For the past few years, the emirate of Ras Al Khaimah (RAK), commonly referred to as the UAE's jewel, has been going through a significant transformation. Looking at the exponential growth of the emirate, global investors, real estate developers, and hospitality leaders, are collectively turning RAK into a trailblazer both for the tourism and development sectors that form the regional market. Nevertheless, besides the outcomes of this influx of opportunities, there is also a demand for accountability and the taking of risks.
Among the most essential regulations that developers and investors need to familiarize themselves with is the law regarding the cancellation of real estate development projects that falls under Law No. (12) of 2023. This regulation goes beyond mere legal formalities—it serves as a guide that makes Ras Al Khaimah’s real estate and hospitality industry not only transparent and accountable but also provides a sense of security to different parties working within these sectors and to the RAK government department.
Why Ras Al Khaimah Is a New Wave of Developers and Investors?
Ras Al Khaimah has been considered a little brother of the more wealthy and powerful neighbors such as Dubai and Abu Dhabi. However, over the past few years, that story has been changed dramatically. By focusing on ecotourism, large-scale hospitality projects like Wynn Al Marjan Island, and being strategically located at the crossroads of Asia and Europe, RAK is not a silent resort anymore but a powerful investment magnet.
Support from the government, low operational costs, competitive land prices, and a vision based on sustainable development are some of the reasons why RAK is becoming the new hotspot for developers in hospitality and real estate. The emirate is willing to attract over 3.5 million tourists yearly by 2030, and there are several billion dirhams being invested in resorts, luxury residences, and lifestyle infrastructure.
In such a fast-paced growth environment, the enactment of Law No. (12) of 2023 is both a wise and a necessary decision. It shields buyers, defines developer duties, and creates conditions where only project can be implemented that are credible and well-managed. For hotel developers and real estate investors, knowing law’s details is neither optional nor negotiable—it’s vital.
Law No. (12) of 2023: Real Estate Development Project Cancellation – What It Means
We want to focus on the essential part of the case. This law issued by His Highness Saud Bin Saqr Al Qasimi, the Ruler of Ras Al Khaimah, identifies the legal situation in which the cancellation of a real estate development project and its removal from the register is followed by the authorities.
The law prescribes that a project cancellation will be considered lawful if:
• Delayed Commencement: When the developer does not implement the project within the specified period according to Article (20) of the law, the project will be canceled.
• Developer-Initiated Cancellation: The developer may request termination only where the concerned administration accepts material reasons. These reasons must be real and explainable.
• Developer Removal: In case a developer is removed from the official register of real estate developers and the project is not transferred to another licensed developer, it will be automatically canceled.
However, that is not all that the law says.
It stipulates a key consumer protection story:
Before the cancellation of any project, complete reimbursement of all buyers must be carried out, and the rights of contractors, consultants, and escrow trustees must be settled.
This article is especially great for hospitality projects in which multiple stakeholders—owners, operators, investors, and off-plan buyers—are involved. The law is doing its part by ensuring that the financial system around a project is at least temporarily cleared and closed before cancellation takes place.
Why This Matters for Hospitality Developers and Owners
RAK's hospitality market is growing faster than ever before. The emirate is witnessing a boom of hotel chains with international reputations, branded residences, eco-tourism resorts, and serviced apartments. A lot of these projects are in the off-plan stage, where units are sold before the completion of the construction. This is where Law No. (12) is instrumental.
As a developer, you are compelled to work in full transparency from now on. If there are delays, unapproved changes, or failure to meet legal deadlines, then the cancellation of the project will be the consequence, even if it is 80% complete.
As a hospitality asset owner, your entire business model can be dependent on the presale of hotel units or collaboration with branded operators. If that is the case, developer non-compliance can put your investment at a great risk of loss.
As an investor or buyer, you have to ensure that you're investing in a project that is legally registered, has an approved escrow account, and is in compliance with Article (20)’s timeline. Otherwise, you become a part that takes the risk of a project cancellation. Though the law guarantees refunds, the refund process can be time-consuming and complicated.
Potential Red Flags for Buyers and Investors
Here are some of the things that should be on your lookout:
• Challenges in verifying whether a project is registered with RAK RERA
• Absent or inactive escrow account
• Uncertainty of hotel operator agreements
• Late project commencement beyond the limit laid down by law
• The developer has ceased to be on the official registry
Firstly, they are not mere technicalities but a set of warning signals that project cancellation may be around the corner. Even if the brochures are good and the vision looks attractive, only legal compliance determines whether your investment is at risk or not.
The Bottom Line: Do Your Due Diligence
RAK is definitely geared up for phenomenal growth. However, along with the opportunity comes the need to be cautious. If you are a hotel brand that wants to expand in Ras Al Khaimah, a developer who is about to launch a new project, or an investor who wants to buy off-plan units, making informed decisions is your best protection.
Your first line of defense is understanding Law No. (12) of 2023. However, due diligence is more than just law reading—it is about reviewing permits, financial structures, timelines, and stakeholder contracts.
Our team can help you find a way to start if you are not sure by offering project-specific due diligence reports that help you assess:
• Conformance with the law
• Financial risks
• Timeframe dangers
• Developer trustworthiness
• Hospitality classification suitability
It’s not about rejecting a project. Instead, it's about knowing what you are agreeing to.
