Ras Al Khaimah's strategic initiatives to enhance its economic environment have been significantly bolstered, as international rating agencies S&P Global and Fitch have upgraded their assessments of the emirate. S&P Global has elevated Ras Al Khaimah's credit rating from 'A-/A-2' to 'A/A-1', a reflection of the emirate's robust economic expansion and financial stability. The agency emphasized Ras Al Khaimah's 'solid pipeline of tourism-related development projects' as a pivotal growth catalyst. Furthermore, sectors such as mining, economic free zones, real estate, and ports are set to gain from non-oil growth and heightened infrastructure investment across the UAE, GCC, and Indian subcontinent. The emirate's integration within the UAE further underpins this upgrade.
S&P forecasts the emirate's real GDP growth to average 4% between 2024 and 2027, driven by tourism and infrastructure investments. The government's prudent fiscal management boosts confidence in the emirate's economic resilience. Additionally, RAK's economy is more diversified than many of its GCC peers, with manufacturing, wholesale and retail trade, and construction collectively contributing 55% to GDP. This upgrade by S&P follows Fitch Ratings' upgrade of RAK to A, reinforcing the emirate's enduring economic strength and sound fiscal stance. These endorsements underscore Ras Al Khaimah's growing appeal to global investors and its strengthening regional economic position.
'Ras Al Khaimah's upgraded credit ratings, coupled with robust growth in tourism, infrastructure, and real estate, position the emirate as an increasingly attractive investment destination. The ongoing economic diversification and government support highlight RAK's positive trajectory,' noted Vijay Valecha, Chief Investment Officer at Century Financial.
As part of its economic diversification strategy, Ras Al Khaimah has made substantial investments in its tourism sector. The Ras Al Khaimah Tourism Development Authority (RAKTDA) reported a record 1.22 million overnight visitors in 2023, an 8% increase from 2022, driven by a 24% surge in international visitors. Hotel occupancy rates also saw a significant boost, reaching 74%, a 12% year-on-year increase. The emirate aims to triple visitor numbers to 3.5 million by 2030, with major projects like the Wynn Al Marjan Island integrated resort, slated to open in 2027, playing a crucial role. This $3.9 billion project, representing 40% of the emirate's GDP, has received the UAE's first commercial gaming operator's license. Additionally, 20 new hotels are planned within the next three years, expanding room capacity by 75%.
According to Fitch, economic growth is projected at 6.2% for 2024 and 5% for 2025, fueled by continued tourism expansion. Analysts anticipate Ras Al Khaimah's revenue to increase from 21.5% of GDP in 2023 to 22.9% in 2024, up from 20% in 2022. The introduction of corporate tax in the UAE is also expected to augment the emirate's revenue streams, supporting ongoing and future projects and solidifying its economic stability. Just a 45-minute drive from Dubai, Ras Al Khaimah is emerging as a compelling alternative, offering attractive property prices and a rapidly developing infrastructure.
'The emirate offers attractive investment returns, with net yields on apartments in Ras Al Khaimah significantly exceeding the UAE average of 5.16%. Developers like RAK Properties are well-positioned to capitalize on this demand shift,' Valecha added. With a keen focus on mixed-use developments, luxury homes, and premium hospitality projects, RAK Properties is meeting the needs of buyers seeking both quality and affordability. The company's revenue reached Dh891 million in the first nine months of 2024, reflecting a 30% increase compared to the same period in 2023. Net profit surged 21% to Dh133.4 million from Dh105.2 million in the corresponding period last year.
Interestingly, the government of Ras Al Khaimah has increased its stake in the company from 5% to 34%, a clear vote of confidence in its growth potential and alignment with the emirate's long-term vision. Projects like Mina 'Al Arab, Bay Residences, and Gateway II Residences are attracting local and foreign investors. As of Q3 2024, RAK Properties' market capitalization has surged to Dh3.33 billion, tripling from Dh1.1 billion in early 2023—a clear indicator that investors are taking notice. The company also offers a 2.60% dividend yield. The stock has jumped 15% in the last year and 76% over the past two years, reflecting growing market confidence in the company's future and the broader momentum in Ras Al Khaimah's real estate market. However, the stock is currently trading 20% below its all-time high, presenting investors with a decent entry opportunity.
'With a strong lineup of projects like the waterfront Bayviews and Quattro Del Mar and solid government support, RAK Properties is well-positioned to capitalize on rising demand,' Valecha concluded.
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