Buoyant 2022 for Emirates REIT manager Equitativa

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• Portfolio value up 6% in 2022 to $785m, Equitativa says
• Strong annual results boosted by soaring demand for offices in Dubai 
• Company appoints former JLL head Thierry Delvaux as CEO

Net profit at real estate fund manager Equitativa grew by 30 percent year on year to $82 million (AED301 million) in 2022 and occupancy levels across its portfolio rose 13 percentage points to 85 percent, as it benefited from the “extremely strong” Dubai commercial property market. 

Equitativa is the manager of Nasdaq Dubai-listed Emirates REIT, a real estate investment trust with $785 million of investment assets as of 31 December.

This week Equitativa appointed a new chief executive, Thierry Delvaux, subject to regulatory approvals. Delvaux was previously chief executive, Middle East, Africa and Turkey at property consultancy JLL. 

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Equitativa’s net profit increase for 2022 was attributed largely to $79 million of unrealised revaluation gain on its investment properties.

The portfolio value was up 6 percent year on year and occupancy rates increased to 85 percent, pushing up rental, fee and “other” income by 11 percent to $69 million. 

The strong results were also attributed to the “strategic management” of the company’s portfolio, Equitativa added.

Emirates REIT “maintained a strong focus on cost optimisation and discipline,” resulting in a 4 percent decline in property operating expenses to $12 million in 2022 and a four percentage point improvement in net property income margin to 94 percent, it said. 

As a result, net property income for the period increased 15 percent to $55 million (excluding the impact of any losses or gains from property sales), “demonstrating the strong market for the REIT’s core assets”. 

Net asset value increased by 29 percent annually to $373 million.

“The positive performance also reflects the quality of assets in the REIT’s portfolio, which is well positioned to capture growing demand for premium office space in Dubai,” the company said. 

Rising demand

There is currently a shortage of high-end office space in Dubai. This is pushing up rental prices and causing Grade A occupancy rates to exceed 90 percent, the highest level since 2015, according to JLL Mena. 

Many real estate experts are calling for more offices to be built across the emirate, to meet rising demand from companies moving to or expanding in Dubai as the economy is buoyed by higher oil prices. 

Around 2 million sq ft of commercial stock is due to be added over this year and next, according to consultancy Core. However, much of this is already pre-leased.  

“The big story in Dubai’s office market is the shortage of grade A office space,” Faisal Durrani, head of Middle East research at Knight Frank, told AGBI in February. “Occupiers entering the market today will find a very limited range of high-quality options.”

Emirates REIT became the first real estate investment trust in the Middle East when it was founded in 2010.

The largest listed Shariah-compliant real estate investment trust in the UAE, it was backed by early seed funding from investors such as Dubai Islamic Bank, Tecom and Dubai Properties, and listed on Nasdaq Dubai in April 2014.

Last year it refinanced a $400 million sukuk, and it is seeking to expand beyond Dubai, including in Saudi Arabia and Africa, Equitativa’s former chief executive Thierry Leleu told AGBI in September.

Sylvain Vieujot, executive deputy chairman of Equitativa, said this week that Emirates REIT’s results were “underpinned by the robust market for premium commercial real estate in Dubai, with the city consolidating its position as a global business hub and a safe haven from growing global economic instability”.