Reasonable price, accessibility, luxurious amenities and other incentives are driving the real estate market in Ras Al Khaimah. Investors and real estate businesses are heading north, quick to sense an opportunity.
Adam Price, managing director of Select Property, lays it out well when he says, “Affordability is the key driving factor for real estate growth in RAK; property is fantastic value for money from both a rental and buying perspective when compared to Dubai and other neighbouring emirates.”
Located just 45 minutes from the world’s busiest airport in Dubai, and with the emirate’s own airport set for more expansion in the coming years, the accessibility to foreign travellers is of huge appeal, adds Price.
Expectedly, it is not only the international tourists and investors, but also those from other parts of the UAE that are driving the real estate market in RAK for its value-for-money luxury and leisure. According to Mat Green, head of research and consulting at CBRE Middle East, “It has also emerged as a tangible second home and holiday home market.”
Real estate in RAK has also received a boost from the way developers are aggressively wooing clients with extended payment plans, small down payments and rent-to-own option. As Barry Ebrahimy, head of commercial at Al Hamra Real Estate Development, puts it, “Families can book a quality home with 5 per cent down payment and pay for the property over five years while living in their homes.
“We are also offering a rent-to-own option for these customers who wish to live in the property, while knowing that they can convert the rental payments they have made towards their property purchase.”
Another factor that drives real estate business in RAK is the determined steps that it has taken to position its business to a wide variety of specific needs of the visitors.
Haitham Mattar, CEO of Ras Al Khaimah Tourism Development Authority (RAKTDA), points to just that saying, “Whether you are a beach-seeker, active adventurer or wellness seeker, the emirate will offer you diverse and exciting new products coming online later this year — specifically in our adventure tourism playground that is Jebel Jais, the highest peak in the UAE — we are optimistic of registering continued growth from all key markets for the remainder of the year and beyond, providing added reason for further hospitality investment.”
Now is the time to invest
RAK boasts a business-friendly environment and cost competitiveness, which assures the investors a very healthy return on investment. Cost of land is comparatively lower than other emirates, which is a big boon to real estate business.
Most industry experts are very positive in terms of returns for the investors. John Stevens, managing director of Asteco, highlights that Al Hamra reported yields of 7-8 per cent per year on town houses and villas and 8-9 per cent on smaller apartments. Price predicts an 8-10 per cent return on beachfront property like Pacific. Ebrahimy, for his part, puts the returns in the range of 6-10 per cent depending on the size and purchase price of the property.
What industry watchers are keenly keeping a tab on is the handover time, the profile of the developers, the actual finalisation of sale of the residential, commercial and office complex, and the occupancy of the hotel rooms to chart out the trajectory of investment safety and returns.
They find that the development in the emirate is taking place at brisk pace and yet adequately phased to give good returns. “The performance of the real estate sector in RAK has been steady and consistent,” says Price, adding that there was an 82 per cent increase in sale in the second quarter over the first quarter.
“With nothing else set to be delivered for a few years at least, it makes for a very attractive time for investors to buy.”
Stevens agrees, “It is not expected that this delivery will happen all at once. Rather a gradual handover to meet the demand of investors.”
Also, investments in RAK carry assurance of political stability and security vouched for by an “A” credit ratings by rating agencies Fitch and S&P.
The government has been making massive efforts to improve the infrastructure, electricity, water and sewer network with single-minded focus at making the emirate a first-choice destination in the UAE for tourists and business. Freehold zones, a no-tax policy, a diversified economy, scaling up of branding and promotion of the destination and positioning of the emirate as an offshore financial centre have all added up to make RAK a go-to place for leisure and business.
In this regard, RAKTDA and RAK Investment Authority (Rakia) have brought about a sea change in the emirate. Businesses and investors that initially moved to RAK as a second option to Dubai and Abu Dhabi soon found it to be a value-for-money destination with comparable benefits.
Multiple price points
With the emirate positioning itself as a new luxury destination, developers are building lavish properties and some are going to great lengths to bring opulence and grandeur to the properties. “The majority of the investment products are leisure oriented, either offering beachfront villas or apartments, or homes on the golf course,” says Green. The trend, he points out, continues even into recent projects like the Falcon Island Villas.
However, RAK’s real estate industry is not merely about luxury villas and private beaches. As Ebrahimy points out, “We are currently seeing strong demand for smaller town houses as second homes and that is something we are designing now to introduce to our customers.”
For those looking for homes close to extreme sports and adventure driving, there is Jebel Jais, which is about 1892m above sea level. “One of the most interesting upcoming projects in the emirate is the potential development of Jebel Jais, which will offer a mix of uses, including residential homes and hotels,” says Green. He predicts the area to become a new destination, exploiting the cooler climate on the UAE’s highest peak.
“We pride ourselves on the fact that our developments cater to all tastes and that we are able to provide diverse residential property options to meet any requirement,” says Mohammad Al Qadi, managing director and CEO of RAK Properties, which recently delivered 157 residences in Bermuda Villas, its latest residential development in Mina Al Arab.
Al Qadi says the delivery “marks a significant milestone in our journey to provide quality residential units to help meet the growing demand for property in the emirate”.
All things considered, the emirate has a wide range of real estate options. Stevens sums it up saying, “RAK offers a range of popular, mixed-use communities with a quality product at very agreeable prices.”
Properties in RAK
As high-profile developers move into the emirate, RAK’s real estate landscape expects a bigger transformation. One of the new projects completed is Bayti Homes, an $8.1-billion (Dh-29.75 billion) residential development of 124 beautifully designed villas on Al Hamrah beach, which was completed and handed over last year. A new phase of the Flamingo Villas is also set to be handed over.
Manar Mall, the iconic mall at Ras Al Khaimah City Centre, is currently undergoing a massive expansion and refurbishment that will double the size of the mall with major retail brands already taking up space.
A number of hoteliers are active and more are moving in. In Mina Al Arab, Ananatara Mina Al Arab Ras Al Khaimah and InterContinental Ras Al Khaimah Mina Al Arab are both scheduled to open in 2018 and 2019 respectively. Rezidor has announced its Park Inn by Radisson Resort Ras Al Khaimah Marjan Island with 408 rooms to open next year. Diamonds International Corporation, Movenpick Hotels & Resorts, Avani Al Marjan Island, Millennium Hotels & Resorts will open in 2020.
Hilton Garden Inn has recently opened with 240 rooms. Thomas Cook and City Max Hotels will open in 2017 and 2018 respectively. Marriott and Sheraton Four Points are opening in 2019 and 2020 respectively. Expansion of The Cove Rotana Resort will create an additional 732 rooms.
“The market will see a big spike in new hotels from 2019 onwards, with the anticipated completion of a number of large resort hotels in locations such as Al Marjan Island and Mina Al Arab, among others,” says Green.
Stevens puts the entire scenario in perspective and gives a balanced view, saying, “In the second quarter, RAK witnessed nominal quarter-on-quarter apartment declines of 1 per cent in typical properties and 2 per cent in high-end and new buildings, but several initiatives announced by the individual governments in the industrial and tourism sectors are expected to create employment opportunities, and thus drive demand for real estate.”
A million visitors
Green sees a direct link between the growth in visitors to the surge in investor interest. “As the popularity of the emirate’s tourism offering increases, we have seen an increase in the number of investors, a trend we expect to continue as 500 new hotel and hotel apartment units are completed by the end of the year,” he says.
The increased number of chartered flights, the opening of representative offices in the UK, Germany and India, aggressive promotion in places such as China, the US, South and Central Asia and Europe, have all added up to increased traffic to the emirate. Catering to their needs are the businesses in the hospitality industry. Following the trail are the real estate developers and investors.
“With one million tourists expected in 2018, the emirate’s rise is only just beginning — the time to invest is now,” says Price.