By Hadeel Al Sayegh and Luke Tyson
Dubai (Reuters) -In a city that is famous to transform the desert into Skyline, developers take the construction process in their own hands while trying to load a tree and maximize the cash flow.
A growing number of large VAE developers set up internal contract companies, after a long trust on third-party contractors. The relocation is aimed at increasing control over the timelines, costs and quality standards of construction and ultimately, securing a larger part of the profit, although it could also have risks.
Buy the best mortgage rates
In a previously reported sign of the trend, Emaar Properties, who developed the Burj Khalifa, founded Rukkn Mirage under his subsidiary Mirage, a spokesperson told Reuters. Emaar agrees with developers such as Samana developers, Ellington and Azizi, who have all launched internal contract units in the last two years.
Arada, the developer, partly founded by Saudi-Prins Khaled bin Alwaleed bin Talal Al Saud, also confirmed in a statement to Reuters that they have taken over part of an Australian contractor this year and are planning to integrate them into the VAE operations in 2027.
The shift comes as the Real Estate Stics of Dubai, with prices by 70% over four years to December 2024 and a government plan to double the population to 7.8 million by 2040.
The real estate launches with 83% in 2024, although the completies fell by 23%, the industrial data shows.
De Boom has fueled a new influx of employees, including migrant workers, mainly from South Asia, with a high turnover at Expat Personnel. It also led to fear of a decline in a sector that remains crucial for the economy of the VAE.
Developers have difficulty attracting bids from external contractors, in the midst of fierce competition.
Samana developers initially intended to allocate 20% of his projects to his new internal arm, launched in September. Now 80-90% of his new projects are being treated internally, Chief Executive Imran Farooq told Reuters.
“We used to have 25 or 30 contractors who offer a project. Today you hardly become two or three,” Farooq said.
In the meantime, Emaar is following a hybrid approach. Although some projects-as a recently announced residential development are carried out by their internal building arm Rukkn Mirage, they will continue to outsource others, founder and director Mohamed Alabbar said.
Developers also tap debt markets to finance land purchases and activities, because billions of dirhams remain in buyer payments to transfer in Escrow. Funds are only released after final inspections, with a one -year delivery period before buyers can claim reimbursements.
