Utility set to provide boost for property in Ras Al Khaimah

The Government of RAK has established its own utilities company as part of a long-running attempt to ease power and water shortages.

The Al Hamra Village development in Ras Al Khaimah. The emirate has been playing catch up in terms of water and electricity. Sarah Dea/The National
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Ras Al Khaimah's property market could emerge as a major beneficiary of a new utility serving the emirate.

With dozens of apartment projects lying empty and unable to complete because of a lack of water and power, property specialists say the new authority could help to ease power and water shortages in the country's northernmost emirate.

According to a decree issued on Friday by RAK's Ruler Sheikh Saud bin Saqr, the new government entity, dubbed Rakewa (Ras Al Khaimah Electricity and Water Authority) will regulate water and electricity throughout the emirate.

It will oversee the ownership, management, operation and maintenance of electricity generation and water desalination plants as well as water rights in the emirate, the decree said.

Property analysts note that establishing power and water connections has been time-consuming and expensive for developers in the emirate, where some investors have been hit by hefty connection fees when their homes have been handed over.

"This new body will definitely be seen as good news for property developers in the region," said Matthew Green, the head of research for CBRE's Dubai office.

"We are aware of a number of developments which are still awaiting handover because there is no power or water connection. For the past five years the Northern Emirates have been playing catch-up in terms of its water and power infrastructure and this means a single point of contact for developers for power and water, although it may take time to have a real impact."

The new body is also charged with monitoring the prices of water and power services in RAK "to ensure fairness, transparency at all times", and to make sure that "present and future consumer demands from the water and power services are properly met".

No information was given about how much of a budget the new authority would have or how much of the Dh5.7 billion (US$1.55bn) federal government cash allocated to building additional infrastructure in the Northern Emirates from 2011 to 2014, if any, would be given to it.

"Problems with water and power connection are ongoing in the Northern Emirates. The problems with connectivity for utilities have had a negative effect in terms of encouraging investment," said Craig Plumb, the head of research at Jones Lang LaSalle's Dubai office.

"There are still many projects from the last boom which have never been completed and if the power and water connections are improved and the Dubai market continues to recover, the demand for these could increase over time. And if the power and water situation is improved that can only help the tourism industry in the emirate which is already seeing some improvement," he said. "The big issue now is whether changing the provider will change things,"

Rakewa will take over much of the responsibility for providing power to RAK from the Federal Electricity & Water Authority, which has been responsible for providing the bulk of power to all of the Northern Emirates since it was established in 1999.

Developers have faced a barrage of criticism from residents over new connections in the Northern Emirates that in many cases have left tenants waiting months or even years for a connection or paying over the odds for the connections they receive.

In January, the RAK-based Al Hamra Real Estate told tenants that it would disconnect them if they failed to pay disputed chiller bills in a high-profile and long-running dispute. The tenants are angry at the size of bills, but the developer says it is simply passing on the costs of connecting the scheme.