Ask anyone who has lived in Ras Al Khaimah (RAK) for longer than a few years and they will tell you that the emirate has changed remarkably since they arrived. While RAK’s skyline remains dwarfed by that of Dubai, or even Abu Dhabi, the emirate has big plans, and things are afoot – the desert may never quite be the same again.
It is perhaps ironic that the view from the offices of Rakeen, the real estate arm of Ras Al Khaimah Investment Authority (RAKIA), includes a sand dune and an ancient fort – already, both are beginning to feel anachronistic in this rapidly changing land.
Integral to plans
Real estate is a key part of realising RAK’s economic development plans. The government envisages that accommodating the influx of interest in the emirate will require a substantial increase in the volume of residential and business premises that it has to offer. But it is also about building on its success in creating desirable lifestyle options that will have the right mix of qualities to attract talent from around the globe.
RAK has a local population of some 250,000 people. In the past few years, that number has swollen by 25% as a result of an inflow of European and Asian (largely Indian, Bangladeshi and Filipino) expatriates, representing a new management and labour class. Already, accommodation is at a premium. RAK City, on the coast, takes the strain of housing most of the country’s non-rural population. Labourers are mostly housed in accommodation close to the projects on which they work, while on the coast, professional workers are enjoying the delights of the RAK vision at the Al Hamra Village, a development consisting of interestingly designed villas built on land reclaimed from the mangroves, made verdant with championship golf courses irrigated by desalinated seawater.
Delivering the dream
Marc-Henri Veyrassat, chief executive of Rakeen and a Swiss national, is “at the coalface” of the emirate’s transformation. Mr Veyrassat, like many of the other expatriates charged with delivering RAK’s dream, is a resident of the Al Hamra Village, and extols its charms and virtues. In addition to professionals like himself, he says, Al Hamra is “perfect for entrepreneurs who have sold businesses in Europe, the US or elsewhere in the Middle East and are looking for an affordable residence which serves their purposes for fiscal or economic reasons.”
He adds “[Al Hamra represents] an important proof of concept that the model works. In my street there are 80 families, some here for work-related reasons, some who have retired here.” All, however, are taking advantage of the fiscal regime and year-round sunshine.
There is also a firm focus on business – and in the same vicinity RAKIA has recently built a state-of-the-art amenity centre, a multi-storey complex that will house corporate offices for a wide array of clients, including information technology firms, financial houses, consultancies and several other new business ventures.
Where once nothing but birds and fish could thrive, the foundations are being laid for mixed-use leisure, hospitality and residential developments. The government has taken a muscular approach to the development of its natural assets – benefiting from an environmental framework built to accommodate business needs – and not to put a dampener on progress. Mr Veyrassat says: “What is so exciting about RAK is that the government is committed to making business here as straightforward as possible. We can make decisions here in minutes which would take weeks in other countries because of their red tape and licensing procedures, and so on.”
It is unlikely that RAK will ever, or even desire to, become a new Dubai. Traffic jams in RAK are few and far between and RAK inhabitants describe life as “more relaxed” than Dubai. Many of the projects on the cards are intended to enhance that state of mind rather than disrupt it, by playing to RAK’s natural strengths and attributes – namely, sun, sea and sand.
Some 27 kilometres south-west of RAK town centre, the Al Marjan islands project will represent the first artificial islands projects slated for completion in the emirate. Already, the land has been reclaimed, and when completed the project will occupy some 2.7 million square metres and have a value estimated at $1.8bn. Mr Veyrassat is proud to say that all units on the yet-to-be-completed archipelago have already been sold. He points out that “unlike elsewhere in the UAE, purchasers are able to actually buy the land on which the units are built – it is not just a lease agreement.”
The first major developments on the iconic island will be the Bab Al Bahr and La Hoya Bay Residences, which, according to Rakeen, offer “idyllic island living”, “magnificent landscaping” and 360-degree sea views from a range of accommodation options including freehold apartments, hotels and timeshare apartments. Other attractions promised by Rakeen include “hospitals of international repute”, golf courses and beach parks.
This emphasis on leisure activities is essential to the growth of the real estate sector – and a number of other projects exist which are calculated to appeal to the investor, tourist and resident alike.
The Jebel Jais Mountain Resort, to be built at what is literally one of the emirate’s high spots, will consist of a five-star hotel and conference centre, a cable car linking the resort to sea level, residential units, an outdoor winter ski slope replete with artificial snow and facilities for climbing, paragliding and falconry.
The Saraya Islands project on Julphar Islands is intended to feature villas, lagoon-view townhouses, bungalows, amusement parks and a planetarium and The Cove Project, extending across some 50 acres and featuring 173 exclusive beach-access chalet-style residences, is being part-funded by the Egyptian company Orascom, one of the largest land development companies in the Middle East.
On the up
When completed, the $150m Julphar Towers will comprise two 43-storey tower blocks – one residential and one devoted to the provision of offices, each of which will be built on the top of a three-storey podium, to provide living and work space in a grand style.
Another project, the $1.6bn RAK Financial City, will perhaps in time come to embody the spirit of RAK. Its developers say that it will be both futuristic and sustainable, use the latest in green building concepts, and provide RAK’s business community with a completely serviced destination, providing both an icon of a modern, functional complex for business and legislation and a role model of cost effectiveness and competitiveness. The integrated hub will be located in a free zone and freehold environment and offer a mixed-use complex of residential, hotel, retail and commercial property in a single zone.
But in time, the bulk of the burden of housing the country’s burgeoning population will be shouldered by RAK’s Gateway City. Due to be completed in 2012 and designed to house some 150,000 people, the theme and function-based development will cover 42 square kilometres and represents, according to its developers, a quantum leap in the region’s coming of age. RAK’s population is expected to rise to 500,000 within five years of Gateway City opening. Mr Veyrassat says: “Real estate development sits hand in hand with industrial development.”
Very much in charge of the day-to-day management of this growth – under the watchful eye of Sheikh Saud Bin Saqr Al Qasimi – is Rakeen, which was launched in December 2006 and best described as the masterplanner for real estate in the emirate.
Rakeen, a private joint stock company owned by the RAK government, RAK Airways, RAK Properties and RAK Oil, was established in 2006 with AED4bn ($1.1bn) in assets and AED400m in paid-up capital. In addition to developing and managing its key projects in the emirates, it is developing and managing projects in Italy, Iran, Ukraine, India and Georgia.
Rakeen uses a number of models to finance its developments. Much of the development is simply self-financed, with the company shouldering all of the risk and enjoying the reward. Larger projects use a model whereby the proceeds of sales on one floor go towards the development of subsequent storeys. A Rakeen spokesman says: “Because we can operate on a government-to-government basis, we can benefit from the arrangements provided by foreign export credit agencies.”
Of course, RAK’s real estate sector is not stand-alone – as an economically viable entity, RAK only makes sense because of the broader prospect of growth in the United Arab Emirates – and it is an obvious sequitur because of its strong role in the Middle East and the Gulf. Altogether, the building, construction and real estate sector in RAK contributed to more than 20% of GDP in 2005. While more up-to-date figures are not available as at time of writing, real estate as a contribution to GDP has almost certainly increased in subsequent years and is enhanced in RAK in the absence of an oil economy.
One of the motivators leading people and institutions to buy real estate in RAK is price. Like-for-like, property generally costs 60% of the prices found in Dubai – and investors can enjoy the benefits of 100% freehold in the properties they purchase. With increasingly sophisticated transport links throughout the emirates, buying property in RAK holds appeal to businesses and individuals who spend much of their time in Dubai.
It is inevitable that a percentage of those tourists that visit RAK from elsewhere in the Gulf Co-operation Council, Iran, south Asia, or increasingly the former Soviet Union, will find themselves so beguiled by the emirate that they set up a more permanent presence, either as part-time or full-time residents, or through one of the many time-share opportunities due to come on stream as development projects mature.
But it is also worth remembering that RAK has a young population – with some 50% of its population under the age of 19, and that the number of inhabitants is set to grow exponentially – and all of whom will require housing.
Real estate is, of course, perhaps the best bellwether industry for understanding the state of an economy at any one point in time. It is evident that RAK’s inhabitants, the government and the expatriate community which has been attracted there as a place to work and live are confident that the future holds great things, and they collectively have the vision, enthusiasm and skills to make sure it happens. But as in any long-term planning, the ability to weather storms and adapt to change is an essential condition for realisation of those plans.
Clearly, RAK is not immune to the economic challenges faced by the rest of the emirates or the wider world, and such financial uncertainty will no doubt have a dilatory effect on some of the projects at planning stage in the emirate.
Mr Veyrassat believes, however, that Rakeen’s projects are in a good position to succeed. “I think that good things can come from [the global slowdown]”, he says. “It should regulate supply, by killing off some of the projects in the pipeline.” It has been, he suggests, too easy for too long to make easy money – and many of the “briefcase companies” gambling on the emirates’ boom will have to pack up and leave. “But people with equity backing, or government backing, will do very well.”
RAK’s Crown Prince Sheikh Qasimi says that in his opinion, “business is not about ego, but about adhering to principle”. This might well prove a valuable dictum in the current climate.