Dubai’s Jebel Ali Free Zone yesterday reported that profit rose by more than 40 per cent in the first half of 2014 after the industrial zone operator paid down a big chunk of debt last year.
Net income jumped more than 44 per cent to Dh449 million in the six-month period to June 30, from Dh311m a year earlier.
The increase is “primarily due to lower finance cost resulting from prepayment of bank facility and cost optimisation,” the chairman Hisham Abdullah Al Shirawi said in a regulatory disclosure posted on the Nasdaq Dubai website.
Last year, Jafza transferred its conference centre to Dubai World, its parent company. In exchange, Dubai World paid Dh1.1 billion towards reducing the free zone’s debt.
The transaction also helped to cut costs.
Total debt stood at Dh4.63 billion by the end of the first half, from Dh4.97bn last year, the company filing showed. The free zone’s cash balance was Dh1.01bn,up from Dh798m in the year earlier period.
“The establishment entered into discussions with all banks under term loan and agreed to reduce the margin payable under term loan to 1.85 per cent from 2.75 per cent, with effect from September 2014,” the filing said.
Revenue was Dh822m, up from Dh752m in the same period.
The authority also added 350 customers to its base in the first half, compared with 313 in the year earlier period amid higher demand for leases.
“There is a shortage of warehouse space across central areas of Dubai for industrial occupiers,” said Faisal Durrani, the head of international research at Cluttons. “So they [have been] driven into free zones around Al Maktoum, like [Jebel Ali].”
Mr Durrani also said that he expected to see an increased amount of speculative warehouse development in the area.
“The economy is exceptionally buoyant, so you are seeing a reinvigoration of the occupier life cycle. New occupiers are trying to get small amounts of space, and large occupiers are expanding more space.”
Jafza 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.
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