Chinese investors are casting their sights on Dubai.
Not only are they hunting for properties in the world’s biggest cities, they’re also moving beyond traditional hot spots for bargains and higher returns. Chinese buyers are zoning in on Dubai, considered a relatively safe and attractive destination for international property investment, an emerging market for higher yields, lower prices and higher capital appreciation. Rental yields in Dubai stand at around 7 to 8 per cent, are backed by strong, stable expatriate demand and are expected to rise as we approach the Expo 2020 event.
China’s property market seems to be losing its appeal given its low rental yields, stock market downturn and low interest rate. Property prices in Shenzhen, China, have risen drastically, up over 50 percent from a year earlier. Hence, Chinese investors are facing a lack of opportunity for property investment in their own marketplace. High prices and low capital gains, paves the way for them to consider Dubai a rewarding overseas destination to diversify their portfolios. Expats comprise close to 80 percent of Dubai’s population. This in addition to the fact that there is an increasing number of Chinese companies setting up offices in Dubai, therefore, boosting the rental demand.
According to recent estimates, Chinese were the seventh biggest property investors in Dubai in 2015, investing over $460 million in the first nine months of the year, compared with $354 million in 2013. In 2014, the Chinese are estimated to have invested over AED 1 billion in Dubai property.
Dubai master developer Nakheel revealed that China buyers purchased 70 percent of its 600 townhouses at Warsan Villa, a development close to the Dragon City mall. Many Chinese investors are also buying land which they look to develop for leasing purposes given the high rental yields that one can achieve from Dubai property. Seeing the opportunity afforded by Chinese investors, Damac Properties recently announced a collaboration with a Chinese property broker to promote its 37,000 properties in the mainland. Furthermore, The Viceroy Dubai Palm Jumeirah Hotel, recently raised $300 million from Chinese and other international investors.
A leading Chinese property portal, Juwai.com, which helps Chinese people buy real estate abroad, revealed a huge 1,200 per cent rise in buyer interest for Dubai property. This should not come as a surprise if we consider the fact that over 300,000 Chinese now visit Dubai each year as tourists – a gateway to initiating property investment in the emirate.