Spanish football club Real Madrids recent decision to scrap plans for a $1bn football-themed tourism scheme in Ras al-Khaimah (RAK) is the latest in a string of failed megaprojects in the UAE emirate.
Slated to be built on the emirates man-made Al-Marjan Island, the project was set to include a 10,000-seat stadium, a football training academy, a five-star hotel and residential facilities. But just one year after the launch, Real Madrid cancelled the scheme in late September, saying the Luxembourg-based organiser of the project, RAK Marjan Island Football, defaulted on payments. The club said it may relaunch the scheme in another location in the UAE.
Keen to boost its tourism sector, Ras al-Khaimah has launched several other megaprojects, which have suffered a similar fate. The $800m Boris Becker Beach Resort & Tennis Academy, also set to built on Al-Marjan Island, was put on hold in 2010 in the wake of the global economic crisis.
On nearby Dana Island, the $2.2bn Shah Ruh Khan Boulevard and the $800m La Hoya Bay real estate projects have also been stalled for years.
While the track record for megaprojects in the emirate is poor, the issue is not Ras al-Khaimah itself, says Chiheb Ben-Mahmoud, head of hotel advisory for the Middle East and Africa region at US-based Jones Lang LaSalle.
Ras al-Khaimah as a destination is not the problem. It is one of the main tourism destinations of the UAE and already has attracted famous names in hospitality such as [Singapores] Banyan Tree and the Waldorf Astoria [by the US Hilton Worldwide], he says.
In the case of the Real Madrid scheme, the chances of the venture going ahead were slim from the outset itself due to the complexity of the work. Complex tourism projects require unique delivery and planning teams, which are not available everywhere, says Ben-Mahmoud. The survival rate of complex schemes of this nature is low anywhere in the world.
Looking ahead, Ben-Mahmoud believes the failure of these recent projects will serve to encourage rather than deter investors from launching future megaprojects in the emirate.
I think if there is a process of taking into account the learnings of the past, this should improve the chances of another project in Ras al-Khaimah moving forward, he says. The emirates ambition has no limits, which is good. There is a strong willingness to take on challenges. But its like venture capital, when you take on challenging initiatives, the likelihood of having to move on to the next one is high.