RAK Properties plans projects worth billions amid strong demand

RAK Properties plans to launch four new residential projects and a hotel project in Ras Al Khaimah this year and aims to surpass last year’s profitability on the back of higher sales, its chief executive has said.

The value of the projects will be “in the billions of dirhams”, Sameh Al Muhtadi told The National in an interview.

The new projects consisting of branded apartments and villas will be built at the company’s Dh10 billion ($2.72 billion) Mina Al Arab master development off the coast of Ras Al Khaimah.

RAK Properties has unveiled three new residential projects with close to 900 units so far this year with the residences at one of its developments, Bayviews, selling out within a few hours of being launched earlier this year.

“There’s tremendous demand in Ras Al Khaimah,” said Mr Al Muhtadi.

“I think people realise the value to be had, they realise the potential of returns on their investments and we are seeing the appetite to invest in Ras Al Khaimah grow on a daily basis.”

The new projects will be financed through a mix of debt and equity and the company has a “very robust balance sheet and we have very healthy liquidity”.

“A lot of the financing comes from off-plan sales, but we have lines of credit with multiple banks if need be,” Mr Al Muhtadi said.

It also has plans to raise money through bonds as it continues to focus on developing new projects.

“That’s one of the considerations but that’s down the road as needed. That might be because we have a very strong development plan ahead of us. This is something that we may require in mid-25 [2025].”

The UAE’s property market rebounded strongly from the coronavirus pandemic with property transaction numbers increasing across the country.

Pent-up demand and improved investor sentiment as well as new initiatives, such as visas for retirees and the expansion of the 10-year golden visa programme, have helped to drive property sales up.

Both Dubai and Abu Dhabi recorded higher sales this year amid strong demand from buyers as the UAE economy expanded at its fastest pace in more than a decade, accelerating 7.9 per cent in 2022.

Dubai’s off-plan sales surged more than 100 per cent annually in May to Dh14 billion with the total number of off-plan units sold during the month rising more than 100 per cent to 5,476, EFG Hermes said in a report this month.

Abu Dhabi recorded 5,472 real estate transactions worth Dh27.9 billion in the first quarter of 2023, according to the latest data from the Department of Municipalities and Transport.

The value of the deals in the emirate more than doubled during the three-month period to the end of March while the volume of transactions, which include property sales and mortgages, rose by 66 per cent.

RAK Properties had set a target of Dh1 billion in sales for 2023 and achieved the target “two weeks back”, with sales of property to international investors including Russians, Chinese and Germans as well as UAE citizens, Mr Al Muhtadi said.

“The speed with which we are developing, rolling out and constructing … is helping us tremendously.”

“Investors when they see the route of progress that we are achieving on site, encouraged them to invest in the properties that we are offering.”

The company’s profit and revenue in 2023 will exceed that of last year amid the launch of new projects and growth in sales, he added.

In 2022, RAK Properties reported Dh408.2 million in revenue and the net profit during the period reached Dh30.7 million.

The company’s first-quarter net profit rose 46 per cent year-on-year to Dh44.5 million as revenue during the period more than doubled to Dh258.5 million.

“I am hoping that we are going to have a multiple of last year’s profitability,” Mr Al Muhtadi said.

The company has a land bank both in Dubai and Abu Dhabi and will look “at potential partnerships, co-development in those Emirates as well” to start projects.

“This is something that we are studying very closely for next year but we have a very significant pipeline of projects in Ras Al Khaimah for this year and we are very focused on that,” he added.

It has already completed one project called Julphar Residence in Abu Dhabi and has started handing over homes to customers.

Mr Al Muhtadi expects interest rates to reduce next year and that will further encourage investors to boost investments in the property sector.

“Interest rates are close to having peaked and are going to get better and interest on mortgages might reduce. I see that as a positive indication.”