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Fujairah: tiny emirate’s big strides in real estate

Investment in roads, ports, tourism to energise real estate growth

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Fujairah’s predominantly mountainous landscape makes it attractive to adventurers
Property Weekly

One emirate that is quietly making a strong pitch to attract tourists and real estate developments is Fujairah. Located completely on the eastern coast of the UAE along the Gulf of Oman, the fifth-largest emirate has relatively moderate climate than Dubai and Abu Dhabi, best suited for mountain and beach-loving travellers.

The emirate’s economy has long been driven by its traditional fishing and agriculture sectors, thanks to ample rainwater from the Hajjar mountains. However, the other local industries that also flourished over the years due to construction boom in other emirates are mining and stone crushing.

Fujairah expects its population of around 235,000 to exceed half a million by 2040. Keeping the population and tourism growth in mind, the government is building around 8,800 homes and 1,500 hotel rooms over the next five years. Despite being a small emirate, Fujairah has managed a GDP of over Dh15.43 billion in 2016, according to data released by the Fujairah Statistics Centre.

Fujairah 2040 Plan

With the launch of Fujairah 2040 Plan in 2015, the emirate is expected to receive a major infrastructure and public service boost in terms of building new roadways, residential complexes, besides upgrading the seaport and airport facilities. The local government has already started spending Dh1.5 billion to improve road networks and build water barriers, ports and residential complexes and health care facilities.

The municipalities of Fujairah and Dibba have collectively issued around 2,600 building permits in 2016. The Ministry of Infrastructure and Development alone had implemented new projects worth of over Dh38 million in 2016.

The ambitious development plan would also include enhancing Fujairah seaport’s capacity by adding new terminals for oil, marine services, dry bulk and containers with an anchorage area. Whereas, Fujairah’s only international airport that handled 9,690 aircraft movement and 33,600 passenger movement in 2016 will go through major expansion by increasing the runway and apron area.

Real estate, tourism

Fujairah is witnessing many tourism-linked real estate developments, including hotels and villas in the city. Abu Dhabi-based Eagle Hills was first to start residential development with direct access to the Fujairah beach. The development is an eight-minute drive from the airport and 25 minutes from the border of Oman. Eagle Hills Fujairah Beach is mixed-use with a gated residential community comprising 84 two-, three- and four-bedroom villas and town houses.

Eagle Hills is further enhancing its presence by building two five-star hotels in a bid to attract more tourists and investment into the northern emirates. In 2016, the company announced its first property, Address Fujairah Resort and Spa, which will be located in Sharm in Fujairah. The project will have the Address Hotel with a range of five-star amenities and four residential buildings that include 170 branded apartments, five beach villas and five garden villas. The company earlier this year signed a Dh300-million facility with the National Bank of Fujairah to finance the construction of the resort.

This follows its second property, Palace Fujairah Beach, which is a premium luxury hotel to be managed by Address Hotels and Resorts. The project will feature 162 rooms and suites and will be set on a prime piece of coastline on the gulf.

“Catering to both tourists and investors, the upcoming Eagle Hills Fujairah Beach project will offer a mixed-use development, including a world-class beach and gated residential community, which will undoubtedly add further appeal to the area,” says Khaleed Zaki, general manager of Millennium Hotel Fujairah, which opened its first property in 2015.

With 220 guest rooms and suites, Millennium Hotel is directly connected to Fujairah Mall, and the operator is planning to expand its operations by introducing a ballroom with a capacity of 500 people. “Fujairah is seeing a steady increase in visitor numbers and over the past few years there had been some major development projects implemented by the government that have helped put Fujairah on the map as a business and leisure hub. Since the Fujairah Plan 2040 launched in 2015, there has also been a focus on extending the base of industrial, commercial and agriculture production,” says Zaki.

Dubai Investments, which initially announced Dh400 million in real estate projects in March 2008 that were subsequently suspended following the downturn, also announced that it is restarting the development of Fujairah Business Park and The Market.

Tourism, for sure, is one of the fastest-growing sectors in Fujairah, as the emirate distinguishes itself with its rugged mountains, valleys, waterfalls, oases and wide sandy beaches.

The emirate has 21 hotels properties and 3,200 rooms. In 2016, it welcomed around 764,000 guests. The number of hotels is expected to grow rapidly with many new properties announcing projects. InterContinental Hotels Group (IHG), for instance, recently announced the opening of its first resort in the Middle East in Fujairah. The property will have 190 guest rooms and suites, including 44 club rooms and 38 suites.

With its many unique attributes, such as the beaches, diverse coral reefs, a predominantly mountainous landscape and the oldest mosque in the UAE, Zaki says Fujairah continues to be a promising market, “with great potential to rival the other more established emirates when it comes to domestic and international tourism”.

Overall, Fujairah still offers less choices when it comes to resort hotels compared with other emirates. “In order to attract a wider market and to further entice holiday makers to explore the region’s many unique selling points, Fujairah is likely to see an increase in luxury resorts openings in the next few years,” says Zaki.

David Prince, area vice-president of Rotana, says Fujairah tops the list of the hotel operator’s best-performing markets in the Middle East. The company, which currently has two properties in the emirate, Fujairah Rotana Resort and Spa and Nour Arjaan by Rotana, claims to have registered strong performance in terms of revenue and occupancy.

“Fujairah’s hospitality sector has been flourishing in recent years on the back of a booming tourism scene,” says Prince. “There has been a marked increase in regional and international tourist arrivals to the emirate following the local government’s launch of a number of initiatives to promote the destination over the past few years.”

Prince points out that the tourism sector has been identified as a core pillar of the economic diversification policy of the UAE, as its contribution represents a significant share of the country’s revenues. “As a result, various local and federal authorities have been exerting substantial efforts to strengthen the sector and enhance the offerings of different tourist attractions around the country,” he says.

In addition to its adventure and nature offerings, the emirate is also home to internationally recognised historic sites, including Al-Heil Castle, the Old Fort and Al Bidya mosque, which is the oldest known mosque in the UAE. An attractive cultural offering together with a tourist-friendly geography presents an incredible opportunity for a major tourism boom and an uptick in tourist footfall.

While there is already progress in the hospitality sector, Prince expects mid-range to affordable properties to help attract more tourists in the future.

Port expansion

Its strategic location and access to the Indian Ocean give Fujairah easy access to major global shipping routes. With its multipurpose port, Fujairah is already home to the world’s largest livestock shipping companies. The Fujairah Free Zone, which is located in the Port of Fujairah, offers opportunities to foreign investors looking to invest in banking and trade.

The Port of Fujairah is expected to go through a major expansion with a recent Dh500-million agreement signed with the Abu Dhabi Ports Company (ADPC), which will develop the port infrastructure, including the deepening of berths to a draft of 16.5m and the establishment of a 1,000m quay and a 300,000-sq-m storage yard to accommodate the expected growth in cargo traffic.

“Fujairah Port is one of the key economic, commercial and logistics hubs not only in the emirate but in the entire nation on account of its important strategic location overlooking the Pacific Ocean at the crossroads of shipping lines between East and West,” Dr. Sultan Bin Ahmad Sultan Al Jaber, Minister of State and chairman of ADPC, told WAM news agency.

ADPC, which recently signed a 35-year concession agreement with the Port of Fujairah, has exclusive rights to develop port infrastructure and manage its operations. “The government’s strategic partnership with Abu Dhabi Ports will help enhance the existing infrastructure and efficiency of operations at the port, which lies on the UAE’s east coast,” says Prince. “Also, the launch of the country’s first very large crude carrier [VLCC] jetty last year with an investment of Dh650 million is expected to put Fujairah on the global map.”

Fujairah government has also signed a partnership agreement with Minpoint Business Investments and Niras International Consultancy to begin construction of a Smart Logistics City. The first phase of construction is slated to start by year end.

In addition, the emirate has also been making efforts to strengthen its private sector with an emphasis on small and medium enterprises. Fujairah had around 237 manufacturing units employing 11,000 workers in 2016. In the same year, the government issued 11,820 new and renewed business licences to expand its private sector.

“The upsurge in new economic initiatives will attract new investments and investors alike, bringing positive strides to the emirate’s tourism and hospitality sector,” says Prince.

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