The real estate rental market provides fascinating insights into Ras Al Khaimah’s evolving relationship with the other emirates. While the price cycle from 2008 to 2014 may have tracked the fortunes of other UAE markets in some respects, in other ways RAK stands apart, with its own identity and offerings.
Survey
Asteco Property Management’s review of property trends in the UAE from 2008 to 2014 compares the fortunes of the seven emirates. Its figures for the fourth quarter of 2014 show that rental prices were highest in Abu Dhabi and second-highest in Dubai. For studios and two- and three-bedroom properties, RAK’s rents in the fourth quarter of 2014 were the third-highest. However, the rent charged in RAK is almost half the rate in Abu Dhabi or Dubai for equivalent-sized properties. The biggest difference was for two-bedroom properties, where the annual rent in Abu Dhabi was Dh108,000 ($29,400), compared to Dh100,000 ($27,200) in Dubai and Dh51,000 ($13,900) in RAK, which is lower than the annual rental for a studio in either Abu Dhabi or Dubai. When three-bedroom properties were compared, the price in RAK was Dh80,000 ($21,800) a year against Dh137,000 ($37,300) in Dubai and Dh150,000 ($40,800) in Abu Dhabi. The least-expensive emirate was RAK’s neighbour Umm Al Quwain, where average rents for a three-bedroom property were Dh40,000 ($10,900), only marginally higher than the Dh39,000 ($10,860) being asked for a one-bedroom flat in RAK.
Six Years On
Looking back over six years, there are still places in the UAE where rental prices remain much lower than in 2008. In the fourth quarter of 2014 older properties in RAK City were commanding rents that were around 25% lower than at the same point in 2008. Yet many areas fared much worse when the final quarters of 2008 and 2014 are compared, according to Asteco. Annual rents were down by 34% in Umm Al Quwain, by 37% in the Al Yarmook area of Sharjah, by 40% for four- or five-bedroom properties in Dubai’s Mirdif, by 41% for older three-bedroom properties in Al Ain, by 48% for mid to lower-end properties in three districts on Abu Dhabi Island, and by 61% in Abu Dhabi’s Khalifa A and B developments.
Still, for landlords who invested in rental properties at the market’s nadir, things have been looking up, particularly in the new upscale communities of Mina Al Arab and Al Hamra. The top three performers from 2012 to 2014 were: three-bedroom properties in newer parts of RAK, which saw rents increase by 38% from Dh80,000 ($21,800) per year in 2012 to Dh110,000 ($29,900) in 2014; one-bedroom flats in older parts of RAK, which had dropped to Dh22,000 ($6000) by 2012, but which had rebounded to Dh32,500 ($8850) by 2014, a rise of 48%; and two-bedroom properties in newer parts of RAK, which hit the depressed market in 2012 able to command rents of Dh31,000 ($8440), but which now go for Dh62,500 ($17,010), up 102% in three years.
Prospects
Despite the impressive uptick in rental prices seen in recent years in RAK, the authors of the Asteco report predict price stability in RAK rather than exponential increases going forward. The report notes that, when rental prices surged in Dubai in early 2014, tenants seeking cheaper flats tended to target Sharjah and Ajman, which are closer to Dubai, rather than considering a commute from RAK. The report suggests that the size and quality of homes available in the managed estates of Al Hamra and Mina Al Arab were the main draw for RAK, rather than simple searches for cheaper homes. However, those new communities, which are 30 minutes closer to Dubai than RAK City, do have strong appeal. Improvements to the Sheikh Mohammed bin Zayed Road made since 2006 mean there is a multi-lane highway all the way. “When you look at the travel time, it’s better to commute from RAK than it is from Sharjah, because from Sharjah you have to go through more traffic,” Abdul Kunbargi, CEO of Union Investments, told OBG.
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