Ras Al Khaimah seeks $13bn investment

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Ras Al Khaimah offers a mixture of resorts, beaches and mountains.

Ras Al Khaimah in the UAE is building beach resorts, a free-trade zone and an airline as it markets itself as a lower-cost alternative to Dubai, the Gulf's trade and tourism hub.

One of the seven emirates in the UAE, Ras Al Khaimah, like Dubai, has little oil. It plans to lure investment worth 50 billion dirhams ($13.62 billion) by 2009 to develop its tourism and industrial sectors.

The emirate hopes to differentiate its resorts from other planned projects, such as Oman's $805 million Wave coastal development, by its proximity to Dubai, a bustling regional commercial and leisure centre.

Gulf Arab governments are spending current account surpluses, estimated by the IMF at $239 billion in 2006, on tourism and industry to diversify their economies.

Developers including Egypt's Orascom Hotels and Development are building resorts along the emirate's Gulf coast worth an estimated $4.7 billion, according the Kuwait-based investment bank Global Investment House.

"The level of investment and the quality of investors they have attracted is notable," said Blair Hagkull, Middle East managing director for global property services specialist Jones Lang LaSalle.

"It is key for them to be able to sell their differentiation -- Ras Al Khaimah has things the rest of the UAE doesn't have such as mountains," he said.

The emirate, with a population of 198,000 and a gross domestic product of $2.5 billion in 2005, aims to quadruple the number of tourists it attracts by 2010 to about 100,000.

To do this it is starting an airline which will begin flying in April and plans to order 15 passenger aircraft from Airbus or Boeing Co. over the next five years.

Some of the 6 million people who visit the nearby emirate of Dubai every year could be attracted to Ras Al Khaimah because of its lower costs, said Costas Verginis, manager of real estate and hospitality at Deloitte & Touch in Dubai.

"Dubai has already done the hard work and Ras Al Khaimah can build on this," he said.

With about 60 percent of its tourists coming from Europe, however, an escalation in tensions with Iran, just across the Strait of Hormuz, could jeapordise the emirate's plans.

"Tourists seem to be a fickle group and there is political risk in the region," said Nicholas Maclean, middle east managing director for U.S. commercial real estate brokerage CB Richard Ellis. "The future of Ras Al Khaimah will have to combine the tourism with industry."

Ras Al Khaimah's free zone, officials hope, will compete with Dubai's Jebel Ali Free Zone, which has attracted 850 companies since opening in 1985.

Like Dubai, Ras Al Khaimah is offering full import and export tax exemptions, no corporate taxes for 15 years and 100 percent profit repatriation. The emirate, with its mineral resources and trading history, has an already-developed industrial base which could set it apart from regional competitors.

"They are globally competitive in cement and ceramics and they are used to dealing with people who operate in international markets," Ellis said. "Their industrial base could be an advantage in dealing with people externally."

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USER COMMENTS (2 COMMENTS)

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Posted by mark de vries, Dubai, UAE on 27 February 2007 at 14:07 UAE time


Hi mark, could you send me an email please, would like to ask you some direct questions regarding RAK.  
Thank you very much,  
 
mark de vries 
mark.devries@unitedinternationalpress.com

RAK, vision to reality
Posted by Mark Sutto, London, England on 16 February 2007 at 15:26 UAE time


The place clearly has potential - predominantely in terms of its combination 'vicinity to Dubai/access' and 'natural beauty/beach/mountains'. However, both factors are not unique and RAK faces strong competition. Other emirates have similar access advantages, and many Gulf and other international destinations are rapidly improving access and will compete for tourists. In terms of natural beauty and culture, RAK pales in comparison to place like Oman. RAK's success will, therefore, hinge on (i) its positioning, and (ii) its ability to execute that positioning/vision to reality. On both fronts, there are questions and doubts. The 'cheaper version of Dubai' scenario is a risky proposition - in terms of how RAK will extract value without flooding the emirate with low-budget tourits, the danger of falling prices in Dubai, as well as the likely cultural and environmental consequences of a high-volume/low margin approach to tourist development. In terms of ability to execute, RAK Properties, RAK Municipality, RAK Tourism Authority and several other of the involved teams and organizations still leave much to be desired (poor quality management, lack of coordination, power struggles, etc). Fingers crossed for a smart and sustainable RAK development path - for the sake of its people and environment.

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