Affordability and rising demand drives building sector in Ras Al Khaimah

A key sector in Ras Al Khaimah, the construction industry is driven by housing, hospitality and infrastructure schemes within the emirate, but also by its key role in providing raw materials and manufactured components for mega-projects in the UAE and beyond. Although the sector has seen unprecedented peaks and troughs in the last decade, activity levels have rebounded and a pipeline of new activity in the run up to Dubai’s Expo 2020 gives added cause for optimism in the near term.

Economic Role

The construction sector employed 12% of all workers in the emirate in 2013, according to the RAK Department of Economic Development (RAK DED), with 25,986 people working in the industry, up 70% from 15,255 in 2009. In terms of gross capital formation, construction companies were worth Dh284m ($77.3m) in 2013, or 4.1% of the total value of businesses in the emirate, and up from Dh267m ($72.7m) in 2009, when they accounted for 4.7% of the total value. The sector accounted for 7.5% of GDP in 2013, according to RAK DED, a proportion that had not changed dramatically over the previous five years. It had been worth 7.6% in 2009, but dropped to 6.1% in 2010 before peaking at 8.7% in 2011. The sector’s contribution to GDP was Dh1.94bn ($528.1m) in 2013, up from Dh1.26bn ($343m) in 2009, Dh1.07bn ($291.3m) in 2010 and just below the peak of Dh1.99bn ($542.7m) in 2011.

Building Permits

One barometer of the level of activity in the sector is the number of building permits issued by RAK Municipal Authority, which declined from 6147 in 2011 to 5768 in 2012, 5398 in 2013 and 4930 in 2014. Of the 2014 total, some 2751 – 56% – were for the construction of villas, down by 32% from 4047 to 2751, though many developers have villa projects still under way.

In its “2014 Statistical Yearbook”, RAK DED noted that in 2013 there had been a “remarkable surge” in demand for property, particularly in the Al Jazirah Al Hamra area. In 2015 areas south of RAK City remain the focus for new developments by Al Hamra Real Estate Development, RAK Properties at its Mina Al Arab waterfront community and Al Marjan Island, which manages the development of four man-made islands built by the emirate’s former property arm, Rakeen, in a $1.8bn mixed-use housing and hospitality scheme. All three locations offer upscale, low- and medium-rise housing aimed at affluent Emiratis and foreign buyers.

Homes For Emiratis

RAK’s Emirati residents can also take advantage of the federal Sheikh Zayed Housing Programme (SZHP), which is designed to provide citizens with affordable homes. The SZHP provides interest-free loans for the purchase or construction of properties, non-refundable grants to help people buy, build or refurbish a property, and housing in compounds that are handed over to beneficiaries. To receive assistance from the SZHP, Emirati nationals must be able to demonstrate they have not received government housing aid in the last 15 years, that they are the family breadwinner, and that their assets and income are not sufficient to own a “good house”.

In 2014, 2281 people in RAK benefitted from SZHP assistance, up from 2167 in 2013. The total value of assistance paid out to beneficiaries in 2013 was Dh1.02bn ($277.6m), and in 2014 this increased to Dh1.2bn ($326.6m). The number of beneficiaries had gradually declined from 1004 people receiving Dh500m ($136.1m) in 2009 to 647 people receiving Dh320m ($87.1m) in 2012. In April 2015 the SZHP announced the first phase of a housing project at Bateen Al Samar in RAK would start in June. The scheme will see 1000 homes built in two phases at a site covering 5 sq km. Jamila Al Fandi, the SZHP’s director-general, told local media that 2838 homes for citizens were under construction in various parts of the emirate, and that the organisation had approved 2100 grants and loans in RAK in 2014.


The growth of RAK’s tourism sector – whose revenues passed Dh1bn ($272.2m) for the first time in 2014, according to the emirate’s Tourism Development Authority – has led many hotels build new units or expand and refurbish old ones (see Tourism chapter). In the first half of 2014 the first three hotels opened on the Al Marjan Islands. With 655 rooms, the Rixos Bab Al Bahr can accommodate more guests than any other hotel in the emirate. The owners of the Al Marjan DoubleTree Resort and Spa by Hilton, which opened with 484 rooms, brought an additional 235,577 sq feet, and in the last quarter of 2014 began construction of another 250 holiday villas with their own dining outlets, taking its total key count to 730. Marjan Resort and Spa was originally designed as Marbella Bay, a luxury residential complex with 430 units, but when the UAE housing market stalled in 2009, the developer, Sharjah’s Manazil, opted to turn part of it into a 301-room hotel. A fourth hotel, the seven-storey, 265-room Hotel Santorini, was being built at Al Marjan Island in 2015 by the Bin Majid Hotels Group. Across the bay, Hilton’s Al Hamra Beach and Golf Resort is to open another 670 rooms, and the adjacent conference centre is being expanded to be able to host 3000 people when joined with the nearby Hiltons. The RAK Hilton in RAK City is also investing in a refurbishment, and will reopen as a Hilton Garden Inn in 2016. With two of the four Marjan Islands still to be developed, opportunities exist for developers to build new hotels on a site that is close to other attractions and already has infrastructure such as roads, walkways and connected utilities. “There is no central business district in RAK City, but historical sites are being spruced up, and state of the art retail outlets are finally entering the market,” Paul Ashton, deputy chief executive officer of RAK Properties, told OBG.

Return On Investment

Opinions on the length of time it takes to see a return on investment in hotel development in RAK vary. Roger Tannous, the general manager of Marjan Resort and Spa, believes the owners of his hotel may have longer to wait than some developers because of the length and complexity of the construction process. “You will seldom see hotels with marble floors and gold leaf covering the ceilings in the atrium, so we cannot really talk about benchmarking with this hotel,” he told OBG.

However, Mohab Ghali, the country manager for Hilton RAK, whose portfolio includes the Waldorf Astoria in Al Hamra, is more optimistic. “The return is good for investors in RAK and it makes sense to invest in hotels here rather than real estate,” Ghali told OBG. “I think in the UAE some of them see a return in seven years, some eight years and some 10. The model in RAK is different to Europe.”

Master Developers

Development of both Al Hamra Village and Al Marjan Islands has been driven by companies established with the approval of RAK’s ruler, Sheikh Saud bin Saqr Al Qasimi. Rakeen, then the state property arm, was responsible for the tendering process for feasibility, engineering, procurement and construction of these projects, whose development and delivery is managed by the emirate-owned Al Marjan Island and private firm Al Hamra Real Estate Development. The former was set up in 2013 to take over and develop the freehold land bank in RAK.

The Mina Al Arab residential complex, just north of Al Hamra, is owned by RAK Properties. The company was created in 2005 and its founders, which include the government of RAK, hold 45% of the shares, with the rest floated on the Abu Dhabi Securities Exchange. According to its annual report, RAK Properties made a profit of Dh156m ($42.5m) in 2014, up 3.4% from Dh151m ($41.1m) in 2013, and had assets valued at Dh4.72bn ($1.29bn), up from Dh4.7bn ($1.28bn) in 2013. In addition to its investments in the emirate, RAK Properties is building a 266-home development on Reem Island in Abu Dhabi. The firm is also planning to build several hotels in the Mina Al Arab complex to cater to “specialist hospitality segments”.


With three major federal highways leading to RAK and a growing industrial sector, there has been considerable investment in infrastructure improvements in recent years that will lessen the impact of lorry traffic on residential and commercial areas. Al Rajhi Construction was awarded the $108m contract to build the RAK ring road in 2012, and had completed two of three planned phases at time of press. The road will provide a critical link for heavy vehicles carrying cement, aggregate and rock from RAK’s quarries and cement works north of the city to the Sheikh Mohammed bin Zayed Road leading south towards Dubai. Dubai-based StructCon was awarded the contract to build all seven bridges and four underpasses along the expressway by the UAE Ministry of Public Works.

At the emirate level, the RAK Department of Public Works and Services announced in February 2015 that 90% of the second phase of the 7. 2-km expansion of the Al Saedi-Al Twain road had been completed. The department said the second phase of the 21-km ring road was scheduled for completion in April 2015, and that work on the third and final stage would begin the following month. Ahmed Al Hammadi, the director-general of the department, also told local media that the road leading to the Saedi roundabout from Sheikh Mohammed bin Zayed Road would have three lanes in each direction rather than two. As of press time, the 9-km, four-lane Al Yalayes Road was set to open in August 2015 AVIATION: The emirate is also investing in its air infrastructure by making efforts to expand the role of Ras Al Khaimah International Airport as a budget airline destination, cargo hub and business centre. In 2015 a contract was signed for the construction of a larger cargo facility at the airport. Dubai-based SKA International took over the operation of the existing cargo facility in May 2015, and signed a contract to build a new freight complex. Due to be operational from the first quarter of 2016, it will cover an area of 15,000 sq metres. The facility is being built in an area of the airport designated as a free zone. In addition, a separate free zone is being developed at the airport to encourage industrial and commercial businesses to locate there, while the facility is also embarking on new projects, such as a VIP terminal for business aviation, expansion of the arrivals terminal, and a terminal that will link departures and arrivals (see Transport chapter).

Satelite Technology

While the ring road is being built at ground level, the Ministry of Public Works is hoping that a new investment will help it plan and plot major infrastructure improvements using space technology. In March 2015 it signed a memorandum of understanding with Emirates Institution for Advanced Science and Technology. This will allow planners to use satellite imagery when planning and devising infrastructure improvements, and to make use of an unmanned aircraft that is designed to take photographs from 60,000 feet up. The ministry has also invested in new technology to ensure roads that have already been built are safer. The Masar initiative will see a fleet of patrol vehicles tasked with maintaining the quality of federal roads by reporting any problems with surface damage, faulty lighting or broken signs. The ministry is also planning to build rest areas at 5-km to 10-km intervals, as well as lay-bys for emergency services vehicles.

The RAK Department of Public Works has also been responsible for measures to control the flow of traffic, including the deployment of more speed bumps in built-up areas to reduce speed and make the roads safer. The number of fatalities on RAK’s roads fell every year from 2009, when 80 people died, until 2013, when 42 people were killed in traffic accidents, according to Ministry of Interior statistics. In 2014, by contrast, 71 people died on the emirate’s roads, according to local media, which reported that RAK’s police had banned heavy trucks from the roads from 6.30am to 8.30am and from 1.00pm to 3.00pm to ease traffic flows at peak times, and also to make the roads safer for children and families.


Another measure designed to reduce freight traffic on the roads is the Etihad Rail network. British company Atkins is already undertaking preliminary engineering work for phase three of the project, which will connect the Northern Emirates to the 1200-km network. Although Etihad Rail will select contractors to provide project management, design and build, and safety services for construction of the railway itself, the new transport network is likely to create opportunities to build infrastructure supporting businesses that wish to use the service.

Initial plans prepared by Atkins show branch lines serving Al Ghail Industrial Area and Stevin Rock, as well as a container port at Al Hamra, a central station and a line running north to the quarries and cement works north of RAK City.

In 2014 three companies based in RAK signed memoranda of understanding with Etihad Rail to ship millions of tonnes of materials for the construction industry around the UAE, giving them the potential to export to other countries in the GCC on the wider network.

In July 2014 Al Futtaim Tarmac Quarry at Shawkah announced that by 2020 it expected to be sending around 6m tonnes of bulk commodities by rail a year, and in December 2014 Stevin Rock said that by 2020 it expected to be using rail for almost half of the 46m tonnes of limestone, aggregate and other construction materials the company produces annually. This will entail using three railheads at Shawkah, Al Ghail and at Khow Khuwair adjacent to Saqr Port, with the three Stevin Rock centres sending 6m, 11.9m and 4.5m tonnes of materials out by rail, respectively.

Hospitals & Schools

February 2015 saw the official opening of the Dh600m ($163.3m) Sheikh Khalifa Specialist Hospital, a six-storey infirmary with a 62,000-sq-metre main building on a 200,000-sq-metre campus in the south of RAK. To the north of the city a smaller hospital is also being built at Shaam in a contract valued at Dh85m ($23.1m), and is due to be completed by 2016. The design of the hospital demonstrates RAK’s commitment to green building technology. It has been built to take advantage of natural light, and gypsum cut-outs made out of recycled material have been used in the construction, along with energy-saving lighting and water systems. The 8000-sq-metre hospital will have 32 beds. New schools are also being built in the emirate in two schemes with a combined value of Dh68m ($18.5m). RAK High School, which is being built in the area of Dhait, will have a total of 27 classrooms, three laboratories as well as a music room, while another school project at Shaml is valued at Dh38m ($10.3m). According to RAK DED’s quarterly statistical bulletins for 2014, the Ministry of Public Works initiated projects in RAK with a total value of Dh670.2m ($182.4m), including the Dh120.7m ($32.9m) design and build of a hospital, and a Dh34m ($9.3m) primary school construction scheme. In addition, maintenance and improvement schemes for schools, hospitals and other state buildings totalled Dh29.3m ($7.98m).


As more people and businesses move to RAK, the emirate is addressing the growing challenge of providing them with power and water. In March 2015 a Dh320m ($87.1m) plant capable of producing 68,000 cu metres of water a day was inaugurated at Ghalilah in the north of RAK. According to the director-general of the Federal Authority for Electricity and Water (FEWA), Mohammed Mohammed Saleh, the new facility would additionally increase its reservoir stores to 91,000 cu metres per day, in a separate project costing Dh75m ($20.4m). FEWA continues to supply the majority of RAK’s utilities.

With demand for power and water expected to rise considerably, private sector development is increasingly seen as a solution to ongoing electricity and power constraints. Utico Middle East already owns 160,000-cu-metre-per-day desalination facilities, a 120-MW gas power station and over 480 km of transmission and distribution networks in RAK, but it also has plans to develop facilities using clean energy technology. The company’s vice-chairman and managing director, Richard Menezes, hopes to see a 270-MW power plant operating in RAK using clean coal and the latest carbon capture technology by December 2016, according to the firm’s website. “Our plant will produce 1.1m tonnes of CO per year and we will capture around 600,000 tonnes, making it as clean as a gas-fired power plant,” he said. The captured carbon dioxide will be sold to third-party buyers already contracted. Utico has already obtained an environmental permit from the RAK Environment Protection and Development Authority as per federal laws for the $500m project, with Shanghai Electric as one of its equity partners. In January 2014 Utico announced it was considering 20 bids from firms interested in constructing the world’s largest solar power plant in RAK, capable of producing 100,000 cu metres per day of desalinated water, as well as power.

Retail Expansion

The growth of international tourism, together with RAK’s popularity as a weekend destination for Emiratis, has boosted returns for retailers such as Al Naeem Mall and Manar Mall and prompted the latter to expand (see Retail chapter). “We have been inundated with demand from retailers, so we have decided to double the size of Manar Mall,” Barry Ebrahimy, the head of the commercial department at Al Hamra Real Estate Development, told OBG. The Dh230m ($62.6m) contract was won by Dubai’s Sun Engineering. Shankland Cox has been appointed as lead consultant and the new centre has been designed by Cadiz International. Construction work is due to be completed in the third quarter of 2016.


RAK’s growing popularity as a tourist destination and a place to live is set to feed demand for new real estate and hospitality developments. This puts more pressure on infrastructure and utilities, and therefore creates additional opportunities for construction in these areas. The arrival of Etihad Rail at the northernmost tip of the emirates will spawn additional building requirements and will also increase the value proposition of RAK for businesses involved in the manufacture of a range of heavy goods and materials that are consumed across the UAE and the wider GCC region.

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