Real estate in Ras Al Khaimah appears set to rebound from the regional downturn in the property market, with experts predicting an increase in sales and building activity, but prices seem unlikely to reach pre-economic crisis levels.
Starting in 2009 and continuing into 2010, demand for properties in RAK tapered off, an easing in line with the general trend across the UAE and the wider region. This in turn saw work on a number of developments either put on hold or slowed as demand dropped and some buyers who bought off-plan struggled to make payments.
Now well into 2011 the situation is turning around, with interest in residential properties starting to take off again and developers scaling up activity on some high profile projects.
Graham Honeybill, the general manager of RAK Bank, says that there is a sense of confidence returning to the market, although it is still tinged with caution.
“As to mortgages, people are still very careful,” he said in an interview with the Gulf News on February 20. “Good property in good locations is still finding a good price. But some segments are facing oversupply, and we have a long way to go before this oversupply is taken out.”
A sign of that returning confidence is the higher lending levels of RAK Bank, which increased its loan portfolio by 22% in 2010. The bank’s commitment to lending helped it to post a 38% rise in profits last year, as well as keep the local property market moving.
Leading real estate developer RAK Properties was another company that posted an increase in net profits for 2010, earning $51m after taxes, up by some 10% over the previous year. The company, which is speeding up work on its $2.7bn mixed-use Mina Al Arab project, forecasts additional growth in earnings for 2011. In mid-January, the company said that it expected to collect at least $474m in 2011 from clients that were making their final payments on completed properties.
According to Mohammed Sultan Al Qadi, the CEO of RAK Properties, while the global downturn did have an impact on the company’s projects, the firm has managed to minimise losses by putting in place a range of programmes to assist buyers. One such scheme allows clients who are experiencing financial difficulties to return some properties or switch to smaller units, Al Qadi said in an interview with the Bloomberg news agency on January 12.
“We are trying a lot of options to help them because we know the situation,” he said. “If someone bought 20 properties, we are trying to help them bring that down to 16.”
Another development that may boost the property market in RAK is the federal government’s recent announcement that it plans to step up infrastructure spending in the emirate. Up to $1.55bn is to be invested to improve the water and power distribution networks in RAK and the other northern emirates, measures that are intended to end supply disruptions, especially in times of peak demand such as the hot summer months.
The improvement to utilities – along with planned upgrades to road links – will further bolster RAK’s appeal as a residential and commercial centre. The emirate may soon have the same standard of services as Abu Dhabi and Dubai but without the high cost and congestion of either city.
Indeed, as John Heck, the vice-chairman of RAK Properties, said in a recent article published by industry journal Construction Week, “The RAK market is for those from the other emirates who wish to live here and commute; it’s a quiet place to live.”
With confidence returning as growth resumes in the local and regional economy, the RAK real estate sector is likely to continue its steady recovery throughout this year and beyond.