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RAK to the future

by Mohammed Aly Sergie on Friday, 03 August 2007

It is easy for residents in the urban centres of the Arabian Gulf to forget that we live in the desert. The everyday toils seldom require us to leave the man-made oasis of city life, but when we do venture out into the vast expanses of desert, it is both humbling and exhilarating. Humbling because the barren desert portrays how small our city cocoons are; and exhilarating because it represents an inexhaustible opportunity for expansion.

In July, I had the opportunity to make the hour-long journey between Dubai to Ras Al Khaimah (RAK), and to meet with Sheikh Tariq Alqassimi, chairman of RAK-based Union Group of Companies, a holding company with interests in shipping, real estate, and IT services. Getting a story is always the plan, but as I drove through the desert, the story changed. The journey transports you between worlds, from hyper-developed Dubai, through the unadulterated desert, to Ras Al Khaimah, a sleepy town striving to make its way up. The reason why the scent of opportunity is in the air is not just because RAK is an underdeveloped area in the world's richest neighbourhood. Indeed the Gulf is peppered with sleepy towns. RAK has something more, and I was eager to find out.

I always tried in all my business ventures to be a pioneer, I never wanted to come and duplicate what others are doing.

Sheikh Tariq's office, which is near the new free zone in RAK, does not automatically give the impression that this is the centre of a major operation with over 2000 employees. It is not housed in an ultramodern glass and steel building. Instead is based within a nondescript three-storey structure on a sandy avenue. The ground floor is home to one of the Union Group's portfolio companies, a travel agency with the brilliant name ‘Time Travel'. Once inside Union Group's headquarters, it became apparent that while life is slower in RAK, there is a lot of business being done. Employees were rushing around to complete their tasks before the weekend; when I was received by Sheikh Tariq, has already been through a full day of meetings with his managers and businessmen looking to invest in RAK. Nevertheless, he passionately delivered the RAK narrative.

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He began by pointing out the obvious, that Dubai and RAK are not competitors, and that "the prosperity of Dubai will only bring additional business to RAK". He continues: "I believe that in Dubai many factors contributed to its success. Some of the factors that made Dubai successful for the past five years also exist in RAK."

Elaborating on the ingredients for success, he first observes that the rise of oil prices provided the government with additional cash which fueled infrastructure investments, enabling the federal government to expand electricity, water treatment, and road networks.

The second factor that the Sheikh raised stems from the different approaches of the emirates. "The marketing of Dubai over the past decade, the success that they have achieved in marketing the emirate, was great for them but it was beneficial for all the UAE and even the entire GCC, who are all benefiting from the experiment of Dubai." RAK is embarking on a similar marketing campaign, and Sheikh Tariq is active in the push to attract business to the emirate.

Given the change in marketing strategy, and basing it on the success of the Dubai model, the RAK government "decided to open its minds and horizons towards investors," says Sheikh Tariq. "When an investor looks at RAK, he finds that the legal framework that exists in the emirate provides an ideal base that caters to all their interests, the laws protect investors, and the government ensures that investors are attracted to RAK," he adds.

The final ingredient for success, according to Sheikh Tariq, is the development of the freehold real estate sector in RAK. The population growth in the emirate over the past three years has been consistent at 12% per year, and this growth is expected to continue for the next five years. RAK has not developed much real estate capacity in the past 20 years, so the developers are building at a lightening pace.

RAK as a tourist destination has already been popular for some time with Russians, but for the past four years an increasing number of Germans have been making the journey to RAK. Over the past three years the average hotel occupancy rate has hit 87%. More hotels are coming up, and existing hotels are expanding. Tourism also fuels the real estate boom, and most of the attraction is due to RAK's natural beauty.


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