RAK’s hospitality market sees upward trend

Ras Al Khaimah / Emirates Business

According to the Q3 2016 RAK MarketView, RAK’s hospitality market is currently one of the country’s tourism bright spots, as it bucks wider regional trends of declining room revenues, recording year-to-date occupancy growth of 13.6% up to the month of September (STR Global). The Emirate now has well over 5,000 hotel and hotel apartment rooms in its inventory, with the vast majority of these either 5-Star or 4-Star hotel properties, and many of them resort based.
During Q3, RAK’s hotels recorded further growth in occupancy rates and revenue per available room (RevPAR), aided by the early timing of Ramadan, which led to higher visitation during July as compared to the previous year.
Mat Green, Head of Research & Consulting UAE, CBRE Middle East, said, “Year-to-date occupancy rates have averaged over 70% (up from 62% in the previous year), and with high visitation months during the final quarter, these figures are likely to increase by the end of the year.”
“The concerted efforts of RAKTDA and quasi-government developers in raising the Emirate’s profile within international markets appears to be succeeding, reflected in the continued growth in visitor numbers which are up around 10% to 613,000 year-to-date to September versus the same period last year. These figures are expected to reach 820,000 for 2016 as a whole, as per estimates from RAKTDA,” continued Green.
“The Emirate has relatively small number of developments in the immediate short-term pipeline, so we would expect to see a continuation of these positive performances, sustained by rising visitor numbers and an improving tourism infrastructure,” concluded Green. The next major phase in the evolution of RAK’s hotel market will really start from 2019 with the expected completion of a wave of new large resort hotels, many of which will be first time entrants to the local market.
According to the Q3 Ras Al Khaimah MarketView, Ras Al Khaimah’s residential market experienced further deflationary pressures during Q3 2016, with rental rates falling by around 2% quarter-on-quarter, taking the annual decline to over 5%. However, performance has been aided by the low levels of new supply within the Emirate’s master planned communities.
Apartment lease rates in the developments of Al Hamra Village and Mina Al Arab are faring comparatively well with a two-bedroom unit ranging from AED65,000-75,000/unit/annum and 60-70,000/unit/annum respectively. A two-bedroom villa in Mina Al Arab ranges from AED85,000-90,000/unit/annum and a three-bedroom from AED110,000-140,000 /unit / annum depending on the size, view and location in the master plan.
Whilst new supply deliveries have been low in recent quarters, levels are set to pick up with the handover of units at the ‘Pacific’ development on Al Marjan Island during 2017. New units are also being handed over within the Mina Al Arab development, with the completion of Phase II of the Flamingo Townhouses during Q4 2016. In total, 57 new units are being delivered, comprising 32three-bedroom units and 25 two-bedroom units.
Development activity in major master plan locations such as Al Marjan Island is also likely to pick up in the medium term, with a number of local and international developers purchased plots with a view to delivering mixed-use schemes to the
market.
“Despite the softening of rates, the overall market has proven to be quite resilient, aided by a period of modest supply growth, particularly within the master planned communities, and buoyed by the Emirate’s stable economy and continued demand for quality housing,” concluded Green.