Ras al Khaimah is often passed over in favour of its bigger, flashier neighbours to the south, but the emirate's top developer offers a cheaper entry point for those banking on a property recovery. After being beaten down in recent weeks, property stocks throughout the UAE generally rose yesterday as investors hunted for bargains, but RAK Properties may present the best value of the bunch. Its shares gained 2.5 per cent to 40 fils.
The company is trading at a significant discount to its peers on the Abu Dhabi Securities Exchange, with a price-to-earnings ratio of about five. By comparison, Sorouh Real Estate is trading near 11 times its earnings, while Aldar Properties is about eight. RAK Properties reported firstquarter profits of Dh42.1 million. With a market capitalisation of about Dh800m, it is a small player compared with the heavyweights from down the coast, but its plans are no less ambitious.
RAK Properties's flagship project is Mina Al Arab, a US$3.27 billion beachfront resort including several islands that takes up 50 per cent of the company's square footage. The company hopes to deliver the first 93 villas of Mina Al Arab RAK within the next few months, as well as RAK Tower on Reem Island in Abu Dhabi and the two Julphar towers. The revenue from those handovers will be key in the coming quarters as the company reported in April it was having difficulty obtaining financing and would be "compelled to manage the project development with available cash".
Property values have dropped up to 50 per cent in RAK since their peak, as many would-be buyers of the emirate's affordable housing were drawn to Dubai when prices dropped sharply there. RAK does not have Dubai's oversupply at the moment but it may struggle to attract buyers until its neighbour's market solidifies. However, there is no reward without risk and RAK Properties offers an attractive price for those bullish on the emirate.
halsayegh@thenational.ae