According to the most recent market data, Chinese investors have returned to Dubai’s real estate market with a fury, registering a startling 130 percent increase in residential property investments in the city in the first half of 2023 compared to the post-Covid period.
The increase is viewed as a classic example of China’s loss becoming Dubai’s gain because it coincides with an estimated 27 percent drop in apartment sales in the country of the Far East, which is much lower than expected given the country’s urbanization trends and the high demand for improved housing, according to industry insiders. This is because China’s economy grew at a slower rate of 3 percent in Q2, 2023, compared to the same quarter the previous year.
In contrast to their preference for smaller studio and one-bedroom apartments in the pre-pandemic period when they were the leading foreign investors in the emirate, the Chinese investors are now investing in spacious housing units in prestigious neighborhoods like Downtown Dubai and Jumeirah Golf Estates, which has seen a substantial increase in average property prices recently.
Cash is now king for Chinese investors
Intriguingly, the survey also highlighted the trend of Chinese investors choosing cash payments over other forms of payment when purchasing real estate in Dubai, with as many as 78 percent of Chinese purchasers presently choosing this option.
“Chinese [investors] transact with cash frequently for property deals. They seem to have accumulated enough wealth before moving for overseas investment, so they can pay full cash to enjoy the easiest transaction process,” Faline Huang, Chief Financial Officer of Allsopp & Allsopp, told Arabian Business.
Early in 2023, travel restrictions on Chinese citizens were relaxed, reopening the Dubai real estate market to Chinese investors. According to the Allsopp & Allsopp H1 2023 report, this signaled a turning point for Dubai’s real estate market, which saw the largest number of sales transactions and total sales value in the city’s history in Q2 2023.
Chinese staging a forceful comeback to reclaim their pre-pandemic position
According to industry sources, Chinese investors have continuously been among the top foreign nationals investing in the Dubai real estate market in the years before to the outbreak of the Covid-19 pandemic, particularly in 2019.
But as the virus spread and travel restrictions followed, Chinese investment in Dubai real estate decreased. The hole was immediately filled by a surge of Russian buyers as a result of the developing tensions in Ukraine.
Russian nationals became Dubai’s top real estate buyers by the end of 2022.
“Despite the slower Chinese economic growth – and the attendant fall in apartment sales in that country – real estate investment numbers in H1 in Dubai reflect the completely opposite result when analyzing Chinese buying behavior since they made a comeback on the real estate charts this year,” Allsopp & Allsopp said.
“Foreign overseas investment will continue to pour into the Dubai real estate market – especially off-plan sales, with China increasing buyer activity and set to rival Russian investment levels by the end of the year,” Lewis Allsopp, the firm’s CEO, told Arabian Business.
In addition, he anticipates further growth in the city’s premium real estate market, with mega-villas and branded luxury complexes hitting new sales records, helped by the growing Chinese predilection for larger housing units in Dubai’s upscale neighborhoods.
“Demand for established residential villa and townhouse communities and premium water-facing apartments will continue to increase [in the second half of 2023] in line with H1 trends,” Allsopp said.
Huang backed up the CEO’s projections, claiming that the UAE and China’s positive and expanding connection will contribute to the growth of Chinese investment in Dubai’s real estate market in the future.
“UAE and China governments have tight relationships and very strong bilateral trade ties. Dubai’s commercial-friendly environment attracts Chinese investment as a low-tax and safe emirate, providing a comparably desirable yield on investments,” she said.
Post Courtesy: Arabian Business