Tecom Group operates more than 10 economic zones in Dubai, and with average occupancy levels at the 89 per cent mark, it delivered big with the 2023 financials. Image Credit: Supplied

Dubai: The Dubai economic zones operator Tecom pulled out a solid 10 per cent growth on its top-line numbers, hitting Dh2.2 billion for 2023. The gains were led by high occupancy numbers, averaging 89 per cent across its portfolio that includes the likes of Dubai Internet and Media cities, the Dubai Design District, Industrial City and other.

That in turn delivered a net profit of Dh1.1 billion compared to Dh725 million a year ago. And margins that touched 76 per cent compared to 2022’s 68 per cent.

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In line with its stated dividend policy, Tecom will release a further Dh400 million to shareholders for the second-half of 2023, with the payment to be made in April. (On DFM, the Tecom stock had gained 18 per cent last year.)

Expansion plans

The holding company is looking into the possibility of adding to its land bank or building more within existing land available as demand for prime commercial real estate in Dubai keeps heading in its direction.

“We have enhanced our position as the preferred destination for investors and entrepreneurs and talent from around the world,” said Malek Al Malek, Chairman. “The Group delivered excellent financial results achieving record revenue and net profit and ended the year with a healthy liquidity position and robust balance-sheet.”

In 2023, we continued to demonstrate the attractiveness of our assets and our ability to acquire new
customers including major and mark

- Malek Al Malek of Tecom Group

High occupancy and more

Averaging 89 per cent occupancy levels played out nicely on the Tecom numbers, but so did the the drop in finance costs, from Dh312 million to Dh262 million. In the statement, Tecom notes the 'lower operational and financial costs, owing to the Group’s ongoing efforts to enhance operations, reduce costs to complement its funding needs and growth plans'.

And all this came about despite the prevailing high interest rates.

A well-timed refinancing
In June last, Tecom refinanced an existing Dh7.6 billion loan facility at lower rates at 'more favourable terms', helping reduce financial costs in the second half of the year and ending the year at a 'very comfortable' debt-to-equity ratio of 0.7x.

As part of the refinanced facility, the Group can tap a Dh3.2 billion revolving credit facility to invest in the business.

On the occupancy side of things, "We witnessed a demand surge for customers requiring premium office spaces in centrally located districts, such as the Dubai Design District," said Abdulla Belhoul, CEO of Tecom. "While the majority of our revenue is attributed to retained customers, we are also pleased with an almost 15 per cent increase in the number of new customers from 2022."

Demand for offices and commercial space continues to run high in Dubai, and Tecom entities have been clear beneficiaries of this. Not just completed offices, even land for commercial purposes has helped with the group's results.

We witnessed a demand surge for customers requiring premium office spaces in centrally located districts, such as the Dubai Design District.

- Abdulla Belhoul of Tecom

"The lease of industrial lands witnessed strong demand, as the occupancy rate rose to 94 per cent, compared to  81 per cent during 2022," said the statement.

Market value gains

The market value of the Group’s real estate investments increased 7.7 per cent to Dh22.9 billion end 2023 - 'achieving a record growth of 18.2 per cent since the IPO, which reflects the distinctive performance of its operational assets'.

“We anticipate the demand-induced growth momentum to be sustained in 2024 and beyond," said Belhoul. "With our wellbalanced business model, access to strategically located land bank and prime assets, we are confident in our ability to satisfy demand trends and consolidate our market-leading position."

Need more land earlier than planned
"The last two years have been about managing the operational and finance costs. Our current financing position is extremely strong to help us capture market demand and reinvest in new opportunities.

“We will continue to invest in land bank within our existing economic zones. That way we get the economies of scale.

“At the time of the IPO, we had land and land investments available to take us up to 2026. But the (Dubai) market has moved faster than we planned, which requires to go for additional land bank.

- Abdulla Belhoul of Tecom Group