Emaar Eyes Global Expansion Via Acquisitions

Prolific Dubai developer Emaar Properties is looking to grow its footprint beyond the United Arab Emirates by acquiring companies in other countries.

The developer, who has created signature projects like the Burj Khalifa and Dubai Mall, said it is considering buying up firms in countries like the United States, India, China and parts of Europe, the Financial Times reported.

Emaar is well-positioned for expansion; increasing property prices resulted in a 25 percent increase in net profit before tax to $5.1 billion last year. In the first half of this year, the company saw a 34 percent gain in net profit.

“A really serious global strategy is something that [Emaar’s] board is really debating now,” Emaar founder and managing director Mohamed Alabbar told the FT. “The aim is really to expand drastically… It’s almost like you grow by acquisition.”

The Burj Khalifa skyscraper has seen increasing revenues as part of Dubai’s larger property boom. Average prices per square foot in the emirate have risen 67 percent between July 2019 and this past July, according to Reidin data cited by the Financial Times.

“Emaar is strong in the [United Arab Emirates], but I think maybe UAE is becoming too small for us, or Dubai is becoming too small for us, to continue this growth story,” Alabbar said.

Though Emaar has established and operated foreign subsidiaries in the past, including outposts in Egypt and Saudi Arabia, it’s in a position to consider acquisitions partially because its low level of debt means it could easily borrow money to fund acquisitions.

“How can we smartly and reasonably take equity and leverage and really do something?” Alabbar said. “The model of investing in a big local player, I think it’s a better way [than starting companies abroad].”

As of the end of last year, Emaar owns more than 175 million square feet of land outside the UAE in addition to the 1.1 billion-square-foot King Abdullah Economic City project in Saudi Arabia, according to the report. Emaar’s current total land bank, including land owned by Emaar or reserved for future use, was nearly 1.9 billion square feet, including the UAE.

— Chris Malone Méndez