Driven by high rental yields and capital appreciation, Chinese investors are looking at buying into Dubai’s lucrative property market, with a Chinese property portal even revealing a whopping 1,200 per cent increase in buyer interest for properties in the emirate.
“Chinese buyers are increasingly comfortable with overseas markets and are searching for new opportunities. They have started to move beyond the traditional gateway cities of Hong Kong, Singapore, London, New York, Los Angeles and Sydney,” Andrew Taylor, co-CEO, Juwai.com, told Emirates 24|7.
“More than 300,000 Chinese now visit Dubai each year as tourists, which is almost always a leading indicator for property transactions.”
Off late, real estate agents and developers have stepped up their marketing efforts to reach Chinese buyers and educate them about purchasing property in the emirate. Damac Properties, Dubai-based developer, has recently announced tied up with a Chinese property broker to promote its 37,000 properties in the mainland.
“These (Chinese) investors are facing a lack of opportunity in their own marketplace, where they already own significant property, but prices are high and capital gains have dried up. Dubai is still a young market for Chinese buyers.”
Rental yields in Dubai are at around 7 to 8 per cent, while the price appreciation is forecast in years closer to the Expo 2020 mega event.
According to the company, the index for Dubai has outperformed that of larger countries as over the past year interest from Chinese buyers has soared although from a low base in absolute numbers.
The Dubai Land Department has not disclosed the investment figure by Chinese in the property market; however, they are listed among the top 10 investors.
In the first half 2015, Dh30 billion has been invested in the realty market by non-Arabs. Currently, the top three expatriate property buyers are Indians, British nationals and Pakistanis.
In 2014, the Chinese are estimated to have invested Dh1.3 billion in the Dubai market
Besides, Chinese companies are increasing participating in Dubai’s commercial life with financial institutions funding of local development projects in the emirate. The Viceroy Dubai Palm Jumeirah hotel, for example, has raised $300 million from Chinese and other international investors.
“For all of its recent ups and downs, Dubai is considered by many Chinese as a relatively safe and attractive destination for their international property investment,” reveals the company report.
The Juwai.com Residential Purchasing Intent Index for Dubai has zoomed by over 1,200 per cent from August 2014 as the combined purchasing intent Index for the five most popular countries with Chinese buyers in the second quarter of 2015 (the US, Australia, the UK, Canada, New Zealand) rose by only 37 per cent.
“We see a picture of rapidly increasing interest in Dubai property, although it will take many more months of growth before Chinese buyers participate in the market in the same numbers as do Middle Eastern and European buyers,” adds Juwai.com.
“When it comes to China and Chinese investors, we've only seen the tip of an iceberg,” Mohammed Hmeid, the Sales and Marketing Director, Omniyat, told Emirates 24|7.
“There are 2.2 billion Chinese who take domestic flights in mainland China, and only 100 million Chinese travel internationally. Look at the impact that the 100 million Chinese investors and tourists had on major cities and the growth potential as more Chines travellers decide to travel overseas.”
Though the company has not revealed the preferred locations for Chinese investors, Taylor believes International City and the area around the Dragon Mart are popular locations.
Though the developer admits that currently it doesn’t have many Chinese investors in its portfolio, they are proactive and going there to meet these investors in Beijing.
Three weeks ago, the company launched Langham Place Downtown Dubai in Burj Khalifa district. Besides, Dubai properties are almost one sixth of the price in Hong Kong but offer nearly four times the yield.
“Why wouldn't they come and invest here? It's the perfect formula,” he asserts.
Local real estate agents told this website that Chinese are also investing in the luxury market segment, picking up properties on the Palm Jumeirah, Downtown Dubai and Business Bay.
Although 60 percent of Juwai.com buy their property in cash, no details are available on the use of financing by them in Dubai.
According to Juwai.com, the purchasing intent index seeks to measure the change in Chinese buyer interest for a given location. It does this by tracking their online property hunting activity on Juwai.com, such as property-focused inquiries, page views, property searches, clicks to reveal agent phone numbers and more. We believe it is an accurate indicator of future transaction trends.