpose, and its value in the eyes of clients are also important measures of quality (Jitpaiboon, 2014). With these factors in mind, Emaar has already proven its game-changing capabilities by overseeing the construction of world-class hotels, building the world’s second largest mall, shaping Dubai’s skyline, and expanding to abroad markets (Emaar Properties, 2019b). A good portion of Dubai’s transformed façade is credited to Emaar Properties. As proof of their unmatched quality delivery, Emaar has won multiple awards as an acknowledgement of its property development competencies (Arabian Business). Emaar’s diversified portfolio has a touch of quality.

Dependability

            Dependability demonstrates how a company abides by its promises (Jitpaiboon, 2014). During two decades of operation, Emaar has accumulated profound knowledge in building and renting of buildings. Through the construction of Burj Khalifa and The Dubai Mall, the company has demonstrated its ability to build revolutionary structures that can stand the test of time. Emaar has already delivered over 2 million square feet of commercial space and over 37,350 residential units located both within and without Dubai (Arabian Business). The professional input of the company into its projects ensures that initiatives are completed within the acceptable cost range and in time.

Flexibility

            Emaar is able to configure its products to suit different markets and customer requirements. The company has exploited all the segments in the real estate industry. It has the expertise to construct both high rise and low-rise buildings both commercial and residential. Emaar has a way of adapting its operations to suit different requirements and adapt to changes as they come.

Sustainability

            Emaar is known to uphold high standards when it comes to environmental sustainability. In particular, this company remains committed to ensuring that ecosystems are not adversely affected by its construction activities. Emaar does this by educating the stakeholders it works with to let them know the effects that construction can have on the environment if not properly checked. By doing so, Emaar promotes responsible behavior and sets its environmental threshold high. In addition, Emaar ensures minimal depletion of natural resources in Dubai and beyond through activities such as recycling energy and materials and using available resources optimally. Lastly, Emaar refrains from using or improperly disposing of hazardous materials.

Polar Chart and Dominance Frontier Graphs

            The real estate industry is vibrant and highly competitive in Dubai due to the availability of resources, the unwavering political support, and the fact Dubai is a popular destination for being a top commercial, residential, and tourism hub. This explains why a spectrum of real estate companies wants a share of this profitable market. Emaar’s direct competitors are Binayah, DAMAC Properties, Nakheel Properties, Provident Estate, Allsopp & Allsopp, Jumeirah Hotel Chain, and Driven Properties, which are all well-established brands in Dubai (Sohlberg, 2018). For instance, Allsopp & Allsopp has a wide range of complete residential and high-end properties (Sohlberg, 2018). Provident Estate adopts Emaar’s business model, but it has no branches outside Dubai. It provides such services as portfolio management, property management, and the construction of towers, commercial, and residential buildings (Sohlberg, 2018). Binayah Real Estate serves not only Dubai, but also Muscat and London markets. If to compare Emaar with Allsopp & Allsopp considering their competitive capabilities, the polar chart below shows that Emaar still emerges top. Assuming that these capabilities are measured on a scale of 35, Emaar rises above Allsopp & Allsopp in five out of six competencies, with the cost being the only area where it is outshined. Nevertheless, placing higher prices for its ultramodern and high-end properties is reasonable. Emaar’s Emirates Hills and apartments in Burj Khalifa are ranked the most expensive properties in Dubai. Following the logical market forces, the fact that Emaar’s properties cost higher denotes its superior quality. Allsopp & Allsopp trounces Emaar as regards dependability as the latter has estates spread not only in Dubai, but also in other countries such as India. Emaar beats its Allsopp & Allsopp when it comes to speed as the former has more readily available resources at its disposal. Its long experience in the field also enables Emaar to use the best technologies and approaches to speedily complete projects. Moreover, Emaar is more flexibleas it exploits all real estate segments including high-rise buildings while Allsopp & Allsopp specializes in low-rise residential and commercial properties. Still, Emaar wins the crown as regards environment sustainability as it strictly abides by operating guidelines that eliminate all activities and products that can potentially interfere with natural ecosystems. Furthermore, Emaar’s projects are characterized by conspicuous and beautiful green spaces. Apart from cost, Emaar is a leader in terms of quality, dependability, speed, and flexibility with higher property prices.

Figure 2: Polar chart comparing Emaar to Allsopp & Allsopp

            The performance of Emaar in terms of competitiveness can also be analyzed using a dominance frontier chart. Taking quality and cost, two important capabilities in real estate, from figure 3, it is evident that while Allsopp & Allsopp offers services at a lower cost, its quality is slightly below the Emaar’s threshold. Therefore, Emaar’s emphasis on high quality and high-end property development warrants its high cost.

Figure 3: Emaar versus Allsopp & Allsoppdominance frontier chart

Process Analysis Calculation

            A business process can be evaluated using the three performance measures; namely, flow time, flow rate, and inventory. Flow rate, also known as throughput, is the number of flow units, which are the basic components in a business model, passed through a system in a given time. The flow units for Emaar are the properties that it constructs and manages. The flow time is the time taken for a flow unit to be processed and made ready for sale. Lastly, inventory is the number of flow units that a business process can handle.

What is Emaar’s Flow Rate?

            It should be noted that Emaar has a large capacity for handling projects and attending to customers. The company had US$ 17 billion in asset value in 2013 (Arabian Business). With over 6600 employees working for the brand, there is enough human resource to ensure a seamless flow of operations. Using these resources, Emaar has completed a total of 37,350 residential units both in Dubai and other locations (Arabian Business). Therefore, considering that the company has been in existence for 22 years, the flow rate is 1,697 residential units per year. Also, Emaar has completed 2 million square feet of commercial space within the same duration (Arabian Business). Thus, the company has an average flow rate of 90,909 square feet per year in terms of delivering commercial space.

What is Emaar’s Flow Time?

            Since Emaar delivers 1,697 residential units and 90,909 square feet of commercial space per year, the flow time can be calculated. The company completes about 4 residential units are completed within a single day. In addition, about 250 square feet of commercial space is completed in a single day.

How Vast is Emaar’s Estate?

Overall, Emaar has a huge and diverse portfolio of rentable space spread in Dubai and outside UAE.

Supply Chainof Property Development

            The supply chain for real estate companies entails the coordination of properties, people, processes, resources, information, and vendors in the process of delivering estate services to end customers. Property development involves processes such as buying land and constructing buildings. Emaar’s supply chain management encompasses all the activities that take place between the planning phase and delivery of projects. The first phase in Emaar’s supply chain is planning and design. In this activity, the company experts conduct in-depth analysis and calculate preliminary costs to determine the suitability and profitability of making particular property development investments. Real estate is all about being ready for the risks and taking proactive measures. When the analysts are certain that developing a particular area is promising, the purchase of land is made.

Figure 4: Emaar’s supply chain

Designers develop the blueprints that become the roadmap for the project and construction plans also provide the desired specifications. Quantity surveyors use the drawings to develop the project budget. Construction is the second activity in Emaar’s supply chain. This process can either be done by Emaar’s contractors or be outsourced from other reputable builders. It is at this stage that a host of logistic activities is carried out. Materials are brought to site and Emaar’s machinery and modern technologies deployed to make the process quick, cost-effective, and efficient. The building process involves activities such as the digging of foundations, construction of frameworks, waterproofing of the roof, applying finishes, electrical and plumbing works, installation of openings and fittings, and landscaping. By the time the construction process is complete, the project is ready for occupation. The third process in the supply chain is property management. Emaar agents oversee the management of the property either by renting out or selling space. Leasing or renting the ready building marks the second last stage of the supply chain in Emaar’s property development supply chain. The final activity is the maintenance of completed properties with the aim of keeping them elegant and structurally strong.

Conclusion and Recommendation

            Emaar Properties is an authority in Dubai, as it has helped to transform the emirate’s skyline, housing, tourism, and shopping culture through the construction of iconic properties that now define Dubai’s landscape. The company has pioneered integrated master-planned communities. Moreover, it has helped to fuel Dubai’s real estate sector by establishing world-class neighborhoods. Through its prime focus on cutting edge building technology, Emaar has continuously outshined its competitors in terms of flexibility, sustainability, quality, dependability, and speed, features that allowed it to expand to abroad markets. Considering that Emaar Properties has the capacity to open branches in other countries, it should also consider investing in other UAE cities such as Abu Dhabi. Apart from that, other UAE cities are also planning and undertaking megaprojects to help boost their property markets.

References

Arabian Business. (n.d.). Emaar Properties – UAE. Arabian Business. Retrieved from https://www.arabianbusiness.com/companies/emaar-properties-uae-66430.html

Companies History. (2019, March 26). Emaar Properties. Companies History. Retrieved from https://www.companieshistory.com/emaar-properties/

The Economist. (2014, July 19). Dubai’s latest mega-projects should worry you. Business Insider. Retrieved from https://www.businessinsider.com/dubais-projects-concern-2014-7?IR=T

Emaar Properties. (2019a). Awards and recognition. Emaar. Retrieved from https://www.emaar.com/en/who-we-are/awards

Emaar Properties. (2019b). About Emaar. Emaar. Retrieved from https://www.emaar.com/en/about-emaar

Emaar Properties. (2019c). Chairman’s Message. Emaar. Retrieved from https://www.emaar.com/en/who-we-are/chairmans-message

Jitpaiboon, T. (2014). The study of competitive priorities and information technology selection: Exploring buyer and supplier performance. Journal of International Technology and Information Management, 23(3), 91-124.

Kadrou, H. (2019, April 6). Elie Saab collaborates with Emaar Properties on luxury residential building in Dubai. aeworld. Retrieved from http://aeworld.com/fashion/elie-saab-emaar-beachfront-luxury-destination-dubai/

Sohlberg, M. (2018, July 4). Top 10 real estate agencies in Dubai: The ultimate guide. Asia Property HQ. Retrieved from https://www.asiapropertyhq.com/dubai-real-estate-agents/

Wenting, Z. (2016, May 31). The Shanghai Tower: China’s tallest building. The Telegraph. Retrieved from https://www.telegraph.co.uk/sponsored/china-watch/culture/12210451/shanghai-tower-chinas-tallest-building.html