Ras Al Khaimah in the UAE: Strategic Investment and Development

by Simon Walker, CEO & Founder - Skyewalker Law

Whilst Dubai and Abu Dhabi often dominate the UAE's business narrative, Ras Al Khaimah has quietly established itself as the Emirate of choice for some discerning investors and business owners seeking alternative growth opportunities.

An hour’s drive from Dubai International Financial Centre (DIFC) (outside of rush hour! - while driving from Palm Jumeirah to DIFC is about the same time in rush hour) with rents c. 30% of Dubai, and cost of living similar, RAK is increasingly attracting ever higher categories of digital nomad – that really can work from the beach, but be within a heavyweight broader business environment.

The 2,486 sq km of RAK borders 3 other UAE Emirates (Sharjah, Fujairah and Umm Al Quwain) as well as the Country of Oman. RAK's development strategy extends well beyond its natural landscape advantages (it has the highest mountain in the UAE, Jebel Jais, at just under 2,000 meters – but with its very summit in Oman) - the Emirate has demonstrated foresight in its economic diversification initiatives, particularly through RAKEZ (Ras Al Khaimah Economic Zone) which has over 30,000 companies from more than 100 countries licenced within/from it. 

RAKIA (RAK Investment Authority) is not, as often thought, a Sovereign Wealth Fund - it is an industrial licensing and promotion agency to attract inbound investment and comprises special economic zones. Special economic zones (often called free zones) offer compelling advantages for business formation including 100% foreign ownership, zero corporate and personal tax, and complete capital repatriation. It includes a RAK free trade zone and even an Al Hamra freezone (Al Hamra being the main Expat residential/golfing area and home to an extremely good value alcohol shop that has been a destination for Dubai residents for over a decade).

SkyeWalker Law, working with Wasel & Wasel, recently achieved a quite groundbreaking company restoration in a RAK Freezone for a corporate client. The client’s RAK company had been formally liquidated, but it was realized many years later that the liquidated company was needed in order to transfer a valuable residential property in London that had been forgotten. 

To restore a company when all the creditors have already been treated in order of priority in a Liquidation, and thereby permit one creditor to conduct a valuable asset transfer, could go against many of the fundamental corporate laws relating to maintenance of capital and insolvency. But the RAK Regulators were persuaded and understood the issue needed to be handled.

SkyeWalker Law, with W&W, had the benefit of English Law expertise as well as local knowledge, and with the involvement of the RAK Courts, Auditor and Freezone sign-off, the restoration, transfer of the London property and then immediate “re-liquidation” was achieved. A deep English Law understanding can be quite important in UAE transactions - bear in mind that Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM), the 2 key financial centres for the UAE, are effectively English Law regimes.

RAK’s balanced approach to development- creating infrastructure that supports sustainable growth while maintaining its distinct cultural identity - is attracting ever growing foreign direct investment - particularly in manufacturing & logistics, and increasingly in residential, hospitality and entertainment. The Wynn Resorts development on Al Marjan Island represents perhaps the most significant investment in RAK's history. What has gone largely unnoticed by casual observers - but is important for legal and business professionals to understand - is the sophisticated regulatory framework that has made this possible.

Contrary to some imprecise reporting, Wynn has been granted a gaming license, not a gambling license – an important distinction in the context of UAE regulations and Sharia compliance. This nuanced approach is an example of RAK's regulatory maturity and ability to create frameworks that respect local cultural and legal traditions while accommodating international business models. The $3.9 billion integrated resort complex is currently under well advanced construction and will create thousands of jobs & generate significant economic benefits - and the legal structures supporting this development offer equally compelling opportunities for professionals with appropriate expertise.

In tandem, the RAK Central development around the keynote building is proceeding apace and represents another catalyst for the Emirate's commercial landscape. This mixed-use development by Marjan is set to become a premier business district, offering Grade A office space that meets international standards. For a UAE “old hand”, the construction there is highly reminiscent of the building of Palm Jumeirah, with its anchor building (Atlantis) having been created in 2008 by the late hotels/casino magnate Sol Kurzner, as part of his then Atlantis brand.

A relatively innovative aspect of RAK's approach to development involves its use of long-term leasehold structures. This predominant model employs 99-year leases that confer substantial rights to developers and investors while ensuring that the ultimate ownership of the land remains with the Ruler H.H. Sheikh Saud bin Saqr Al Qasimi and the Emirate, in the same way that the large English landowning families like the Grosvenors, Portmans etc implemented many years ago, as did the World’s largest landowner, King Charles III of England (ie The Crown/The House of Windsor). The fact that King Salman of Saudi is the second largest landowner, one ahead of the Catholic Church @ number 3, tells a certain tale. As does the fact that the Al Qasimi family have been a UAE Ruling family since 1722, whilst the House of Windsor was founded in 1917 (when the German Saxe-Coburg name was dropped by King George V). The Al Nahyan Family of Abu Dhabi have ruled since 1761.

This land ownership model provides investors with the security required for substantial capital deployment while respecting the Sovereign interests of RAK. For legal practitioners, these structures present opportunities to craft sophisticated agreements that protect client interests while respecting local legal frameworks. Particularly interesting is the potential application of this model to franchise operations. As international retail and hospitality brands seek to establish presences in developments like Wynn Al Marjan Island and RAK Central, there is scope for innovative thinking in, for example, structuring franchise agreements that both protect brand standards and create appropriate value-sharing mechanisms with landowners.

Businesses contemplating investment in RAK/UAE should consider several critical factors:

1.   Entity Structure: The choice between free zone and mainland entities remains crucial, with each offering distinct advantages depending on the business model.

2.   Land Rights: Understanding the distinctions between freehold and leasehold rights requires knowledge of both UAE law and the specific regulations applicable in RAK.

3.   Sector-Specific Regulation: Industries such as hospitality, entertainment, and financial services are subject to specific regulatory frameworks that require careful navigation.

4.   Exit Strategies: Structuring investments with clearly defined exit mechanisms is essential, particularly for private equity and institutional investors.

RAK's development has reached an inflection point. The confluence of strategic infrastructure investment, innovative regulatory frameworks, and increasing international recognition has created an environment ripe with opportunity for businesses and their advisors. For legal practitioners with expertise in cross-border transactions, real estate development, and regulatory compliance, RAK represents not merely another market to serve, but an opportunity to participate in the creation of new legal frameworks and business models appropriate to the region's unique characteristics.  There may even arise the opportunity to consider entirely new legal and economic frameworks aimed at structuring prosperity in more sustainable and participatory forms, given the tectonic shifts in employment arising from AI.