TECOM Group, the Dubai-based business park operator, announced a 13 percent increase in its first half (H1) profit. According to the Group CEO Abdulla Belhoul, the demand for commercial property is surpassing the supply in one of the world’s fastest-growing cities.
Read more: TECOM refinances credit facility with $2.1 bn loan
The company reported a rise in profit for the six months ending in June, from the same period last year. The increase was driven by strong top-line performance, continued growth across all business segments, improved operational efficiencies, and lower total financing costs. TECOM made this announcement in a statement to the Dubai Financial Market (DFM), where its shares are traded. The profit amounted to AED484.5 million ($131.9 million).
There was a 6 percent annual increase in first-half revenue to AED1.05 billion. This was buoyed by continued growth in rental rates and sustained strong occupancy levels. It was also driven by high customer retention rates across the business districts.
The group reported a 14 percent year-on-year (YoY) increase in earnings before interest, taxes, depreciation, and amortization (EBITDA) for the January-June period. This amounted to AED824.5 million and was attributed to improved management of operating expenses and better operational efficiencies.
Dubai real estate growing
Belhoul said commercial real estate in Dubai is growing steadily. This is due to Dubai’s appeal as a global city to businesses, talent, and investors, as well as its macroeconomic resilience. TECOM’s CEO stated that the company’s robust business model and market reputation have enabled it to capitalize on strong demand. This has resulted in solid performance during the period. The vast majority of the company’s leased assets, particularly Grade A centrally located offices, have recorded high occupancy rates.
As of June 30, the occupancy level for commercial and industrial assets was 87 percent, reflecting a 5 percent year-on-year increase. At the end of June, the overall customer retention rate stood at 92 percent.
AED400 mn cash dividend
The company’s board of directors has approved the distribution of an interim cash dividend of AED400 million for H1 2023. This dividend will be distributed in September, according to the filing.
During H1 2023, TECOM experienced an 18 percent year-on-year increase in the number of customers. The number of customers exceeded 10,000 and included multinational and regional companies.
10 business districts
Furthermore, TECOM is made up of 10 business districts, including Dubai Internet City, Dubai Media City, and the Dubai Design District. Nine out of the 10 business districts are located in free zones that allow 100 percent foreign ownership. Tenants of these districts include Meta, Google, Visa, BBC, CNN, Unilever, and Dior.
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