WHILE Ras Al Khaimah has been hit by the global economic crisis, the emirate expects to see growth rates of 10 per cent this year.
Despite the slowdown, the northernmost of the seven emirates that make up the UAE expects to outshine its more glamorous neighbour, Dubai, which expects to see growth rates of three per cent this year. Recent forecasts for growth rates for the whole UAE this year range from two to four per cent.
And tourism is among those sectors that look most resilient. The emirate currently has tourism projects worth about $5 billion under way, including hotels and a new airport.
“Tourism is a major contributor to our economy and we are working to develop this sector further. None of the top-ranking hotel chains that announced plans to expand their activities in RAK last year has cancelled them. Some projects have already opened and others are on schedule to open later in the year,” Hassan Hamdan Al Alkim, director general of the Ras Al Khaimah government’s Economic Development Department, was quoted as saying in the UAE newspaper Emirates Business 24/7.
“Compared to other emirates we expect to be the least affected by the current crisis,” he said.
“We have a non-oil economy and we know we have challenges and issues to tackle. But we prefer not to exaggerate so we will disclose further plans in the tourism sector at the right time.”
The emirate’s tourism authority says Ras Al Khaimah is moving forward with its projects and expansion plans in the tourism and hospitality sector. “We are neither delaying nor cancelling hospitality projects we had announced last year in Ras Al Khaimah; it is business as usual,” Hilary McCormack, manager of RAK Tourism, told media recently.
Last July, RAK Tourism announced that nearly two dozen five star hotels and several premium global operators would be operating in the emirate over the next five years, adding over 3,700 additional hotel rooms to the market.
“We know some areas in the UAE and the region are seeing a slowdown in business activities, but that does not mean it is the same case here. So we are completing whatever we started and we will deliver on time.”
“Of course, this does not mean we are not aware of a business slowdown or an economic crisis in the world that might be having an effect here,” she said. “And this is just making us slow down a little bit when we take decisions on fresh ideas and new projects.”
The authority recently led contingents to this year’s ITB in Berlin and the Moscow International Travel and Tourism exhibition in March, and a strong Ras Al Khaimah delegation will be at this month’s ATM too.
“Tourism, and all sectors related to it, is a significant spot in the economic growth of RAK and all hotels projects that operate under our umbrella will be open to business this year as they were previously, since we are keen on maintaining RAK along with the UAE as a favourite destination for travellers,” said McCormack.
However, the emirate has felt the impact of the property crash in the UAE and this will at the very least delay several major new-build projects.
Real estate developer Rak Properties has put on hold $1billion worth of projects, its CEO has confirmed. The developer, which said in April that first quarter profit fell 39 per cent, will now shift its strategy to affordable housing as it waits for the financial situation to improve, Mohamed Sultan Al Qadi told Reuters.
This is particularly bad news for the hospitality industry. “We were going to build 11 hotels, but it has been put on hold because of the financial crisis and we’re now building one hotel,” Al Qadi said, adding that the value of projects on hold was about Dh4 billion. The developer, the third largest on the Abu Dhabi bourse, had been working towards creating a real estate portfolio of about Dh12 billion, but at present it did not exceed Dh4 billion. The company’s future strategy would be to look at affordable or middle range housing because high end buildings “are exhausted”, Al Qadi said of the Ras Al Khaimah market.
Faith in the emirate was restored this February, when Fitch Ratings extended to the emirate the UAE’s country ceiling of ‘AA+’. “Ras Al Khaimah enters a difficult year in a relatively comfortable position,” said Richard Fox, head of Middle East and Africa Sovereign Ratings at Fitch. “It completed a major infrastructure and borrowing programme in 2008 and now has no net financing need for the foreseeable future, with the budget projected to move back into surplus. Although economic growth will slow, alongside the slowdown in the UAE and other markets, it will remain supported by strong public investment.”
Ras Al Khaimah has stated it hopes to welcome 2.5 million tourists to the emirate by 2012. Ras Al Khaimah has also shown impressive growth with average occupancy in 2007 averaging 85 per cent – up from 35 per cent in 2001. Numbers for 2009 are expected to be in the same region.
By Clark Kelly