A model of Mina Al Arab project. RAK Properties is completing the master development in phases. Pawan Singh/The National.
A model of Mina Al Arab project. RAK Properties is completing the master development in phases. Pawan Singh/The National.
A model of Mina Al Arab project. RAK Properties is completing the master development in phases. Pawan Singh/The National.
A model of Mina Al Arab project. RAK Properties is completing the master development in phases. Pawan Singh/The National.

Business

Property

RAK Properties income surges as revenue more than doubled amid recovery

The developer of Mina Al Arab master development in Ras Al Khaimah is set to launch new projects this year

Sarmad Khan
Sarmad Khan

February 14, 2022

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RAK Properties reported a 77 per cent rise in 2021 full-year net income as revenue more than doubled amid a continued recovery in the UAE's property market.

Net profit for the 12-month period to the end of December climbed to Dh201.47 million ($55m) up from Dh113.5m in the same period a year earlier, RAK Properties said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.

Full-year revenue surged to more than Dh515m at the end of the reporting period, up from Dh243.5 in 2020.

The developer of Dh10-billion Mina Al Arab master development in Ras Al Khaimah is set to launch new projects and has made significant progress in delivering its hospitality projects.

The InterContinental Mina Al Arab Resort is expected to open soon, while the construction on Anantara Mina Al Arab Hotel and Resort project is progressing according to the development plan.

“These two premium assets will add significant value to the revenue stream and strengthen balance sheet,” RAK Properties acting chief executive, Mohammed Al Tair, said.

The property market in the UAE, the second-biggest Arab economy, has made a strong recovery from the pandemic-induced slowdown amid business and social reforms and government stimulus measures to support economy.

Pent-up demand and improved investor sentiment have also helped to drive property sales. New initiatives, such as visas for retirees and the expansion of the 10-year golden visa programme, are expected to further support the property market, industry experts say.

RAK Properties said it started handing over villas and town houses in its Marbella Villas project in Mina Al Arab, while The Julphar Residence project on Reem Island in Abu Dhabi, which includes 266 apartments, will also be delivered to customers soon.

With regards to upcoming projects, RAK Properties’ Bay Residence has reached tendering stage, while it has awarded construction contract for its Gateway Residence 2 development in Mina Al Arab.

Marbella Extension project on Hayat Island in the emirate is at design stage.

In November, the company said it plans to launch a number of residential projects in 2022 to boost its property portfolio as it is registering higher demand from buyers.

“The new projects will have 500 to 600 apartments as well as 100 additional villas,” Mr Al Tair said at the time.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Bio

Age: 25

Town: Al Diqdaqah – Ras Al Khaimah

Education: Bachelors degree in mechanical engineering

Favourite colour: White

Favourite place in the UAE: Downtown Dubai

Favourite book: A Life in Administration by Ghazi Al Gosaibi.

First owned baking book: How to Be a Domestic Goddess by Nigella Lawson.

The specs

Engine: 2.0-litre 4cyl turbo

Power: 261hp at 5,500rpm

Torque: 405Nm at 1,750-3,500rpm

Transmission: 9-speed auto

Fuel consumption: 6.9L/100km

On sale: Now

Price: From Dh117,059

Updated: February 14, 2022, 6:41 AM
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