Though there has been a noticeable slowdown in property developments across the Gulf region, with a number of major projects either seeing their completion dates put back or work put on hold, the effects of the global economic crisis do not appear to have had much impact on RAK’s real estate market.
In late November, Solanki Real Estate, an arm of Solanki Holdings, announced plans for a $2.4bn mixed use residential, commercial and hotel development on the Al Marjan Islands. Launching the project, Abdulrahman Ismail Solanki, the chairman of Solanki Holdings, said RAK and the Al Marjan Islands were a natural choice for investment, “giving us the opportunity to cater to the emirate’s growth in terms of commercial activity, tourism and population”.
The previous month, well-known Indian actor Shah Rukh Khan and United Arab Emirates property group TSA launched a $2.16bn beachfront residential development project to be built on RAK’s Dana Island. When completed in 2012, the project, known as the Shah Rukh Khan Boulevard, will have 10 residential towers including specially designed studios.
In September, it was the turn of another celebrity, tennis star Boris Becker, to put his name to a major development, an $800m tennis and holiday resort to be built on Al Marjan Island. Along with a state-of-the-art tennis academy, the resort will have a 223-room hotel and 1000 serviced apartments.
Local developer Rakeen has also got in on the act, unveiling an updated master plan for its $16bn project on Dana Island, another high-end mixed use development.
These new projects are clearly driven to a large extent by the government’s ambitious plans for tourism, which aim to attract 2.5m visitors to RAK by 2012, a five-fold increase on the current number of arrivals. To accommodate this surge in the number of tourists, officials foresee the need for doubling the number of hotel rooms over the next few years, with 1900 rooms to be added and up to 20 new five-star hotels to be launched by 2012.
Additionally, there is the residential sector. According to official estimates, the emirate’s population is set to grow from the current 200,000 to 750,000 by 2020, partly as a result of the expanding economy attracting expatriate workers as well as those drawn by RAK’s appeal as an alternative to Dubai.
While Dubai remains the highest profile business centre in the Gulf region, RAK’s lower property prices and the easy commute to Dubai, just 45 minutes down the highway, makes RAK a viable residential option.
According to Khater Massad, the chief executive officer of the Ras Al Khaimah Investment Authority (RAKIA), the state’s lead business development body, the residential property market will continue to be driven by the growing need for housing to accommodate the increasing inflow of foreign workers.
“In my opinion there is a shortage of about 20,000 flats at a minimum, and if we continue with the same inward investment levels the requirements will increase by 10,000 per year,” Massad was reported as saying in December.
That is not to say RAK is looking to become a “bedroom suburb” of Dubai, as its own economy is performing strongly thanks to the expansion of trade and financial services.
Massad pinpointed the difference between the property market in RAK and those in some other states, saying, “The thing is here we have a genuine demand, we don’t have speculators.”
Though RAK’s real estate and development market remain strong despite the current downturn, some external factors could take some of the heat out of the sector. Falling property prices in Dubai and other emirates may lessen the appeal of RAK. Having said that, real estate costs would have to drop significantly before some of the shine can be taken off RAK’s gloss. Additionally, the tighter credit market could play a part in slowing some developments in RAK, but the swathe of new projects seems to belie this concern.
Overall, with such major plans for the expansion of the emirate’s economy and population, the real estate and property development sectors have a wide scope for further growth.
