Although Ras Al Khaimah’s economy is increasingly diversified, its roots lie in extracting natural resources for use as construction materials. This remains a core strength of the emirate’s economy and an important driver of future growth, as RAK’s producers will continue to quarry and export products like aggregate, cement and ceramic tiles. However, attention is turning to the development of value-added products and processes that can build on these core industries.

Chief Strengths

In the construction-materials market segment, RAK’s chief strengths are in three areas: cement and aggregate, glass and ceramics. Stevin Rock is the government-founded company that leads quarrying efforts, producing high-grade limestone, gabbro rock, concrete and asphalt aggregates for the construction industry. RAK is home to five cement producers as well: Union Cement, RAK Cement, RAK White Cement, Gulf Cement and Pioneer Cement, which is owned by Raysut Cement of Oman.

The ceramics market is dominated by RAK Ceramics, which since its foundation in 1991 has become the world’s largest producer of ceramic tiles – it recently passed a milestone of having produced 1bn sq metres of tile since it began operations. The firm produces 8000 types of tiles and has expanded into making kitchen, sanitary and bathroom ware, as well as household fixtures and products. About 40% of sales go to European markets and it has factories in Bangladesh, China, India, Iran and Sudan, as well as RAK.

Glass is an area in which the government has preferred to invite private investors to operate as opposed to setting up its own companies and building them up into sector leaders. The newest arrival is international firm Saverglass, a France-based maker of bottles that was founded in 1897. The company’s facility opened in April 2013 and has capacity to produce 150m bottles annually. The firm’s management told local media the decision to move to RAK was based on the expectation of reduced costs for natural gas, labour and for shipping to markets located in the southern hemisphere.

The UAE dirham’s peg to the dollar was also cited as an effective hedge against currency risk, as the firm’s base currency is the euro but export transactions are conducted in dollars.

The glass industry in the UAE has seen compound annual growth of roughly 20% from 2010 to 2013, according to industry assessments. The outlook for future performance is closely aligned with that of the Arabian Peninsula and the greater Middle East North Africa (MENA) region. As of mid-2013 the future appeared to hold significant potential thanks to four main factors: regional growth as a result of general economic trends; rapid expansion specifically in the Saudi Arabian market; the impacts of instability in some countries; and a long-term focus on major projects. Each of these factors point to the building boom in the GCC region continuing in the short to medium term.


The GCC’s fundamentals have been underpinned by high hydrocarbons prices, and demand for construction materials has climbed as a result. Despite the disruption of the global financial crisis in 2007-08, this is likely to continue, even though there is an overhang of real estate in some countries and particularly in some market segments. Consumers are now accustomed to modern retailing options, and this has boosted demand for retail spaces across the peninsula.

Social spending on hospitals and schools are also demand drivers for construction materials, as education and health care are now a larger focus for economic and social planning at the government level.

Several states in the GCC are considering making health insurance mandatory and in the UAE, where such decisions are made by each of the seven emirates individually instead of at the federal level, Abu Dhabi has already implemented this reform.

Population increases are also a factor in driving up demand, according to a report on demographics by Markaz, a Kuwait-based investment bank. “Residential markets in the GCC are already facing shortages due to increasing demand for housing,’’ the report stated. “There is a strong demand for compounds and a short supply, leading to growth in the rental segment.’’ Increases in the number of expatriate workers also fuels demand for construction across both the residential and commercial building segments.

According to estimates from Middle East Economic Digest (MEED), construction and infrastructure projects under way as of early 2013 amounted to $1.9trn in the GCC region, the lion’s share of the $2.28trn in the MENA region as a whole. Within the GCC the UAE remains the largest market for construction materials, with $940bn of projects in the execution phases.

According to a report from Ventures Middle East, an Abu Dhabi-based consultancy, in 2012 building projects worth approximately $68.7bn were completed in the GCC, an increase of 48% over the total of $46.5bn in 2011. The firm’s projection for 2013 is a more modest increase of 19%, implying the value of completed projects for the year at $81.6bn. The value of new projects in 2013 is expected to climb from $48.2bn in 2012 to an estimated $64.5bn in 2013.

The Saudi Connection

With its population of 27m – more than the other five GCC member states combined – Saudi Arabia’s economy has a strong element of domestic demand driving the pace of construction and stands out in the region for its size. Research from the Kuwait-based regional investment bank Gulf Investment Corporation (GIC) indicates that 1.25m homes are required to meet demand in the country between 2013 an 2015, at an expected cost of SR500bn ($133.3bn). The research suggests cement consumption, as of January 2013, was approaching 1500 kg per capita, five times the global average of roughly 300 kg.

The pace of development in the country, however, has been tabbed as a challenge – like the housing stock and modern retail options in the kingdom, institutional capacity at many government agencies as well as at private enterprises is growing from a relatively small base. As a result, it is reasonable to expect that not all budgeted projects will proceed at the expected pace. “Bureaucratic hurdles, financing bottlenecks and capacity constraints with contractors have slowed the pace of contract awards, raising execution risks in key markets such as Saudi Arabia,’’ the GIC research reported.

Regional Instability

Political upheaval in the past two years has created new opportunities for RAK’s materials providers. One example has been a pledge by the GCC’s four major oil-and-gas producers, Saudi Arabia, Qatar, Kuwait and UAE, to help the two members with less-significant deposits: Bahrain and Oman. Each of the four major energy producers has agreed to contribute $2.5bn to fund infrastructure projects, with $20bn in spending expected as a result – $10bn for both countries over a 10-year period.

The instability has also set in stark contrast the political stability of RAK and the UAE, casting it as a safe haven for assets. Regional demand for real estate in Dubai has picked up in the past two years. Tourism is also set to see a boost, as vacationers may be more open to trying out new resorts outside the more-established options in the region. “The tourism sector in RAK provides some of the best growth and investment opportunities for the private sector,” Abdulnaser Abdullah Al Qasser, the director-general of the RAK Chamber of Commerce and Industry, told OBG. “The emirate’s diverse natural environment is a unique advantage that will become the main driver of sector growth over the next decade.” Recent developments include the revival of its airline, plans to renovate and perhaps expand the airport, and a series of new hotel projects.

Long-Term Plans

Several catalysts promise to extend the building boom beyond the next few years. One certainty for RAK’s materials producers is that Qatar’s successful bid for the 2022 World Cup means big orders in the near term. The country is already in the midst of a building boom at the moment – its 2012/13 budget included a 25% increase in spending on infrastructure. According to GIC’s research, a clearer outlook on spending for World Cup facilities will be available in the next few years.

Another major impact could come if Dubai’s bid to host the 2020 World Expo is successful. The winner is expected to be announced following voting in November 2013. Dubai’s proposal pledges a new facility called the Dubai Trade Centre-Jebel Ali, which is envisioned as a 438-ha site on the south-western edge of the city. Some initial estimates peg expo spending at Dh30.84bn ($8.4bn), including capital expenditures. It is anticipated that the development of infrastructure will add to the growing roster of opportunities for builders, thereby increasing demand for materials produced in RAK. Cement capacity by plant, 2013