By Parag Deulgaonkar
Veteran developer and CEO of RAK Properties, Mohammed Sultan Al Qadi’s sanctuary-like master development has come at an opportune time, as the UAE’s northern-most emirate witnesses a surge in tourists.
Mohammed Sultan Al Qadi talks like a developer.
“I want to build every square foot of land in Mina Al Arab,” he tells Arabian Business.
The RAK Properties CEO is leading the $2.72bn master development – the largest in the northern UAE emirate of Ras Al Khaimah (RAK).
The master plan has been revised since its original in 2006 and now includes eight resorts (including two eco-hotels), an Arabian souk, boutiques, traditional Abra (water taxis) and thousands of residences including villas, townhouses and apartments.
The global financial crisis of 2008-09 means it is running behind its original schedule but Al Qadi is enthusiastic about the current surge in activity at the site.
“We have a lot of space, nearly 165 million square foot, and we have just developed a third of it,” he says, emphasising that the entire Mina Al Arab area will be developed.
Two hotels are already under construction - a 350-key InterContinental and a 306-key Anantara – and are both slated for completion in 2018.
“There is a high demand for beach hotels in Ras Al Khaimah and we are tapping into that segment,” Al Qadi says. “The beach-front Anantara will have chalets built in the sea, while the Intercontinental will be beach facing.”
The latest tourism data released by the RAK government affirms the CEO’s projections that more accommodation is needed in the emirate, which is particularly known for its natural landscapes.
Ras Al Khaimah Tourism Development Authority said in its most recent report that the number of visitors to the emirate rose by 8.3 percent in the first quarter of 2017 compared to same period last year.
While domestic tourism remains the largest contributor to it tourism performance, international arrivals registered an increase of 11.3 percent year-on-year. Average occupancy reached 75.5 percent, an increase of 6.2 percent, over the previous year, while revenue per available room (RevPAR) went up by 2.5 percent as room revenue jumped by 9.3 percent.
The authority expects 4,445 new rooms to open over the coming years, ranging from 3- to 5-star properties, says the report.
In its Q1 2017 report, property consultants CBRE said RAK’s hospitality market received over 193,000 visitors with more than 758,000 guest nights, an increase of 8.3 percent and 18.7 percent growth in visitor arrivals and guest nights, respectively, compared to the year earlier. The consultancy puts occupancy rates at 76.3 percent in the first three months of the year compared to 71.3 percent same period last year.
The uptick in tourism in the emirate has significantly helped RAK Properties.
Listed on the Abu Dhabi Securities Exchange (ADX), the company posted a 61.41 percent increase in profit during the first quarter of 2017, up to $10.87m from $5.05m during the same period 2016. Revenues rose to $31.48m from $19.5m, while property sales jumped to $27.79m from $16.13m.
The company attributed sales during the past 12 months largely to off-plan products and increased interest in the emirate following a growth in tourism numbers. The emirate’s tourism authority has been vigorously targeting 1 million visitors by the end of 2018, which, of course, requires investment in further accommodation.
“Ras Al Khaimah is establishing itself as a strong proposition for investors and homeowners, [and] there is significant demand for waterfront properties,” Al Qadi says. “Through our developments, we are meeting this demand and providing communities that encompass affordable luxury.”
Last year, the developer released its new phase of Bermuda Villas in Mina Al Arab and it is gearing up to launch Julphar Residence, a 24-storey tower on Al Reem Island in Abu Dhabi later this year. The tower’s completion is scheduled in the fourth quarter of 2018.
Though some real estate companies are facing tough times getting bank funding in the UAE, Al Qadi remains confident of raising all the money required to complete the project.
“We will raise $1.36bn between now and 2021 to finance our projects in Mina Al Arab and our Julphar Residence project on Al Reem Island, Abu Dhabi. I don’t see any problems getting funds especially if a company is reputed and reliable,” he says.
A UAE national, Al Qadi is one of the longest-serving CEOs of a publicly-listed company in the country, having been appointed in 2005. While the resounding quarterly numbers attest his decisions, he concedes it has taken time to reap the fruit of his plan.
“I would have gone a long time back if I didn’t have a vision. I am one of those [CEOs] who is very conservative and not aggressive,” he says.
“I don’t take decisions immediately, but always try to do a SWOT [strengths, weaknesses, opportunities, and threats] analysis before I move forward.”
Al Qadi is also sure not to be side tracked by what is going on around him. With real estate accounting for just 13.3 percent – or $327m - of RAK’s total economy (behind the industry and tourism sectors), it pales in comparison to the powerhouse of Dubai, where real estate and construction combined contribute 22 percent to Dubai’s gross domestic product. The Dubai Land Department says $70.5bn worth of deals were made in 2016.
But Al Qadi insists there is no rivalry.
“I never call it competition, but we complement each other. We are one country,” he says, after being coaxed to discuss the topic.
“Though we may be chief executives of different companies and we all would like to win or show better results to our shareholders, nonetheless, as an emirate, we don’t compete.
“All the emirates do complement each other.”
In fact, RAK’s proximity to Dubai (45 minutes from the Dubai International Airport) is often a message used in the northern emirate’s promotional material. Dubai’s international standing and billions of dollars in investment annually does have a positive spin off effect for the other, smaller emirates, Al Qadi says.
“We (all emirates) have benefited from that, there is no doubt. People look at Dubai; it’s got its own brand, and every other emirate has benefited from that brand recognition,” he says.
“We have learned a lot from them, especially when it comes to decision making and getting things completed.
“Personally, I have learned a lot from the Dubai model. It’s not just unique to the UAE but unique for the whole region. They do always think out of the box, have a long-term vision, and I hope that every one of us will do the same.”
Exactly how Al Qadi has put those lessons into play will no doubt be visible as the Mina Al Arab development gradually comes to life.