Experts say the booming Dubai property market continues to attract investors from China, which has been seeking more economic cooperation, trade and foreign direct investment since travel restrictions were lifted.
High yields and political stability are key factors that have triggered a surge in Chinese investment in Dubai, leading to growing demand for luxury real estate.
According to data provided by Juwai IQI, an Asian real estate technology group, the UAE is ranked eighth in the top 10 destinations for Chinese property purchases in the first half of 2023, ahead of Vietnam and Singapore.
The UAE has risen rapidly in the list in recent years.
Kashif Ansari, Co-Founder and Group CEO of Juwai IQI, said, "After being ranked 13th in 2021, the UAE entered the top 10 for the first time in 2022 at 9th place, and is ranked 8th this year."
According to UAE-based NBD Research, the number of Chinese tourists travelling to Dubai in the first half of 2023 increased by almost 300 per cent year-on-year to 260,000, driven by visa-on-arrival facilitation and improved flight connectivity following the lifting of COVID-19 travel restrictions in China. This trend looks set to continue into the second half of the year.
A TrendLens report released in May by luxury consultancy Agility revealed that more than 20 per cent of Chinese millionaires plan to visit the Middle East in the next 12 months, and that these consumers have already amassed the funds to invest in international property.
Even if China's economic growth slows in 2023, it will have more households in the middle and upper income brackets than any other country.
According to Econet, the number of households in the income category (high-income) that can afford to buy international property will increase by 50 per cent by 2025. Logically, the demand for international property in China will also grow proportionally," says Ansari. He added that the number of upper-middle-income and high-income urban households is expected to reach 209 million by 2025.
He continued: "The pandemic has exacerbated the already world-leading savings rate of Chinese consumers. According to official statistics, China's savings deposits jumped by RMB 26.3 trillion (US$3.6 trillion) in the first nine months of 2022 alone."
Overseas, Chinese investors are attracted to real estate investment because it is an easy-to-understand investment category that promises to provide price appreciation and reliable long-term foreign exchange earnings, independent of China's economic cycles.
Ansari points out that Chinese investors with access to readily available funds have an advantage over local buyers in the current period of high interest rates.
Real estate brokers haus & haus have observed a growing interest from Chinese investors in Dubai property developments in recent months. According to Charlie Bannan, director of sales, the company has seen a 75 per cent increase in Chinese buyers this year compared to 2022.
Some Chinese investors are buying properties in bulk, while others prefer to invest in luxury branded homes. This is naturally driving demand and growth in the market. Property types vary, but up-and-coming areas like Dubai Creek are receiving a lot of attention from Chinese investors.
Bannan says the price bracket varies greatly and many Chinese buyers are snapping up properties in areas such as Dubai Creek in large numbers.
Their preferred method of payment is cash and they are buying in consortiums, adopting a strategy of buying and getting rental income, he added.
Fadi Moussalli, executive director of international capital coverage at JLL International, a global real estate services company, said, "Now that China has abandoned its zero mark-up policy, we can expect more Chinese nationals to invest in the country's residential property sector."
However, investments will remain moderate and will be more focused on value-based, i.e. cash-driven, sectors. Investment by Chinese nationals in the UAE is a diversification play and does not usually rely on bank mortgage financing.
According to JLL, in the residential sector, the majority of Chinese buyers can be considered value investors, mostly interested in mid-market properties. However, demand for luxury properties from China's ultra-high-net-worth individuals has remained high.
Dubai-based real estate brokerage Allsopp & Allsopp noted that sales to Chinese nationals surged 130 per cent in the first half of this year, with cash purchases accounting for 78 per cent of transactions.
The emirate's residential market also saw a rise in sales of luxury flats in the first half of 2023 as demand increased from Russian investors and recently returned Chinese buyers.
These investments led to significant price increases of between 8 and 10 per cent for premium flats with water views in Downtown Dubai, Bluewaters and Dubai Marina.
Faline Huang, chief financial officer of Allsopp & Allsopp, wrote in a report: "Chinese often use cash for property transactions. They have accumulated enough wealth before moving overseas to invest, so they can pay full cash and enjoy the most convenient transaction process."
During its Q2 2023 conference call, Emaar also reported strong property demand, which it attributed to better participation from Chinese and Saudis. Data shared by the master developer further revealed that Chinese investment has historically peaked at 13-14 per cent of total sales, 4 per cent in 2022 and 8 per cent this year.
Additionally, government initiatives such as golden visas and company ownership reforms have proved the effectiveness of capital migration to the UAE.
