An empirical study on measuring operating efficiency and revenue of real estate assets in the UAE using data envelopment analysis

Abstract

PurposeThis paper aims to examine the performance efficiency of 56 real estate assets within the rental sector in the UAE to evaluate the relative operation efficiency in relation to revenue generation.Design/methodology/approachThe data envelopment analysis (DEA) approach was used to measure the relative operational efficiency of the studied assets in relation to the revenue performance. This method could produce a more informed and balanced approach to performance measurement.FindingsThe outcomes show that scores of efficiencies ranging from 7% to 99% in some of the models. The results showed that on average buildings are 75% relatively less efficient in maintenance, in term of revenue generation, than the benchmark set. Likewise, on average, the inefficient buildings are 60% relatively less efficient in insurance. Result also shows that 95% of the building assets in the sample are by and large operating at decreasing returns to scale. This implies that managers need to considerably reduce the operational resources (input) to improve the levels of revenue.Research limitations/implicationsThis study recommends that the FM operational variables that were found to inefficiently contribute to the revenue should be re-examined to test the validity of the findings. This is necessary before generalising or interpolating the results that are presented in this study.Practical implicationsThe information obtained about operational performance can help FM managers to understand which improvements in the productivity of inefficient FM resources are required, providing insight into how to reduce operating costs and increase revenue.Originality/valueThis paper adds value in using new FM operational parameters to evaluate the efficiency of the performance of built assets.