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- Hospitality: RAK's hotels continue to experience positive revenue growth and shows resilience despite ongoing challenges across the UAE and wider regional hospitality market.
- Residential: RAK's residential rental market experiences modest declines, with further pressure likely due to upcoming completions both inside and outside the Emirate
Ras Al Khaimah, United Arab Emirates - Ras Al Khaimah’s (RAK) tourism sector continued to see growth in visitor numbers buoyed by significant increases from markets including Russia, Poland and India according to the Q1 2017 RAK MarketView by global real estate consultancy firm CBRE.
The average length of stay of Indian guests also grew by 10.6% during the same period. However, visitors from the UAE, Germany, Russia and the UK remained the key source markets for RAK.
Mat Green, Head of Research & Consulting UAE, CBRE Middle East, said, “RAK’s hospitality market has witnessed a solid start to the year, with over 193,000 visitors recording more than 758,000 guest nights. This reflected growth of 8.3% and 18.7% growth in visitor arrivals and guest nights respectively on a year-on-year basis.”
RAK’s encouraging tourism trends have also translated into solid hotel occupancy and revenue performances. According to data from STR, average occupancy rates were up 6.8% year-to-date (Jan-Mar) from 71.3% to 76.3%, versus the same period last year, whilst RevPAR’s rose 2.3% during the same period. This was despite a 4% decline in average ADR’s which continued to fall. Overall room revenues also rose, up 8.1% on the same period last year.
Around 500 new hotel and hotel apartment keys are expected to be completed over the remainder of 2017, with a similar figure to be completed in 2018. This includes the Hilton Garden Inn (formerly Hilton Ras Al Khaimah City Hotel) and the expansion of the Cove Rotana, which are both due open in 2017, and the CityMax hotel which is expected to be delivered in early 2018.
According to the MarketView, average residential rental rates in freehold locations, including Al Hamra Village and Mina Al Arab have experienced a minor dip of around 1% during the first quarter, taking the full year drop to around 5%.
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 AED35,000-55,000/unit/annum, and 2-bedroom’s from around AED60,000-70,000/unit/annum.
However, with around 1,440 new units at the Pacific project on Al Marjan Island expected to be delivered in phases over the coming quarters, there could be further deflationary pressures on the horizon for RAK’s residential apartment market. The situation is likely to be compounded by rising supply levels, and subsequent rental declines, in the Dubai and Sharjah markets, which could also have a knock-on effect on housing in the Emirate.
“Despite the softening market conditions, it is likely that RAK will actually see an increase in the number of new residential developments under construction, with a number of new mixed-use developments currently being planned for masterplan locations such as Al Marjan Island,” concluded Green.
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.ae
© Press Release 2017
