Rak Properties is closing on the launch of Dh5b project as hospitality sector soars
Dubai: Ras Al Khaimah’s real estate market is getting back into full development mode … and its leading developer is right in the thick of action. Rak Properties has confirmed it will flag off an estimated Dh5 billion mixed-use project within its Dh10 billion Mina Al Arab master-development next year.
“We are nowhere near utilising the full potential of the Mina Al Arab location, which covers 30 million square feet and with prime sea-facing land options,” said Mohammad Sultan Al Qadi, CEO and Managing Director. “The new project will take up 800,000 square feet and will have extensive focus on hospitality and retail elements. The project designs are still being worked on, but once the launch happens, it should keep us busy through to 2021.
“In the meantime, we will need to decide on the branding and other details — we will complete these processes closer to the launch date.
“For the funding needs, we will rely on equity and go in for external funding where needed, with a Sukuk [Islamic Sharia-based debt instrument] being one of the options.
“Ras Al Khaimah is in immediate need for new hotels and rooms … the estimates suggest as many as 10,000-15,000 hotel rooms within the next 10 years.” (Currently, there are 5,000 rooms available.) Apart from building new, Rak Properties is also reviving dormant hotel projects that got hit in the aftermath of 2008’s crisis. Recently, it confirmed that work will restart on the 350-room upscale island property that will be managed by InterContinental Hotels and set to open in 2019. “We had Anantara coming in earlier, now it’s InterContinental and there are more to come.”
Independent reports suggest the northern emirate’s hospitality sector has been a steady performer in recent quarters and is set to cash in fully during the peak season over the next few weeks. Occupancy levels and bookings are already at optimal levels and that should continue all the way into late February.
According to the consultancy CBRE, hotels in the emirate managed “further growth in occupancy rates and revenue per available room” during the third quarter, “aided by the early timing of Ramadan which led to higher visitation during July as compared to the previous year”.
“Year-to-date occupancy rates have averaged over 70 per cent, but with peak visitation months during the final quarter, these figures are likely to be higher by year end,” it adds. “RAK’s hospitality market is currently one of the country’s tourism bright spots, as it bucks wider regional trends of declining room revenues.”
Signs of a project-led upturn are evident in some of the Northern Emirates, further evidence that the UAE real estate and construction sectors need not be entirely dependent on what is happening in Dubai alone. Ajman’s Al Zorah development — a joint venture between the emirate’s government and Lebanon’s Solidere International — is ticking off key construction milestones and simultaneously boosting its hospitality component. Umm Al Quwain recently signed off on a massive mixed-use project involving Sobha Group.
The Rak Properties’ chief believes his emirate has every chance of taking its place in the sun. “I believe that Mina Al Arab offers us space — on- and offshore — to create more opportunities for Ras Al Khaimah’s hospitality sector,” the CEO said. “We don’t need to look around for additional land in the emirate. We have enough.”
But Rak Properties does have a presence in Abu Dhabi, in the form of the 24-storey Julphar Residences on Reem Island. “We are in the process of awarding the contracts — this will be our second venture in Abu Dhabi after RAK Tower, which we sold in 2013,” Al Qadi added.
“It’s too early to decide what we might do with Julphar Residences. As a development strategy, Rak Properties sells 70 per cent of whatever we build and retain the remaining for our leasing portfolio. This is a model that should work well for us.”
Factbox: Ras Al Khaimah’s hospitality operators cast the net wide
* The top source markets for the emirate’s hotels are Germany, the UK, Russia and India. “The market has been buoyed by the ability of local hoteliers to offer attractive room rates and inclusive holiday packages, which have ultimately been beneficial to overall hotel revenue performance,” says the new CBRE report. “The market has also been insulated to a degree by a slight lull in supply deliveries, with no major new resorts opened during 2016, and only a comparatively small number of new keys becoming operational.”
* Another developer with a focus on Ras Al Khaimah, Supercasa has confirmed Archea Architecture and Design Consultants for its resort project on Al Marjan Island, cited as the “first man-made island” in the emirate. The design phase will end by mid-2017 and construction likely to be completed by mid-2019. The resort will have 320 beach-facing rooms. Supercasa also has other mixed-use development projects in Ras Al Khaimah for a total built-up area of 15 million square feet.
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