Dubai's Tecom profit surges 28% amid strong economic expansion

Revenue also increased by 12%, driven by higher occupancy and stronger customer retention

Dubai Internet City is one of the Tecom Group's business districts. Photo: Tecom Group

Tecom Group, the operator of business districts in Dubai that are home to more than 9,500 companies, reported a 28 per cent increase in its 2022 full-year net income, as revenue rose amid the continued growth of the emirate's economy.

Profit for the 12-month period to the end of December climbed to about Dh726 million ($198 million) from a year earlier, Tecom said in a filing on Friday to the Dubai Financial Market, where its shares are traded.

Revenue for the reporting period jumped 12 per cent on an annual basis to Dh1.97 billion, driven by higher occupancy levels, stronger customer retention rates and an increase in the number of new customers across the Tecom Group portfolio.

Earnings before interest, taxes, depreciation and amortisation (ebitda) rose by an annual 15 per cent to Dh1.35 billion.

The ebitda margin expanded to 68 per cent in 2022 financial year, from 66 per cent in 2021, driven by improved revenue from all business segments and efficient management of operating expenses.

“Our strong first full-year results since listing are a testament to our ability to deliver on the growth strategy outlined at our IPO [initial public offering] and our rigorous financial and operational discipline,” said chief executive Abdulla Belhoul.

“The strong growth in our occupancy rates in 2022 indicates a sharp return in demand for quality commercial and industrial real estate assets in Dubai and reflects the attractiveness of Tecom Group’s specialist real estate offerings.”

Tecom said its positive top-line performance was also supported by the resilience of the economic environment in Dubai and the upward trend in its real estate market.

Dubai's economy expanded by 4.6 per cent on an annual basis in the first nine months of 2022, according to the Dubai Statistics Centre data.

Emirates NBD estimates Dubai's full-year growth for 2022 at 5 per cent. It expects the emirate’s GDP to grow 3.5 per cent in 2023.

Business activity in Dubai's non-oil private sector economy remained robust in January, expanding for the ninth month in a row as consumer demand improved along with employment in the emirate.

The seasonally adjusted S&P Global purchasing managers' index reading in January softened to 54.5, from 55.2 in December, staying firmly above the 50 mark that separates economic expansion from contraction.

Dubai's property market also had a record-breaking year in 2022, registering 90,881 transactions, which exceeded the previous high of 81,182 in 2009, property consultancy CBRE said in its Dubai Residential Market Snapshot report.

“I am encouraged by the progress we have made this past year, particularly in increasing the value of our investment property portfolio by nearly 10 per cent, as well as increasing and enhancing our high-quality customer base to reach more than 9,500, including companies and freelancers, which represents a 22 per cent year-on-year growth,” Mr Belhoul said.

The occupancy level for commercial and industrial assets in Tecom Group portfolio stood at 86 per cent at the end of December 2022.

The company registered its fourth quarter of sequential growth and a substantial increase from the 78 per cent occupancy level at the end of 2021.

The customer retention rate in 2022 stood at 92 per cent. More than 1,700 new customers also joined the group's technology, media, education, science, design and industrial business districts, last year.

“We expect sustained growth in rental rates and occupancy levels for the foreseeable future, which will enable us to maintain a robust financial performance and unlock greater value for shareholders,” Mr Belhoul said.

Tecom comprises 10 business districts that include Dubai Internet City, Dubai Media City and the Dubai Design District.

Nine in 10 Tecom 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 company, which started trading in July last year, said it would remain focused on developing new and existing assets.

In December, it began the construction of an office project, the second phase of the Innovation Hub, with a total investment of Dh442 million.

The project will have two high-end office buildings, four boutique offices, retail spaces and more than 800 parking spaces.

Set for completion by 2024, the Innovation Hub Phase 2 will provide more than 355,000 square feet of gross leasable area, Tecom said at the time.