Emaar’s Exciting Expansion Plans

Emaar's Exciting Expansion PlansFollowing a very successful rights issue earlier this week, UAE based real estate development giant Emaar Properties raised substantial capital and the company plans to use this money to fund their ongoing global expansion.

The rights issue resulted in Emaar’s coffers being boosted to the tune of USD 3.9 billion, but even before this capital was raised Emaar had begun extending their reach by beginning a development in India, agreeing a development in Egypt and exploring the opportunities for expansion in Saudi Arabia.

Analysts are watching Emaar’s progress closely; they are aware that the company which is 33% owned by the government of Dubai has been assisted massively by their close links to the government in their local market.  As a result the gains and yields they’ve been achieving from their Dubai based developments are significantly higher than they can realistically expect elsewhere. 

But Emaar are not deterred by the thought of lower profit margins and believe that global expansion is the right way forward for the company.  Investors in the company have shown their approval at the expansion plans as well and Emaar’s underlying share price shot up on Tuesday following the success of the rights issue.

In terms of Emaar’s initial ventures overseas, in 2004 they began extending their reach with a venture into the Indian property market in Hyderabad.  Hyderabad has become famous as the IT capital of India and Emaar are currently constructing a 4,000 seat convention centre and 300 room hotel complex on a 15 acre plot of land in the city.  The development is due for completion towards the end of 2005 and will be used to host the biennial meeting of the Asian Development Bank in May 2006.

Earlier this year they also signed up to a USD 1 billion deal with Giorgio Armani to develop and construct ten exclusive Armani hotels and they also partnered with Egypt based Al Nasr to begin a development called Cairo Heights, a USD 3.9 billion residential and commercial development in Cairo’s Mukattam Suburb.

Their plans don’t stop there and talks are on going in Saudi Arabia for example as Emaar Properties seek new opportunities in the kingdom.  Furthermore, rumour has it that Emaar may divert more funds into Amlak Finance in which they have a 45% interest.  Amlak Finance is a fast growing mortgage bank in a fast growing mortgage market and could prove even more profitable for Emaar whose fortunes continue to go from strength to strength.

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