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Tecom Group, the operator of business districts that are home to more than 10,000 companies, has reported a record 34 per cent annual increase in its third-quarter profit, driven by robust demand from existing and new customers and the strong growth of Dubai’s economy.
Profit for the three-month period to the end of September rose to Dh283 million ($77 million), Tecom said on Tuesday in a filing to the Dubai Financial Market, where its shares are traded.
The profit increase was underpinned by strong revenue growth, reduced operational expenses and lower financing costs, which were supported by the recent refinancing of a loan facility at lower margins and more favourable terms, Tecom said.
Third-quarter revenue increased by an annual 10 per cent to Dh541 million ($147 million), supported by the continued improvement in occupancy levels and strong customer retention rates across the group’s portfolio.
Earnings before interest, taxes, depreciation and amortisation (ebitda) for the three-month period rose by 13 per cent to Dh410 million, compared with the same period a year earlier, on the back of positive top-line performance and enhanced operational efficiencies.
“Our outstanding financial and operational performance over the nine-month period reflects our ability to take advantage of Dubai’s favourable market conditions as we continue to successfully push ahead with our strategy of optimising our diverse portfolio and sustaining high occupancy rates,” said Tecom chief executive Abdulla Belhoul.
“Our 10 business districts are almost near full capacity, with our existing customers continuing to renew their leases with us and new customers coming on board. This is a testament to the strong demand for our quality assets and unique, fully serviced strategic locations underpinned by buoyant business conditions.”
Tecom comprises 10 business districts that include Dubai Internet City, Dubai Media City and the Dubai Design District.
Nine of its business districts are in free zones that permit 100 per cent foreign ownership, with tenants including Meta, Google, Visa, BBC, CNN, Unilever and Dior.
The results come at a time when Dubai’s economy continues to register a strong performance.
Dubai’s economy expanded by an annual 3.2 per cent in the first half of 2023 to Dh223.8 billion, driven by 3.6 per cent growth in the second quarter of the year, solidifying the emirate’s position as a global economic centre.
The emirate’s economy is estimated to have grown by 5 per cent last year and is forecast to expand by 3.5 per cent in 2023, according to Emirates NBD.
Dubai’s real estate activity rose by 3.6 per cent on an annual basis in the first six months of the year, driven by higher property sales, according to data from the Dubai Land Department.
Tecom’s net profit in the first nine months of the year rose by more than 20 per cent to Dh768 million from the same period a year earlier, underpinned by the continued boom in the real estate market in Dubai.
The growth is in line with the positive top-line performance and strong growth across all business segments, it said.
Revenue in the same period increased by 7 per cent to Dh1.6 billion, driven by the continued improvement in occupancy levels and strong growth across all business segments.
Its nine-month ebitda increased by an annual 14 per cent to Dh1.2 billion, compared with same period a year earlier, mainly due to improved revenue quality and enhanced cost efficiencies.
Going forward, Tecom will develop new storage and logistics complexes with a total gross leasable area of 200,000 square feet in Dubai Science Park, driven by a surge in demand for Grade A storage and logistics space across the emirate, it said.
“We … will continue to focus our efforts on being the go-to destination for international and regional businesses,” Mr Belhoul said.
“Furthermore, our business model, which includes a balance between long-term and short-term leases, enables us to take advantage of rising prices while providing us with greater revenue stability and visibility.”
Updated: November 01, 2023, 6:45 AM
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