Union Properties PJSC: A 44% Surge in Gross Profit Marks Turnaround in H1 2025

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August 3, 2025

Buy Home , Buy Property

Dubai, August 1, 2025 – Union Properties announced a 44% year-on-year jump in gross profit, reaching AED 75.6 million in the first half of 2025, versus AED 52.6 million for H1 2024.

This impressive performance comes as the developer continues its multi-year restructuring plan and prepares to monetise flagship land assets—signaling renewed momentum and long-term resilience in a highly competitive UAE real estate market.

1. Context & Strategic Reset 🧭

A once deeply leveraged developer, Union Properties has dramatically improved its financial health:

Between 2022–2024, the company paid down AED 723 million in legacy debt (from a peak of AED 1.47 billion) and reduced finance costs from AED 114 million to AED 31.7 million.
A series of AED 1.3 billion in land sales over this period helped fund the deleveraging and working capital needs.
In 2025 the company continues with two major project launches—such as Takaya in Motor City—while retaining about 10 million sq ft of Gross Floor Area (GFA) for future developments.

Through these actions, Union Properties transformed from distressed asset management into an asset-light, project-centric developer—with a leaner balance sheet and a growing subsidiary ecosystem including ServeU and The FitOut.

2. Financial Picture: Growth, Margin & Efficiency 💹

a) H1 2025 at a Glance

Metric	H1 2024	H1 2025	YoY Change
Revenue from contracts	AED 265.8 m	AED 315.7 m	+18.7%
Gross profit	AED 52.6 m	AED 75.6 m	+44%
Gross margin	≈ 19.8%	≈ 23.9%	+4.1 pp
Net profit	AED 34.8 m	AED 14.6 m	–58%

Revenue grew ~19%, to AED 315.7 million, led by strong Q1 and Q2 topline momentum.
Combined gross profit surged by 44% to AED 75.6 million, increasing margins from ~20% to nearly 24%.

b) Quarterly Momentum

Q1 2025: Revenue reached AED 163 million (+18.2% YoY) and gross profit rose to AED 42.8 million (+25.3%).
Q2 2025: Revenue stood at AED 152.4 million (+19%), with gross profit up 77.8% to AED 32.9 million.

3. Why Profit Rose but Earnings Fell 📉

Union Properties acknowledged that strong gross profits did not translate to higher net earnings—a key illustration of short‑term tradeoffs:

Net profit dropped 58% YoY to AED 14.6 million, due to higher pre-launch expenditures, marketing, master‑planning and digital transformation spend.
Financial costs edged lower—from AED 15 million to AED 14.28 million—thanks to earlier debt repayments.

Union Properties emphasized that these strategic costs were necessary to lay the infrastructure for sustained, higher-margin development operations—expected to bear fruit in 2026–27.

4. Balance Sheet Strength: Debt, Assets & Sale-by-Sale 🏗️

A defining feature of the turnaround has been balance sheet repair:

AED 150 million debt slated for Q2 repayment was delayed; only AED 20 million was settled by quarter-end, while AED 130 million is now scheduled for Q3 2025 due to cash flow timing.
A conditional sale agreement worth AED 700 million for a major real estate asset in Motor City was signed, expected to be relatively booked in Q4 2025, potentially covering the rest of legacy debt and freeing capital for new launches.

5. Operational Drivers: Efficiency and Subsidiaries 🧱

Key elements behind margin recovery include:

Fixed cost absorption: As project activity increased, shared costs (SG&A, sales, contractors) became more efficient.
Growth from subsidiaries: Businesses like ServeU, The FitOut, and others delivered recurring revenue with stronger margins than cyclical property sales.

6. Outlook: Opportunities & Risks 🧐

⚡ Tailwinds

Strong buyer demand in key segments: off-plan sales in Motor City display growing traction with flexible payment plans.
Improved project visibility: Order backlogs and deferred-payment models lend visibility through late-2027.
Debt-light lean structure: With legacy debt mostly cleared post‑Motor City sale, financing flexibility is rising.

⚠️ Risks

Oversupply pressure in 2026: Moody’s and Fitch estimate a potential 10–15% down‑correction in segment pricing as ~210,000 units come online. Over‑exposed developers may face margin erosion.
Execution risk: Achieving gross margin leverage hinges on on‑time delivery of Takaya and other upcoming projects.
Macro headwinds: High global interest rates may restrict mortgage affordability in mid- to lower-tier offerings.

7. Why the 44% Gross Profit Growth Is a Milestone 🎯

This surge in gross profit is more than just a headline—it reflects:

Recovered pricing power from new launches.
Operational discipline through more effective cost structures.
Strategic clarity across land monetisation, debt reduction, and subsidiary optimisation.

Union Properties is emerging from a multi-year reset cycle, shifting into a developer mode with:

Lean balance sheet.
Revival of flagship projects.
A plan to deploy AED 5 billion+ in developments, including Takaya.

8. 🧾 What Investors & Stakeholders Should Watch

Q3 updates on the AED 130 million debt repayment and potential earnings recognition from the Motor City asset sale in Q4.
Gross and net margin trends in H2 2025—signaling whether recent cost investments convert to long-term productivity.
Project launch pacing—particularly updates on Takaya, and the two other developments targeted by 2026.
Dubai property pricing trajectory—with development supply forecasted to peak through 2025–26.

9. Bottom Line ✅

Union Properties’ 44% gross profit growth in H1 2025 is not just a number—it represents an operational pivot from restructuring to growth. While net profit dipped due to early-stage costs, the underlying margins, recurring income, and balance sheet strength position the company for a comeback.

Investors and observers should treat this as a turning-point quarter: the financial scars are healing, and a new era of project-led growth and margin expansion appears within reach.

Disclaimer & Notes

This content is for informational purposes only and should not be construed as investment advice. Past performance is not indicative of future results. Financial figures are extracted from officially released half-year 2025 filings and credible media sources as of July 31, 2025.