Earnings Report
RAK Properties
1. Company Overview & Earnings Context
RAK Properties PJSC is an Abu Dhabi Securities Exchange-listed real estate developer headquartered in Ras Al Khaimah. Its activities include property investment and development, property management, hotel operations, marina management, facility management and related services.
The company’s flagship destination is Mina, supported by its wider development pipeline and hospitality portfolio. It is also developing The Strand, a 186,000 sqm land parcel within the Marjan Beach destination.
The first nine months of 2026 were characterised by a focus on selling existing launched inventory rather than introducing multiple new projects. Management highlighted regional uncertainty and evolving market conditions, while emphasising construction progress, customer handovers and engagement with domestic and international buyers.
The financial results show a material slowdown compared with 9M 2025. Revenue fell 31%, while net profit declined 49%. The main operational context is the timing and scale of property sales and handovers, with management positioning 2026 as a significant delivery year.
2. Financial Performance Snapshot
Nine months ended 30 September 2026
AED million, except EPS and percentages. Figures are consolidated.
Profitability indicators
Gross profit margin: approximately 38.6%, compared with 38.6% in 9M 2025.
Operating profit margin: approximately 18.6%, compared with 23.9%.
Net profit margin: approximately 13.8%, compared with 18.6%.
Underlying performance commentary
The decline in gross profit broadly tracked the fall in revenue, with gross margin remaining approximately stable. The more significant deterioration occurred below gross profit: operating profit declined 46%, reflecting the lower scale of revenue and a higher burden from operating costs relative to sales.
Selling, general and administrative expenses increased slightly to AED 206.01 million from AED 204.22 million, despite the substantial decline in revenue. This indicates that the company did not reduce its operating cost base in line with the fall in sales.
Other income was AED 25.18 million, compared with AED 26.47 million. The company also recognised AED 5.75 million from the sale of investment properties, while its share of profit from joint ventures increased to AED 12.72 million from AED 5.87 million. These items provided some support but were insufficient to offset the lower gross profit.
Q3 2026 performance
Q3 confirms that the weakness continued into the latest quarter rather than being limited to the first half. Revenue fell approximately 29%, while net profit fell approximately 38%. This is important because it suggests that the company had not yet returned to the previous year's earnings run rate by September 2026.
3. Operating Performance & Major Programs
RAK Properties continues to concentrate its development activity around Mina, while building out The Strand and its hospitality offering.
A. Residential development and handovers
More than 5,000 homes are in different stages of design, planning, development and delivery.
The company has landbanks of approximately 4 million sqm at Mina and 186,000 sqm at The Strand.
748 homes had been made available for handover by 30 September 2026.
Management expected a further 691 homes to be ready in Q4, targeting more than 1,400 homes ready for customer delivery during 2026.
Key project updates:
The handover programme is especially important because completed deliveries support the recognition of development revenue. The company’s ability to meet the targeted handover schedule will therefore be a key determinant of its near-term financial performance.
B. Development pipeline and strategic projects
The Strand: The masterplan was revealed in February 2026. RAK Properties plans to reintroduce its first project, Lunara, to brokers and investors in early 2027.
Four Seasons: The Raha Island project has progressed in design and contractual planning. Contractor and master-broker appointments remain important milestones ahead of sales launch.
Mina Harbour: The company is in advanced discussions with an architecture firm for a mixed-use development comprising residential, hospitality and commercial uses.
Armani Beach Residences: The project has reached market-ready status, with enabling works underway ahead of sales launch.
Nikki Beach Global: The company continues to work towards delivering the first Nikki Beach-branded resort in Mina.
Porto Playa: The Ellington and RAK Properties joint venture continues construction on Hayat Island.
C. Hospitality operations
The hospitality portfolio generated meaningful revenue, although both hotels reported lower revenue than in the prior-year period.
The InterContinental is a 351-key resort, while Anantara is a 174-key resort. Anantara achieved higher occupancy, ADR and RevPAR, reflecting its premium positioning.
Bar Du Port Beach opened at the end of February 2026 and has become a focal point of Mina's lifestyle and dining offering. Management also announced further restaurant openings, including Tasha’s Hunter & Barrel and Antonia.
D. Revenue composition
Property sales remained the dominant source of revenue, accounting for approximately 81% of total revenue. The decline in property sales was therefore the largest contributor to the overall revenue contraction. Hotel operations were relatively more resilient, although they also recorded lower revenue.
4. Key Performance Drivers
1. Lower property sales and revenue recognition
Property sales declined by approximately AED 304 million year-on-year. Since property sales account for most of the company's revenue, lower sales and the timing of project completion and handovers had a direct impact on reported earnings.
2. Handover execution is central to the recovery
The company had made 748 homes available for handover by September and expected another 691 in Q4. Successful completion and customer delivery could support revenue recognition and cash flow generation. Delays in commissioning, approvals or customer handovers could defer this benefit.
3. Development backlog provides future visibility
The reported development backlog stood at AED 3.18 billion, up 11% from the comparable period in 2025. This provides visibility on future revenue recognition, although backlog conversion depends on construction progress, customer delivery and the timing of contractual performance obligations.
4. Operating costs remain relatively sticky
Selling, general and administrative expenses increased slightly despite the revenue decline. This contributed to the sharper reduction in operating profit compared with gross profit and demonstrates the importance of cost discipline as revenue fluctuates.
5. Hospitality provides diversification
Hotel operations contributed AED 119.39 million in revenue. Although down year-on-year, the hospitality portfolio provides an additional income stream alongside property development. The occupancy and RevPAR figures at Anantara were stronger than those at InterContinental.
6. New launches and partnerships support longer-term growth
The Strand, Four Seasons, Armani Beach Residences, Mina Harbour and Nikki Beach projects offer opportunities to expand the company's future development and hospitality pipeline. However, several projects remain at design, planning or pre-launch stages and should not be treated as near-term recognised revenue.
5. Balance Sheet, Backlog & Cash Flow
A. Balance sheet position
AED million; 30 September 2026 compared with 31 December 2025.
Key observations:
Total assets increased by approximately 2.3% to AED 8.91 billion.
Shareholders' equity increased by approximately 1.9% to AED 6.05 billion.
Total liabilities increased by approximately 3.2% to AED 2.85 billion.
Equity represents approximately 68% of total assets, indicating a substantial equity-funded asset base.
Current assets increased by approximately 26.5%, supported by higher receivables and current trading properties under development.
B. Borrowings and debt position
Total borrowings declined by approximately AED 48.5 million, mainly due to the reduction in term loans. However, bank overdrafts increased by approximately AED 57 million.
The company had AED 588.78 million in bank balances and cash, but this includes AED 333.67 million of bank overdrafts. For cash-flow purposes, cash and cash equivalents were AED 249.38 million after deducting overdrafts and unclaimed dividends.
Using cash and cash equivalents of AED 249.38 million against total borrowings of AED 962.44 million gives an indicative net borrowing position of approximately AED 713.1 million.
The company has AED 900 million in overdraft facilities, secured overdrafts being backed by term deposits. Term loans are secured against specified properties, insurance proceeds, project revenues and related project accounts. The borrowing agreements also contain restrictive covenants, including a Debt-to-EBITDA ratio requirement.
C. Working capital, receivables and contract liabilities
Trade receivables and contract assets, net: AED 1,814.1 million.
Total trade and other receivables: AED 2,197.5 million.
Contract assets: AED 1,045.9 million.
Contract liabilities: AED 689.0 million, compared with AED 443.2 million at December 2025.
Project contract accruals: AED 209.2 million.
Advance connection charges: AED 171.3 million.
The increase in contract liabilities is a positive indicator of customer-related amounts received or due before the associated revenue is recognised. However, contract assets and receivables also remain substantial, so collection and conversion into cash should be monitored.
D. Cash flow performance
AED million, nine months ended 30 September.
Cash flow observations:
Operating cash flow was AED 135.1 million, down from AED 149.4 million.
Trading properties under development absorbed AED 187.7 million of cash, compared with AED 78.5 million in the prior-year period.
Increased trade payables, accruals and other liabilities provided AED 170.5 million of working-capital support.
Investing activities generated AED 29.3 million, helped by AED 51.1 million in proceeds from the sale of investment properties.
The company repaid AED 105.5 million of loans and paid AED 44.3 million in interest.
Cash and cash equivalents increased to AED 249.4 million from AED 235.5 million at the beginning of the period.
The positive operating cash flow is encouraging, but the cash generation remains modest relative to the scale of the development portfolio. Cash flow was supported by higher payables, while ongoing development expenditure continued to absorb cash.
E. Development backlog and landbank
Development backlog: AED 3.18 billion, up 11% year-on-year.
More than 5,000 homes in the development pipeline.
Mina landbank: approximately 4 million sqm.
The Strand landbank: approximately 186,000 sqm.
Management also disclosed approximately 924,862 sqm of undeveloped land across Mina and The Strand, representing around 1.44 million sqm of potential gross floor area.
The backlog is an important source of future revenue visibility, but it should not be confused with cash already received or guaranteed profit. Conversion will depend on execution, customer payments and the timing of revenue recognition.
6. Investor Takeaway
RAK Properties has a substantial development platform, a strong landbank and a growing backlog, but its 9M 2026 financial performance was weak compared with the previous year.
Positive factors
Development backlog of AED 3.18 billion, up 11% year-on-year.
More than 5,000 homes in various development stages.
Strong equity base of AED 6.05 billion and total assets of AED 8.91 billion.
Total borrowings declined year-on-year from AED 1.01 billion to AED 962.4 million.
Hospitality operations provide some diversification from property sales.
Several residential projects are approaching completion and handover.
Key concerns
Revenue declined 31%, while net profit fell 49%.
Q3 revenue and net profit remained materially below the prior-year quarter.
Selling, general and administrative expenses increased slightly despite lower revenue.
Property sales remain the dominant revenue source, leaving results sensitive to sales and handover timing.
Receivables and contract assets are substantial and require continued collection discipline.
Development expenditure and interest payments continue to place demands on cash flow.
What investors should monitor next
Whether the company achieves its target of more than 1,400 homes ready for handover during 2026.
Whether the AED 3.18 billion development backlog converts into recognised revenue and cash receipts.
Whether property sales recover and new launches, particularly The Strand projects, progress as planned.
Whether operating expenses become better aligned with revenue.
Whether operating cash flow improves while the company continues investing in development.
Whether debt and overdraft utilisation remain controlled as construction activity progresses.
Overall investor view: RAK Properties has a credible long-term development platform, supported by its Mina and The Strand landbanks, hospitality assets and sizeable backlog. However, the current earnings performance is under pressure, and the next phase of execution is critical. The investment case depends on converting its development pipeline into completed homes, recognised revenue and stronger cash flow. The backlog and balance sheet provide support, but they do not yet remove the risk associated with weaker property sales and lower profitability.
