Dubai: The two leading publicly listed master-developers in Dubai and Abu Dhabi are coming together to pool their resources and sizeable land banks, in a move that will have a far-reaching impact on UAE property market over the next decade.

Today, Sheikh Mohammed bin Zayed and I witnessed Aldar Properties and Emaar signing an AED30 billion partnership agreement. This inspiring cooperation between our national companies improves our economy and drives our competitiveness. pic.twitter.com/ELQQHNZNUW — HH Sheikh Mohammed (@HHShkMohd) March 20, 2018

But the alliance between Emaar and Aldar Properties will not take the form of a full-fledged merger. In the initial phase, they will work on two mega-projects — the Saadiyat Grove in Abu Dhabi and the Emaar Beachfront, a multi-tower development that Emaar recently launched in Dubai.

Dh20.9b

Emaar’s sales recorded in the 2017 financial year

The combined value of the alliance’s first foray could be valued at Dh30 billion.

It was on Tuesday afternoon that the first announcement of the coming together was revealed, in the form of a tweet by His Highness Shaikh Mohammad Bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces.

My brother Mohammed bin Rashid and I are delighted to launch a strategic partnership between Aldar and Emaar, consolidating our efforts to enhance the competitiveness of our companies and institutions globally. pic.twitter.com/JuHIkXScnd — محمد بن زايد (@MohamedBinZayed) March 20, 2018

It said the “strategic partnership between Al-Dar and Emaar companies” will “unite efforts, energies, cooperation and work together in creative plans and programmes that enhance the leadership of our companies and the competitiveness of our institutions at the global level”.

Both developers had a solid set of operating results last year, with Emaar recording sales of Dh20.9 billion and Aldar with Dh6.2 billion. As for their respective cash positions, Aldar had Dh6.885 billion on its books at the end of 2017, while Emaar had a hefty Dh15.5 billion.

Dh6.2b

Aldar’s sales recorded in the 2017 financial year

With a full-fledged merger ruled out, it will be these cash positions and the land bank that will come in handy in what the two plan to do.

“The partnership will further accelerate the pace of rapid urbanisation, both in terms of quality as well as different price points,” said Sameer Lakhani, Managing Director at Global Capital Partners.

Emaar Development — the entity that oversees the company’s residential projects in the UAE — has a land bank of 170 million square foot gross area for build-to-sell properties in the UAE. This at an average development rate is expected to service at least 12 years of sales, the company had said at the announcement of its 2017 results.

As for Aldar and Abu Dhabi, “this relationship will ensure that investors, end-users, shoppers and residents of Abu Dhabi benefit from quality mixed-use destinations that enhance the emirate’s lifestyle experience,” said Vaibhav Sharma, Chief Strategy Officer at MPM Properties.

170m sq ft

size of land bank held by Emaar Development

Aldar has still some way to go in building up its Yas Island interests as well as further way from Abu Dhabi City. Interestingly enough, it holds quite a bit of land assets in the area bordering Dubai, which was added to its portfolio following the merger with the other Abu Dhabi master-developer Sorouh. (The process was completed in 2013.) “Alliances of this type can only contribute positively as a sentiment driver in the backdrop of UAE real estate sector having faced headwinds over the past three years,” said David Godchaux, CEO of Core Savills, the property consultancy. “While the amount of resources put in common and the extent of the partnership remain to be defined, this will certainly contribute to strengthening the position of their respective product offering to demanding local and global buyers.”

Abu Dhabi and Dubai moving in step on its next-generation real estate projects will also have a significant say in investor perceptions, market sources say. “It feels a lot secure when you see Abu Dhabi and Dubai combining to take positive action like this,” said Firas Al Msaddi, CEO of fäm Properties. “As soon as the news came out, we broadcast it to our investors.

“This will make them feel much more secure about continuing to invest time, money and efforts in the UAE market. “Both (Emaar and Aldar) are very successful companies. Both have amazing trackrecords in building global landmarks. The fact that the announcement comes directly from our two leaders makes it even more impactful.”

On the development side, Emaar and Aldar already mirror each other in many ways. If the former has The Dubai Mall, the Abu Dhabi developer has Yas Mall and the wider leisure and entertainment destination it has made out of Yas Island. And this year, Yas Island is also building up a presence on the residential side.

In Dubai, apart from the Beachfront, Emaar is busy with the Creek Harbour master-development, which will cover 6 square kilometres, and where it will have the world’s next tallest structure, Dubai Creek Tower. (The land for the Creek Harbour is actually owned by Dubai Holding. Emaar also has an alliance with Meraas for its Dubai Hills Estate development.) But in their overseas exposures, the two are divergent. Emaar now has interests in multiple overseas territories, while Aldar after the 2008 financial slowdown decided to double down on its home market.