Adorned with Persian rugs and antique weapons showcased in glass cabinets, the palace of Ras Al Khaimah’s ruler is as grand as one would expect. Outside, peacocks are showing off their feathers on the patio. Inside, the Arabic coffee is free-flowing.
Sitting in his chair in the main hall, His Highness Sheikh Saud Bin Saqr Al Qasimi says he is confident about the growth of the UAE’s northernmost emirate. Not only has Ras Al Khaimah (RAK) recently signed a deal with the world-famous Spanish football team, Real Madrid, but in 2011, the emirate has shown positive rates of growth despite the ongoing politcial unrest in the region.
“I’m optimistic for the future,” the ruler says. “The growth in GDP for RAK was eight percent last year, and I hope we’ll have the same figure this year, if not better. We have also seen a growth in business registration by more than 25 percent. This is an indicator of growth, and I think this figure will stay the same in 2012.”
The long-term outlook for RAK, whose GDP makes up around 1.5 percent of the UAE’s economy, is currently dominated by plans to attract additional investment and boost tourism. Given the emirate’s lack of oil wealth, it has traditionally relied heavily on industries such as glass, cement and pharmaceuticals, but is now looking to diversify and expand.
According to Sheikh Saud, the government has already taken several steps to boost investment; from the launch of large industrial parks and the opening of its freezone, to the construction of a maritime city and the development of its ports. In the coming months and years, it will continue to review the business environment.
“We’re trying to increase transparency. We are reviewing our practices on a continuous basis and how to simplify them. We are also looking at how to improve our IT systems to make them more accessible, and how to improve our processes to make them more investment-friendly.”
At the same time, the emirate has also made moves to raise the number of visitors, with the establishment in May of a Tourism Investment and Development Authority (TIDA) to help investors, and a government-owned hospitality management company to take care of state-backed leisure developments.
Going forward, Sheikh Saud says RAK will continue to maximise its best assets.
“What we are trying to do is focus on our competitive advantage. Our economic development depends on the choices that we have. It is evident we have been successful in attracting industry, as we have world-class brands that have grown out of RAK and that have come here. But we also have good hotel occupancy now, and this supports our strategy to develop tourism even further.”
According to recent figures, 2011 was a particularly strong year for RAK’s tourism market, despite the Arab uprisings that have rocked the surrounding region. Data from the emirate’s TIDA said as many as 835,200 holiday-makers visited the city and its surroundings during the twelve-month period, marking an increase of 40 percent upon the year before, and pushing revenues up by more than a third to AED400m ($108m). The rise in numbers, which set a new record for the emirate, was mostly due to a surge in German tourists after a 200 percent growth in German visitors since 2010, authorities said. Other key source markets were Russia, the United Kingdom, Italy, Austria and Switzerland.
“Tourism plays a major role in our strategy and in the development of our emirate,” says Sheikh Saud. “Through history, RAK has been a destination for other Emiratis to come for the summer, so it’s not unnatural for us to focus on tourism.”
The big challenge today, he says, is to increase the number of hotel rooms to meet the high demand among holiday-makers.
“At the moment, our challenge is to build more hotel rooms. Our target is to reach 10,000 rooms by 2016. I am also hopeful that we will reach more than 1 million visitors in 2012.”
But despite its recent success in attracting tourists, many UAE residents remain intrigued as to why RAK was chosen by Real Madrid for its first branded resort, over more developed and globally well-known emirates, such as Dubai and Abu Dhabi.
The 50-hectare development, which is set to include a 10,000 seat football stadium, rollercoaster and sports academy, in addition to a raft of other sports and entertainment facilities, will cost a massive $1bn to develop, and is expected to enhance the attractiveness of its home town significantly when it is completed in 2015.
According to Sheikh Saud, it was less about choosing one emirate over another, and more about finding the right site for the complex.
“It wasn’t so much a choice between one emirate and another, but a decision to build in the UAE,” he explains. “I think the reason they chose RAK specifically was because it was a reflection of the whole offering of the UAE, and at the same time, the offering of RAK.
“The location they have chosen to build the resort is also a beautiful place. It is in close proximity to the airports, and there’s beautiful scenery and beaches. You can also see the mountains, which is unique.”
He adds that the idea of there being constant competition between emirates is unfounded. “I don’t feel there is competition between the emirates. Dubai is benefiting from Abu Dhabi and Abu Dhabi is benefitting from Dubai. The growth of Dubai for me represents an opportunity.”
Asked how the resort will impact RAK in the long term, Sheikh Saud says it will be extremely beneficial. Not only will it enhance the economy by attracting a spate of new visitors, but it will also put the small northern emirate on the map by boosting its image around the world and increasing people’s awareness of its existence. In addition, it will likely draw a flurry of new real estate investors and hotel operators to the emirate in accordance with the government plan, the ruler says.
“I think the project will boost the image of the UAE — there’s no question about it,” he says. “Real Madrid is a world-class brand with so many fans, who will all of a sudden pay attention to the Emirates and to RAK, so this is a great vehicle for us to reach more people. It will also reinforce the image we want to project for the whole UAE and for RAK, that we are friendly to the world.
“As for the economy, it will encourage more investors to come and join in with the tourism development, giving us more hotels and other projects. Each investor will define what is feasible, and we will be there to assist them in being successful.”
New brands who have already signed deals to build in RAK include the luxury Waldorf Astoria by Hilton, which is set to open a hotel on Al Marjan Island in October 2012, and Bab Al Bahr, which is opening a beach resort in RAK later this year. Hilton Worldwide will also add RAK's second Doubletree resort in 2014.
Hopefully, the resort will also raise the price of property, Sheikh Saud adds. “The real estate price is a function of supply and demand, and of course as you have more demand, the price usually goes up. I believe a major investment like this will increase demand, because people will know more about RAK.”
Infrastructure in the emirate will be developed in line with the growth, he says, but only where it is economically viable and needed. The biggest projects coming up are the inter-emirate road and railway links, which will be particularly beneficial in connecting RAK with the rest of the country.
“The infrastructure improvements are already under way; the federal government is assisting us. We’re not working as if we are an island, we are working alongside other emirates. We would like RAK to contribute to the growth of the wider UAE.
“The upgrade of the inter-emirates highway, for example, will soon be extending to RAK, and the first phase of the Etihad Rail project is also making progress, which has huge potential for cargo. If we could ship all our cargo via the rail network, it would reduce traffic on our roads. We have more cargo in RAK because we have more industry.”
Sheikh Saud says his government is also studying plans to expand Ras Al Khaimah airport in a bid to cater for the expected growth in demand in the future. There are no specific dates or plans confirmed as yet, he says, but this is certainly on the cards within the coming years. Asked if Ras Al Khaimah would consider a metro, he says this is not needed at the current time.
“We’re not considering a metro yet, as I don’t think it is required at the moment. There is a very efficient network of roads now which will allow you to go from one part of the emirate to the other. We are looking at more public transport, but it has to be economically viable. I don’t think a metro is economically viable in RAK today.”
Non-infrastructure projects, such as malls, are also in the pipeline. These will add to the existing offerings prior to the stadium’s completion. “There are several malls now in RAK. RAK Mall will open at the end of this month and the retail part of Al Julphar Towers will also open soon. Malls have become like city centres, downtowns really, but people aren’t impacted by the winter or summer.
“We do have other investors who we are in talks with about other projects, and once we have them we will announce them. We want to promote industry and tourism, but at the same time we would like to see the quality of life in RAK to improve, so we are also encouraging investors to look at schools, hospitals and other public amenities.”
However, no project will be as big as the Real Madrid resort, which will likely preoccupy the RAK government for the next three years. The development, which is a joint venture between Spanish football team Real Madrid, the government of RAK and Luxembourg-based RAK Marjan Island Football Investment Fund, will begin building work following a worldwide roadshow planned to lure investors, and each party will be contracted for a period of 20 years.
Sheikh Saud says he is very happy about the deal, not least because he is a huge fan of the sport and the Spanish team. “Who’s not a fan of real Madrid? You have to respect what they have done. Even in terms of their financial management and how they’ve managed to make their brand so global. It is one of the most respected football clubs. We’re very proud to be associated with them. Speaking to their president, you realise he is a businessman, a sportsman and a developer.”
The most important question of course, is whether the Sheikh has favourite player. “That is a very difficult question,” he laughs. “I met Zidane, he was really impressive; this was the first time I met him. But all of them really are marvellous. The best players are defined by what they are able to do. What I like about football is that teams compete, but they are all united by the spirit of the sport. The success of the team also depends not just on player, but on all of them.”
There's little doubt that Sheikh Saud has built an exceptionally strong team to manage RAK's bright future.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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