Jebel Ali Free Zone paid down a big chunk of its outstanding debts last year, while annual profits rose to Dh690 million from Dh252m.
Revenues at Jebel Ali Free Zone reach a record Dh1.53bn
Jebel Ali Free Zone reached record revenues of Dh1.53 billion last year as rents in Dubai’s industrial district soared, pushed up by increased demand amid government plans to build the world’s leading logistics hub in the emirate.
The free zone is an industrial area exempt from foreign ownership restrictions. It rents out warehouse space to companies, and is located close to several of Dubai’s zoned industrial and logistics areas, and the Jebel Ali Port.
JAFZ paid down a big chunk of its outstanding debts last year, while annual profits rose to Dh690 million from Dh 252m, according to a London Stock Exchange filing.
“JAFZ’s fundamentals are very strong,” said Edward Batten, associate director at Knight Frank, a property consultancy. “It’s a household name … [and] the busiest port outside of Asia.”
Rents, which currently stand at about Dh36 per square foot for industrial space at JAFZ, increased by 19 per cent in the second half of 2013, and are trending up, according to data from Knight Frank.
“We’re seeing a big squeeze on available stock,” said Mr Batten. “There’s a lot of leasing activity,”
Industrial, manufacturing and logistics firms account for the highest number of rental inquiries for the JAFZ site, followed by the food and beverage sector, according to the data.
Profit increases were driven by a major fall in costs, following the transfer of an “integrated facility complex”, believed to be its conference centre, to its parent company. In exchange for this, Dubai World paid Dh1.1bn toward reducing the free zone’s debt pile, according to the filing.
This move enabled the free zone to cut its gearing ratio – which measures the company’s debts as a proportion of total capital held – from 50 per cent in 2012 to 39 per cent in last year.
JAFZ issued a Dh2.38bn Islamic bond in 2013, which is set to mature in 2019. That is in addition to a term loan of Dh4.4bn, of which Dh1.81bn has so far been repaid.
The transfer of the building also helped to cut the free zone’s costs.
“JAFZ didn’t continue with the investment [in the conference centre] because they would have completed it at the wrong time in the market,” said Mr Batten. “[But] we’re now seeing real growth in the market, and big inquiries in the office sector. Will start doing deals there sooner rather than later.
“The conference centre is probably going to come to market at a very good time,” he said.
JAFZ, which covers an area of 56 sq kilometres, owns an estimated Dh6.13bn of investment property, according to the filing.
“We enjoy the advantage of having the port, the free zone, the logistics corridor and the Al Maktoum airport with a small area,” said Hisham Al Shirawi, JAFZ’s chairman. “That’s the biggest and most efficient logistics corridor in the world – [cargo can move] from sea to plane in no time.”