Tecom to invest $463m in Dubai acquisition and development plan

Business district operator to build six office buildings in d3 amid strong demand

Tecom will invest Dh689 million to develop more projects in Dubai Design District. Tecom

Tecom Group, the operator of business districts in Dubai, has approved a Dh1.7 billion ($463 million) acquisition and development plan that it says will support the next phase of its growth.

As part of the plan, Tecom will invest Dh966 million in acquiring commercial and industrial assets from Dubai Holding Asset Management (DHAM) and has earmarked Dh689 million to develop grade A offices in Dubai Design District (d3).

Tecom will acquire two grade A office buildings in Dubai Internet City with a combined value of Dh420 million from DHAM.

The properties have a gross leasable area of 334,000 sq ft and have high occupancy levels with “a loyal and quality customer base” that includes regional and international tech companies.

It will also acquire 13.9 million sq ft of land for industrial use in Dubai Industrial City for Dh410 million from DHAM.

Dubai Design District, one of Tecom Group's subsidiaries, will acquire 629,000 sq ft gross floor area for Dh136 million within phase two of the mixed-use d3 Design Quarter development.

Tecom will invest Dh689 million in developing six grade A office buildings with a gross leasable area of 503,000 sq ft in d3.

It said the new development, which is expected to be completed by 2028, is “driven by strong demand from customers in the design, fashion and creative industries”.

Abdulla Belhoul, chief executive of Tecom Group, said the “ambitious Dh1.7 billion ($463 million) strategic acquisitions and development plan” will “capitalise on the unique opportunities that Dubai’s commercial real estate market offers”.

The company aims to tap into “new sources of growth to expand our offerings and boost our portfolio value”, he said.

“Expanding through acquisitions has always been a crucial lever to help accelerate our growth ambitions and cater to evolving market dynamics.”

He added that the company's “prudent financial management, optimised capital structure and strong financial performance so far this year” mean “we have the financial means to execute these deals while maintaining a healthy cash profile”.

Research from consultancy Savills said Dubai's office sector retained its positive momentum in the first quarter of this year.

It said grade A office spaces witnessed significant rental growth, seeing a year-on-year increase of 14 per cent on average, fuelled by strong demand and a steady global economic recovery.

The first quarter of the year saw a significant uptake of space by legal services, wealth management, and technology, media, and telecommunication (TMT) companies, Savills said.

Tecom comprises 10 business districts including Dubai Internet City, Dubai Media City and the Dubai Design District. Nine of Tecom's 10 business districts are located in free zones that permit 100 per cent foreign ownership, with tenants including Meta, Google, Visa, BBC, CNN, Unilever and Dior.

It said its average occupancy across its business districts was 91 per cent as of March 31, with d3 occupancy rates reaching 98 per cent for the same period.

Tecom added that the industrial segment is seeing robust growth, which is leading to a notable increase in rental rates.

The group said it is well funded for the planned transactions with the option to tap into up to Dh3.2 billion from its existing revolving credit facility, which was refinanced in 2023 at more competitive financing terms.

In its first quarter earnings, Tecom reported a 15 per cent increase in profit, driven by demand across the business from new and existing customers, which it said was supported by Dubai’s economic performance, pro-growth and diversification government initiatives.

Profit for the three-month period reached Dh293 million, with revenue also rising by 10 per cent during the quarter to Dh564 million.