How Tecom Group’s IPO will impact Dubai’s commercial property market

 

The listing will increase transparency and will be a barometer of investor appetite, while offering other added benefits for the office real estate sector, experts told Arabian Business

Tecom Group’s initial public offering (IPO) will be a barometer of investor sentiment towards Dubai’s commercial property market as well as bringing added transparency, industry experts told Arabian Business.

Part of Dubai Holding Asset Management’s portfolio, Tecom Group is listing 12.5 percent of shares in an IPO on the Dubai Financial Market amidst a regional boom.

“Dubai is currently riding a wave of recently floated IPOs with this opportunity set to become one of the most significant in recent years,” said Anthony Spary, head of office Investor Leasing & Retail at CBRE Middle East.

“Tecom Group has clearly demonstrated itself as a leading institution in Dubai that provides an ecosystem encouraging innovation across the emirate. With an occupancy level of approx. 83 percent across its portfolio of 21.1M sqft of leasable area, Tecom Group’s offering will likely prove very attractive to potential investors,” he continued.

The IPO comes in at a time when the Dubai’s real estate market is booming, having witnessed 6,651 real estate transactions worth $4.98 billion (AED 18.3bn) in May 2022, marking the highest figures for the month of May in 13 years in terms of real estate sales volume and value.

“The IPO is another positive step to diversify the real estate market and will likely further encourage both local and foreign investment. At a time when Dubai’s real estate market is strengthening rapidly, I believe it is a further vote of confidence that the city is going in the right direction and will position itself for further growth,” explained Spary.

“As we’ve seen with the likes of Brookfield entering the market recently, the greater the level of foreign investment in the market will only add to the attractiveness of further foreign investment.”

Spary added: “Ultimately, this will bring with it a wealth of international best practice that will add further weight to Dubai being a leading business hub. With Dubai Holding remaining as the holding company of the newly listed company, I believe this will also assist in ensuring it remains aligned with Dubai Holding’s key objectives and continues to focus on its core DNA of innovation.”

Qualified institutional, exempt and the UAE retail offers for Tecom Group’s IPO are expected to run from 16 to 23 June and the listing on the Dubai stock exchange likely to be July 5 with lead managers including Emirates NBD Capital and First Abu Dhabi Bank.

“The pending IPO of a stake in Dubai office park provider Tecom is a welcome step in the further maturity, and pathway to added transparency, for the Dubai commercial real estate market,” said Declan King Mrics – MD & group head real estate ValuStrat.

“As a leader in the provision of world class leased office park destinations in Dubai, the Tecom IPO offers opportunities for both institutional and retail investors to indirectly allocate to a property sector that has witnessed strong post-Covid growth – well located Grade A office space has performed well, with both rental and capital values rising, as commercial activity in Dubai recovers and grows.

“As the city further positions itself as a headquarter location for both regional and global businesses, with increased company registrations, sentiment for this segment remains positive. How the shares trade on open and going forward will be a useful barometer for the office sector, with their price being one measure of investor appetite for business park workspace.

“The IPO is particularly welcome at this time, as we see increased institutional investor interest in Dubai, with allocations now coming from Europe and North America in a way that was not seen even a few short years ago. The transparency and market data that the listing will offer, will give such players further confidence in our real estate market,” he continued.

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