Backward integration drives Sobha Realty's expansion and project efficiency
Backed by more than four decades of engineering and real estate expertise, Sobha Realty stand out in the UAE's highly competitive property market through its fully backward-integrated model.
'Sobha Realty is the first developer to pioneer this business model in the UAE, and the only major real estate player that is fully backward integrated in the region,' said Francis Alfred, Managing Director of Sobha Realty. 'This is spearheaded by Sobha Modular Industries and complemented by an integrated operational network.
The luxury developer adopted a strategic approach by identifying key construction bottlenecks—such as bathrooms, MEP (Mechanical, Electrical, and Plumbing) modules, facades, and other critical elements. These insights formed the basis of the backward-integrated model, allowing for greater control, efficiency, and scalability.
'Our rapid success in implementing these technologies has paved the way for expanding modularisation across more areas of the construction process,' said Alfred, who is helming the company's evolution towards factory-based modular construction, sustainable building methods, and end-to-end operational self-sufficiency.
'Modular construction is rapidly emerging as the new norm, and we believe it will become mainstream in the near future,' he noted.
Alfred said the company is currently testing volumetric modular construction, which will allow it to offer fully modular solutions for various geographies.
'As building codes and approvals for modular construction continue to evolve in the UAE, we are optimistic about the prospects of fully modular buildings,' he said.
He added that the company continues to invest in research, prototyping, and capability-building to manufacture and deliver complete modular solutions.
On the business front, the company is expanding its footprint both within the UAE and internationally. Following its successful entry into the Umm Al Quwain (UAQ) emirate with the launch of Sobha Siniya Island in 2024, Sobha Realty announced its next phase of expansion through the new Downtown UAQ project.
'Furthermore, we are entering the Abu Dhabi market as part of our commitment to shaping the UAE's luxury real estate landscape,' stated Alfred. 'On the international front, we have already expanded in key global markets, including the U.S. and Australia, as part of our long-term growth vision.'
He credited Sobha Realty's fully backward-integrated model as a key enabler of the expansion, providing greater control over quality, cost, timelines, and environmental impact throughout the development cycle.
'We have always built and maintained our integrated ecosystem in the markets we operate, and we will follow the same approach as we grow into new regions,' he emphasised.
Alfred also highlighted Mission 70:70, Sobha Realty's initiative to transform construction execution in the region by automating repetitive tasks and enabling skilled professionals to focus on high-value work.
'We aim to shift 70 percent of on-site work into a controlled factory environment by developing innovative offsite products,' he explained. 'This transition will enhance precision, improve quality, boost efficiency, scalability, and accelerate project timelines.'
The second '70' focuses on optimising the workforce within the company's factories through lean manufacturing and automation.
'In a conventional setup, 100 workers may be required to run operations, but under Mission 70-70, we will operate with just 50,' he noted.
'We've already witnessed a remarkable impact through Sobha Modular, and with Mission 70-70, we are poised to expand this impact across multiple domains—driving large-scale change and setting new industry benchmarks.'
Interview excerpts:
Sobha has clearly invested heavily in its backward integration model. What are the key performance indicators (KPIs) you use internally to assess the success and efficiency of this model over time?
At Sobha Realty, our backward integration model is central to our commitment to delivering exceptional quality and value. To evaluate its effectiveness, we monitor several key performance indicators:
• Project Delivery Timelines: We track the adherence to project schedules, aiming for early or on-time completions. Thanks to our backward integration model, our projects are delivered on time as per the original project delivery plans.
• Quality Assurance Metrics: We assess the quality of our projects through internal audits and customer feedback. At Sobha Group, we use German capabilities across our quality control team to ensure that all our projects adhere to and exceed the highest standards, both on the market level and internationally.
• Customer Satisfaction: We regularly survey our clients to identify satisfaction levels, focusing on aspects like build quality, design, and overall experience.
• Sustainability Benchmarks: Our commitment to sustainability is measured through rigorous certifications and assessments. Sobha One recently received the Middle East's first Green Mark Platinum Super Low Energy (SLE) certification from Singapore's Building and Construction Authority (BCA). It has also been awarded the Whole Life Carbon badge, underscoring the project's dedication to low-impact development and eco-conscious design.
Several other projects are currently pursuing LEED certifications across various rating systems. Sobha Realty achieved an impressive score of 91 in the 2024 Annual GRESB ESG Assessment, marking a significant improvement from its 2023 score of 72.
With backward integration comes a higher fixed cost base and greater CAPEX exposure. How does Sobha de-risk its model financially during periodic downturns in the real estate market?
Real estate development is not an isolated industry, it requires extensive network support and supply chain related to different industries, including steel, glass, façades among many others. Sobha Realty recognises that connecting multiple industries with the real estate industry can carry some exposure to market fluctuations.
However, our backward integration strategy is built with long-term resilience in mind.
Each vertical within our ecosystem is established not only to support internal demand, but also to have the potential to operate as an independent profit centre. This reduces dependency on a single revenue stream and opens up opportunities to serve external markets.
While the model is capital intensive, it allows us to keep liquidity within the group, streamline payment terms, and gain significant intangible benefits across the supply chain.
Moreover, our fixed costs and capital expenditure are carefully planned based on projected volumes and long-term savings. We are also developing a 5–10-year roadmap for each business vertical to ensure diversification and greater protection against sector downturns.
Many developers are still reliant on third-party contractors despite the risks. Why do you think the industry has been slow to adopt backward integration, and how does Sobha's model offer a sustainable long-term edge?
Shifting to a backward integration model is a strategic move that requires extensive planning and investment from real estate developers. It involves high capital investment, careful operational planning, and expertise across various domains.
Thanks to our backward integration model, we ensure:
• Quality Control: Full oversight of design, materials, and construction ensures top-tier standards. Our quality efforts are spearheaded by German Master Craftsmen to ensure German quality — the golden standard in the real estate industry.
• Timely Delivery: Sobha Realty's model eliminates delays originating from external suppliers' failure to meet delivery timelines. The latest example is the early handover of Creek Vistas Grande in Sobha Hartland, where residents received their keys six months ahead of schedule.
• Innovative Designs: In-house capabilities enable unique, custom-built developments. Sobha Group proudly employs over 500 in-house designers and architects.
• Sustainability: We ensure green building practices throughout our supply chain.
• Backward integration also protects our operations from global supply chain disruptions and inflationary pressures. By relying on our in-house manufacturing units, we reduce dependency on external vendors and service providers. We leverage locally available raw materials and operate within a self-sufficient supply ecosystem. As a result, we ensure uninterrupted progress and deliver projects on schedule, all while upholding the highest standards of quality.
With over 40,000 workers under direct employment, how does Sobha manage labour productivity and cost optimisation without compromising on quality or timelines — particularly during market slowdowns or lean phases?
At Sobha Realty, we recognise that an evolving workforce and rapid technological advancements require forward-thinking solutions that enhance efficiency and drive engagement. Our people-driven initiatives leverage smart technology to streamline processes, upskill employees, and create a seamless work experience.
In line with our commitment to continuous learning and professional growth, we have introduced the Sobha Skill Hub, our proprietary learning management system. This platform offers a wide array of courses and training modules, ensuring employees have access to relevant learning resources that help them develop critical skills and stay ahead in the industry.
These efforts, coupled with our constant drive to engage and motivate our people, help us maintain our competitive edge in terms of quality and delivery across business cycles. As a testament to our efforts, Sobha Realty has been re-certified as a Great Place to Work for 2025–2026, and this recognition is a reflection of what we hold most dear: our people.
How does Sobha Realty embed sustainability into its developments?
Sobha Realty's robust backward integration ensures seamless communication and consistent sustainability messaging across all entities. This approach enables the development and implementation of optimal designs that deliver maximum sustainability impact.
Our in-house development, design, construction, and FM teams lay the foundation for sustainability standards at the early stage of every project, which result in high performance and climate-resilient developments and masterplans.
All new developments within Sobha Realty's portfolio – including the masterplans – are pursuing global green building certifications, by embracing a judicious blend of active and passive strategies, including energy efficient designs and technologies, water saving solutions, as well as cutting-edge indoor air quality and HVAC systems. Each development reflects a deep respect for the environment by thoughtfully integrating both mitigation and adaptation measures.
Currently, more than 25 upcoming projects are pursuing green building certification, and all future projects and masterplans are well positioned to achieve the highest levels of sustainability.
The use of sustainable materials, low-carbon technologies, and an effective waste management system contributes to circularity in our construction processes and aligns with the UAE's circular economy policies.
Our backward integration model targets the completion of 70 percent of site-related works at the factories, which significantly reduce the environmental footprint of each project. For example, our Sobha Modular Facility minimised on-site impact by delivering ready-to-install aluminium facades and bathroom pods. This approach not only reduces waste and material transport from multiple locations to the construction sites, but also positively contributes to the Whole Life Carbon footprint of our developments.
(Reporting by Rajiv Pillai; Editing by Anoop Menon)
(anoop.menon@lseg.com)
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