Emirates Reit reports a strong Q1 2025 with 24% increase in property income
Operational efficiency remained a key driver of performance in Q1 2025, with property operating expenses down 8.4 per cent year-on-year to $3 million. Despite the exclusion of income from divested assets, net property income held steady at $16 million, underscoring the resilience and income-generating strength of the core portfolio. At the same time, net finance costs declined sharply by 57 per cent to $6 million, driven by the successful Sukuk refinancing in late 2024 and reduced financing exposure, directly enhancing earnings and cash flow.
The fair value of investment properties rose 14 per cent year-on-year to $1.2 billion (Dh4.0 billion) despite strategic asset disposals. This growth was underpinned by unrealised revaluation gains of $149 million.
Portfolio fundamentals remained exceptionally strong, with occupancy reaching 95 per cent, supported by a 17 per cent year-on-year increase in commercial and retail rental rates.
Earlier in June, the shareholders of Emirates Reit approved the resolution to distribute a final cash dividend of $7 million or $0.02 per ordinary share, for the financial year ending on 31 December 2024, as well as authorising the Reit manager to allow the payment of another dividend later in the year. 'We executed a two-stage strategy, which saw us first increase occupancy rates, aggressively manage operating costs and boost rental revenue. Then we sold selected assets at a premium in a dynamic market, the proceeds of which enabled full repayment of a bank facility and partial Sukuk settlement, followed by refinancing to provide a leaner and more efficient capital structure. These initiatives equipped us with a resilient platform for sustainable returns, supporting our progressive dividend policy,' Thierry Delvaux, chief executive officer of Equitativa (Dubai), told Khaleej Times after the results were announced.
Delvaux believes this is a compelling time to invest in Reits in the UAE, because of the strong economic fundamentals, a maturing real estate sector, and ongoing investor confidence. 'The market has shown resilience, with high occupancy rates and rising rental yields across key segments. Our portfolio's occupancy reached 95 per cent in Q1 2025, with a 17 per cent year-on-year increase in commercial and retail rental rates—clear indicators of a robust leasing environment and strong demand for quality properties. Now that Reits may be exempt from the corporate tax, they will become an even more compelling vehicle for real estate investment in the UAE,' he added.
Demand for commercial, educational, and retail space continues to grow, driven by the UAE's strong economic momentum and population growth. Sustainability is also front and center, and energy-efficient buildings are increasingly important to tenants and investors alike.
Importantly, the office market continues to be under-supplied and there is room for significant new stock. 'The challenge for Dubai is to incentivise developers to build office assets, which has proven to be difficult. If demand continues to outstrip supply, we are likely to see pre-leasing emerging as the only option for organisations looking to secure future space. However, a surge in the number of pre-lease commitments will further limit availability,' Delvaux said.
The Equitativa CEO remains confident about the resilience of both investor and tenant demand, despite ongoing macroeconomic uncertainty. 'Investors are increasingly focused on stable, income-generating assets, and real estate, particularly in high-growth sectors, remains a strong choice,' Delvaux said.
On the tenant side, demand continues to rise for premium commercial properties. This reflects a broader market trend where sustainability and quality are becoming key decision drivers. Overall, we see a positive outlook for the year ahead, with strong fundamentals supporting continued growth and long-term value creation across the commercial real estate sector.
Emirates Reit is not looking at fractional ownership/tokenisation at the moment. 'Fractional ownership and tokenization are interesting developments, but our current focus is on delivering a stable, efficient, profitable Reit that delivers long-term value to our stakeholders. Tokenization's main objective is to enable retail investors to invest in a fraction of a real estate asset, while a public Reit achieves a similar outcome since anyone can buy shares on the stock market. So, in the future, blockchain-based tokenization could be deployed to make traditionally illiquid real estate investments more accessible and tradable. However, any such consideration would need to align with our strategic objectives and regulatory framework. For now, our priority is to strengthen our portfolio and capital structure to support sustainable growth,' Delvaux said.
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