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Chinese investors are heading back to Dubai as one of the world’s most exclusive markets continues to heal since the pandemic outbreak.
Dubai’s residential market ended 2021 on a high, recording 84,196 transactions worth AED300 billion, the highest ever recorded, according to official Dubai Land Department statistics.
It carried the momentum into this year, with residential market transactions reaching 6,342 in April 2022, up 43% from a year earlier, according to the latest data released by CBRE.
“Dubai has always been a great option as one of the most popular destinations for investing overseas. This year we had transactions for whole buildings and floors which were purchased by renowned Chinese investment groups and individuals,” said Saad Haq, Group CEO of H&S Real Estate.
Kashif Ansari, co-founder and CEO of Juwai IQI Group, also spoke of ongoing corporate and institutional Chinese investment in the Emirates. “Look at ByteDance’s investment in iMile Delivery LLC and Jinsha Holding Group’s pledge to invest $2 billion in real estate, among other sectors.”
While traditionally more interested in the US property market, Chinese investors have recently reignited their keen interest in Dubai property.
Chinese investment in UAE property dipped during and after the pandemic but has been bouncing back, according to industry experts. From a high of AED3.97 billion pumped in during 2019, following strong investment of AED1.7 billion in the first nine months of 2018 alone, China’s love affair with Dubai property stalled in the wake of the global lockdown.
The country ranked as one of the top four foreign investors in the market, and data from Juwai IQI suggest that the Chinese demand for UAE properties has been returning since the second quarter of 2021. This, according to Ansari, “denotes a reservoir of Chinese demand for property in Dubai.”
“Dubai today is much more affordable than at the peak in 2014,” he said, adding that Dubai units are larger, amenities more abundant and prices lower than in China. “You can live with resort-like comfort for less than you would pay to live in a normal apartment in a Tier One Chinese city.”
Driving Factors
With many Chinese companies establishing permanent offices in Dubai and elsewhere in the UAE, residential property as an asset has grown in popularity.
H&S Real Estate CEO Saad Haq agrees. He believes geopolitics, COVID-19 and the UAE visa scheme have all contributed to renewed interest: “The world saw that even during the worldwide lockdown, the UAE became the most vaccinated nation within a few months.”
“A third of the investors who have purchased in Dubai over the past five to seven years have come back looking to invest more,” Haq said, citing happy customers as the reason why Dubai continues to draw further investment from China.
China’s Belt and Road Initiative and the strategic ties between the two countries may also be working in the UAE’s favour, experts believe. “Investors looking for attractive opportunities in the post-pandemic world choose Dubai, which has become an idyllic haven for the wealthy,” Ansari said.
Range of Properties
“Chinese investors are zeroing in on the kind of properties that fit both their desire for a second home and a good investment,” he added.
Investors are looking at apartments for self-use and villas and townhouses for investment. Luxury branded apartments are in demand. As for villas, Haq has received more inquiries for mansions and bigger villas. “High-end luxury properties are the trend since 2021, especially for the new generation, who want a better and more luxurious lifestyle,” he added.
In terms of locations, downtown Dubai has always been a favourite with the Chinese, but demand has grown for apartments at Emaar Creek Harbour, Business Bay and communities like Maydan and Dubai Hills.
Outlook
“Sales to Chinese investors are climbing due to the improving prospects of the Dubai real-estate market, which Chinese investors would like to take advantage of,” Ansari noted. “We expect both transaction volume and value to increase in 2022 compared to last year. The trend will gather steam and sustain itself through 2025 at least.”
“The data shows that 2021 transaction volume was 59% higher than in 2020, and the value was 88% higher,” he added.
Property Market Rebounds
Average property prices rose by 11% in the year to April 2022, but properties are still cheaper than at the 2014 peak. In March 2022, average apartment prices in Dubai stood at AED1,097 per square foot and average villa prices stood at AED1,291 per square foot, according to CBRE data, which noted that these rates are 26.3% and 10.6% below the peak in 2014 for apartments and villas, respectively.
“Despite growing concerns around the global macroeconomic backdrop, namely higher financing costs and high rates of inflation, activity in Dubai’s residential market continues to remain at historic highs,” said Taimur Khan, Head of Research for the MENA region at CBRE.
(Writing by S A Kader; editing by Seban Scaria)
