Dubai's Jebel Ali Free Zone reports 51% fall in profit for last year

Dubai's Jebel Ali Free Zone has been forced to write down property investments as profits halve.

Dubai's oldest free zone yesterday said profits more than halved last year because of write-downs on property investments.

The Jebel Ali Free Zone, which was founded in 1985 and operates the commercial hub around the emirate's main Jebel Ali port, said it made Dh139.7 million (US$38m) last year, down 51 per cent from the Dh286.7m of profit it reported in 2009.

The decline, revealed in documents posted on the website of Nasdaq Dubai, came as impairments on investment properties last year rose to Dh198.3m from just Dh28.4m the year before.

Last year's impairment charge related principally to a convention centre complex under construction at the port, the free zone operator said, "and reflects its estimated recoverable amount, due to the decline in the real estate market in Dubai". In all, the free zone owned property worth Dh3.2 billion excluding the value of projects under construction, its financial statements said.

The convention centre, launched in 2006, is to include two office towers and a 320-room hotel. "Completion of the project is now expected after 2012," the free zone said. At the time of its launch, the project was said to be worth Dh2bn.

Despite its drop in profit, the free zone reported the number of customers registered there reached 6,576 at the end of last year, up 3.9 per cent from 2009. It also said occupancy levels in its buildings were high, without specifying the percentages.

After paying back a Dh368m revolving loan, the free zone said its only debt was a Dh7.5bn Islamic bond due in November of next year. It was "currently exploring various refinancing options" to address that debt.

The free zone is owned by the Dubai Government through Economic Zones World.