Ras al Khaimah's Government is in talks with the Federal Electricity and Water Authority (FEWA) to boost power supplies to the emirate as it attracts more businesses to its industrial zones and completes development projects. Power shortages or delays in connecting projects to utilities continue to hold back property development in the Northern Emirates, according to a recent report by the property consultancy CB Richard Ellis (CBRE). But as Ras al Khaimah seeks to bring in more foreign investment, it is also pushing to complete properties that have already been sold as part of projects such as the Dh3.6 billion (US$981 million) man-made island Al Marjan. Khater Massaad, the chief executive of RAK Investment Authority (RAKIA), a government investment body, said that while power supply was "not a big issue", Sheikh Saud bin Saqr, Crown Prince and Deputy Ruler of Ras al Khaimah, was talking to FEWA about securing a bigger supply of electricity.
"They have promised that they will get more power here," Mr Massaad said. Attracting more businesses to the emirate would in turn help the emirate's property sector, he said. While house prices in Ras al Khaimah did not rise as sharply as in Dubai during the boom, they are down about 10 per cent from their peak towards the end of 2008. RAKIA said last month it had attracted almost $3bn in foreign investment and 6,500 businesses since its launch less than five years ago. "Our main job is to attract industrial investors to the industrial zone," Mr Massaad said.
"We are very hopeful because we have a lot of people who are interested to set up their industries, so it's good news for us ? which is also good news, hopefully, for the property sector." A number of privately backed projects in Ras al Khaimah were cancelled or put on hold in the past two years, but some are being reactivated. Khoie Properties said recently it had signed a memorandum of understanding with Arabtec Construction for a Dh2.5bn contract to build its long-delayed La Hoya Bay project on Al Marjan Island. The agreement came just months after the developer's chief executive, Frank Khoie, was released from prison. Mr Khoie was jailed last year because a Dh57m cheque written to RAKIA bounced. But the company still needs to raise funds before Arabtec will begin construction on the first phase, said Ziad Makhzoumi, the chief financial officer of Arabtec.
"Generating capital is just as difficult for developers in the Northern Emirates as it is for those in Dubai," said Matthew Green, the head of research and consultancy for the UAE at CBRE. "One of the main issues for developments in the Northern Emirates at the moment is that everything is linked in to a payment plan. "If people are in negative equity, then there's not as much reason for them to make staged payments. Obviously, if the developer doesn't get those payments, then they won't be going ahead with the project. Unfortunately, there's no immediate resolution. It's difficult for anybody to raise additional finance at the moment." Because of the shortage of electricity capacity in places such as Ajman, there is also less incentive for some developers to complete projects, Mr Green said.
The Northern Emirates, once attractive places to live because of lower rents, have also seen residents migrating to Dubai to benefit from falling rents there. "Dubai has become more affordable and there are more accommodation options for people to choose from," Mr Green said. "It's certainly having an impact in Sharjah and Ajman." agiuffrida@thenational.ae