Introduction
The report is intended for the Al Naboodah Real Estate Company. The company, which engages in the real estate business, intends to expand its business from its native country, the United Arab Emirates (UAE). The company commissioned the report with the aim of exploring a suitable market for its products. Egypt in North Africa has been billed as the country that fits the company’s description of a suitable market both regarding moderate returns and sustainability of the company’s projects in the end.
The report contains a brief background of the Al Naboodah Real Estate. It details its inception, product offering, and its vision concerning its expansion strategy. It also contains a detailed profile of Egypt. It details both the macro-economic and micro-economic aspects of the country and how they relate to Al Naboodah Real Estate Company’s vision and strategy of expanding into the region. Over and above the economic aspects, the report seeks to evaluate other aspects such as the political, legal, and social factors. The report also addresses the strategies that Al Naboodah can employ to gain market share in Egypt’s highly competitive real estate industry.
Ultimately, the report recommends Egypt as a suitable investment destination for Al Naboodah Real Estate Company. The returns from the industry in Egypt can be high with average margins of 30-40% for high-end properties. The margins represent an attractive enough return to compensate for the probable risks that the company might face especially in terms of bureaucratic registration processes, corruption, and the need to cede majority ownership of the company to be within the country’s laws.
Al Naboodah Real Estate Company Background
Al Naboodah Real Estate begun as part of the giant Saeed and Mohamed Al Naboodah group of companies that traces its origins in the 1960s. The real estate company was officially launched as a separate entity in 1975. In 2007, the holding company, Saeed and Mohamed Al Naboodah, consolidated its businesses to form a twelve thousand strong workforce with interests in the construction and real estate industries. As a result, Al Naboodah Real Estate became one of the largest real estate companies not just in the UAE but also in the Middle East and North Africa region.
The company, which is situated in Deira, Dubai, is a vertically integrated service provider in the real estate sector. It offers a wide range of services in relation to the sector. These services include residential and commercial property consultancy, facilities management (FM), evaluation and market studies, and real estate brokerage as well as property management. To cement its credibility, the company is a member of the Dubai Property Society as well as the Real Estate Regulatory Authority. It is also affiliated with the Emirates Green Building Council, which is an illustration of environmental consciousness.
Country and Market Analysis
Marketing and Staffing
A robust marketing strategy would be vital if Al Naboodah is to be successful in Egypt. Both push and pull strategies would have to be employed by the company . Advertising would be the main channel of our pull strategy. The company would buy up advertising space in both online and traditional media such as television. Property expos are common in Egypt and the company should take all efforts to ensure that it is represented in most of them if not all.
Given that the middle-income market targeted is quite expansive, it would be prudent to have moderate margins of about 20% as opposed to the average of 30% in order to provide an attractive entry price for this demography. The company would, therefore, look to make money out of high volumes rather than high premium prices. Residential housing units should be suitable for families, meaning three bed-roomed houses would be the most prudent. Apartments are also the most preferred class of real estate.
Egyptians harbor apathy for foreign workers. It is, therefore, important that the company integrates as much local labor as possible especially in the management and marketing levels. However, the situation in Egypt is not isolated because many other places practice the same .
Plans to provide alternative labor should be made. For instance, the company can opt to seek workers from learning institutions such as colleges and universities in Egypt. This idea is not only a form of offering community service but also reduces labor cost for the company as the student workers will perform as interns. It is also important that the company consider putting up career development programs for the existing workers. Training and retreats can work magic as they ensure that the workers remain motivated. Offering bonus after a period of economic success in the company can also motivate the workers.
As Al Naboodah is venturing into a new market, there is need to find the best marketing strategy. As the product is good, the next step is to find the right price, time and place, to attract customers. The market mix components include product, price, place, and promotion. When considering the product, the marketers of Al Naboodah have to ensure that they explain to the customers that the product will meet their needs. As for place, they have to elaborate the locations of the company or the alternative branches. The right addresses should be put across to ensure that there is effective communication. The price or the value of the product is the third component. The company should ensure that both the prices of their services and products are customer friendly. They should also consider offering discounts in the various segments of the company. Lastly, promotion aids in advertising the company. The company can prefer the use of radios, billboards, pamphlets, and even social media. This will ensure that more people are informed and hence, good business for the company. When doing promotions, it is important to consider the strategies the competitors are using, to promote uniqueness. In addition, it is important for the marketers to consider the season and the environment they are approaching.
Market Entry Strategy
Egyptian laws impose a limit on the maximum shareholding for a foreign company in the real estate industry. Ownership is capped at 49% . Therefore, rather than start a company from scratch, which involves a lengthy regulatory process, it would be prudent for the Al Naboodah to acquire a minority stake (49%) in a mid-level Egyptian real estate company that would not only provide an already established market but also save the company the cost of starting a new company and having to look for local partners in order to comply with regulations. Despite the relative ease of entering the market through an acquisition, the downside is that Al Naboodah cannot have majority control of the new company to be formed . However, that is the law in Egypt.
International Business Operations
A majority of the foreign companies that succeed in Egypt tend to localize their operations. It is because as suggested earlier, Egyptians harbor apathy against foreign institutions and organizations, which they perceive as being intrusive to their domestic affairs. Al Naboodah should, therefore, domesticate its operations if it is to become endeared as a local brand and subsequently gain market share. Localization should be at all levels of operations from procurement to staffing as well as marketing.
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