Challenges ahead for RAK
Ras Al Khaimah is trying to compete with Dubai and Abu Dhabi, but in its own inimitable style.
Angela Giuffrida takes a look at the challenges faced by Ras Al Khaimah, as the emirate tries to compete with Dubai and Abu Dhabi, but in its own inimitable style.
With a similar style of real estate development either under way or planned in Ras Al Khaimah, it would be easy to suggest the northernmost emirate is hoping to flourish on the Dubai model.
A reclaimed island development - Rakeen's US $1.8 billion (AED6.6 billion) Al Marjan Island - is already under construction, while the developer is set to launch The Gateway, a 'city within a city' which, in its first phase alone, will cost $1.1 billion.
The emirate has experienced a significant amount of inward investment over the last five years, leading to growth rates of around 18% a year and to it being described in an Oxford Business Group report as the 'strongest' of the emerging northern emirates.
When it comes to real estate, Ras Al Khaimah has 31 projects under way or in the planning stage.
Among them is the $2.7 billion Mina Al Arab - a shoreline and reclaimed island project that is being developed by the government-backed RAK Properties.
Others include Saraya Islands, Mangroves Island and Ras Al Khaimah Financial City.
The emirate has also been shrewd enough to spread its investments across various industry sectors.
One area is the development of its manufacturing sector, which has seen the likes of RAK Ceramics grow internationally.
A $1.5 billion plan by RAK Investment Authority to attract investment in manufacturing has also led to around 1,000 investors now playing a role in areas such as glass and tableware, float glass sheet, cement and vehicle assembly.
RAK Investment Authority has also set up RAK Offshore, an offshore regulatory facility that has so far attracted 250 companies.
The emirate is also expanding its port and airport facilities to accommodate trade and an anticipated surge in tourism figures to 2.5 million by 2012.
But while Ras Al Khaimah might benefit from Dubai and Abu Dhabi's expansion in terms of putting it on the map, the emirate is taking steps to exploit its own natural assets to differentiate itself.
Key to its success are its natural advantages; its unspoilt coastline and mountains.
"Ras Al Khaimah has already attracted global and local investment within a short amount of time," Blair Hagkull, Middle East managing director for global property services specialist Jones Lang LaSalle told a recent MEED conference.
But as we create projects of a large density we need to make sure we don't take away the competitive advantage that makes the emirate different. There needs to be integrated development, defined markets and sector diversity.
Hagkull added that growth would also be spearheaded by a bigger take-up of international investors over the next year.
"2008 will be the year that the global market discovers the power of GCC investment, because of better transparency," he said.
But as with development in the other emirates, Ras Al Khaimah is set to experience similar challenges.
One will be attracting enough contractors for projects, as well as housing the anticipatedlabour force. Another will be ensuring all the infrastructure is in place and well-coordinated with the various sectors of growth.
According to David Yaw, regional managing director, Halcrow, Ras Al Khaimah plans to invest around $626 million in roads, quarries and rural roadworks projects over the next five years.
"As soon as a developer has the masterplan they want to sell off-plan straight away," said Yaw. "But it can cost a developer lots of money if the utilities and infrastructure design isn't done properly and isn't in place at an early stage. Utilities need to be considered before construction.
A further $65 million will be spent on sewerage works, while $32 million will be spent on wastewater treatment plants.
"Water supply will be critical to the development of Ras Al Khaimah. Wastewater needs to be treated. If we're trying to get the emirate pristine, then this will be critical.
Yaw added that one of the biggest challenges in terms of utilities will be establishing a policy for centralised and decentralised systems in the short and long-term.
"Developments outside of the city will need their own utilities systems," he said.
"And if the policy will see a proliferation of decentralised systems over the long-term then that will place a huge burden on residents in the long-term."
Another challenge will be creating the right amount of infrastructure for each sector at the right time - whether that be industrial, port development or tourism.
"Tourism is seasonal - so the challenge for the infrastructure designer will be to provide infrastructure for peak demand," added Yaw.