26 March 2018

The Road to Consolidation

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The recent partnership between Aldar and Emaar is a seminal event in the process of consolidation across developers in UAE. Initially confined to two projects, the alliance calls for a range of national and international master communities to be rolled out as the two giants capitalize on their synergies. This will further spur the wave of consolidation that is already underway, especially amongst the private sector developers.

A dissection of unique developers in Abu Dhabi and Dubai, reveals that the latter has four times more number of developers than the former. This has been due to a confluence of factors; some of them include the fact that Dubai’s freehold market was established considerably earlier, Dubai has a far greater number of master planned communities (thus far) than in Abu Dhabi, and as a consequence of the first two factors, has a far greater number of private sector developers.

In both emirates we can witness a similar distribution, where a small percentage of developers account for more than 10 projects. The bulk of the topography of developers are 2 projects or less, which is very different to what is witnessed in the developed markets; we opine that the same will transpire in the UAE as well, especially after the strategic alliance announced between Emaar and Aldar.

We can witness that in Abu Dhabi, where developers who have more than 10 projects account for 44% of units, whereas in Dubai they account for 56%. This concentration is expected to increase, especially as the number of developers continues to fall in the coming years as a number of smaller players coalesce.

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