- Report indicates demand within Ras Al Khaimah’s (RAK) hospitality market has continued to grow
- Room supply is set to increase rapidly from 2019 onwards
Ras Al Khaimah’s property market has continued to experience a slightly fragmented performance, with positive growth in the tourism and hospitality sectors, but with further deflationary trends in other parts of the real estate market, according to the latest Ras Al Khaimah MarketView by global real estate consultancy firm CBRE.
The Emirate’s tourism market experienced another positive quarter with over 197,000 guests confirmed. This brought the half yearly figure to 390,499, against an annual target of 900,000 visitors, equating to a 6.5% increase over the same period last year.
There was also a 10% year-on-year increase in the number of international guest arrivals during H1, whilst total guest nights rose 17.7%, average length of stay increased by 10.5% to 3.9 days and room revenue increased by 13.3%.
With visitor numbers steadily increasing and with limited new supply being added to the market, the Emirate’s hotels have continued to generate positive occupancy growth, with a 6.0% increase in year-to-date average occupancy rates, according to data from STR Global.
Average occupancy rates for the last six months to June reached 75.1%, versus 70.9% for the same period in 2016. Importantly, RevPAR figures also trended up, as a 0.6% increase in ADR’s and the positive occupancy performance resulted in a 6.6% increase in H1 year-to-date RevPAR. This translated into AED456/room/night versus AED426/room/night for the same period in 2016. Overall room revenue also experienced positive growth, rising 10.1% over the same period last year.
Mat Green, Head of Research & Consulting UAE, CBRE Middle East, said: “With the Emirate’s continued hotel expansions and the completion of the new Hilton Garden Inn in May, RAK is set to reach an estimated total of close to 6,500 rooms by the end of 2018.”
According to the MarketView, from 2019 onwards, room supply will start to increase at a quicker pace, driven by the handover of new large scale resort properties in locations such as Al Marjan Island and Mina Al Arab, amongst others.
However, the residential sector is set to experience further rental deflation in the coming quarters, driven by similar negative trends in the Dubai and Sharjah markets.
“Ras Al Khaimah’s residential market continues to suffer from weaker demand fundamentals and the added pressure of declining rentals in neighbouring Emirates, which combined have brought about further downside in rental performance”, added Green.
Average rental rates in popular freehold locations such as Al Hamra Village and Mina Al Arab witnessed a dip of around 2% during the quarter, taking the full year decline to 6%.
Average rentals for a studio unit in Al Hamra Village and Mina Al Arab range from around AED22,000-30,000/unit/annum, 1-bedroom’s from AED35,000-50,000/unit/annum, and 2-bedroom’s from around AED60,000-70,000/unit/annum.
Subsequent to the handover of the Bermuda Villas at Mina Al Arab earlier in the year, and the ongoing delivery of the Pacific project on Al Marjan Island, completion of new freehold properties in the Emirate will see a period of relatively low supply, until deliveries start to increase again from 2019 onwards.