Looking at an overview of the global real estate market in the past eight years, the strong purchasing power of mainland Chinese investors has led to healthy investment flow into countries, such as the US, Australia, UK and New Zealand; it has also led to an uplift in the Southeast Asian market in the past two years. With the advantages of quality education, medical care and immigration, European and American countries have attracted a large number of Chinese buyers to invest; Southeast Asian countries have attracted Chinese investors due to the convenience of its geography, affordable prices and tourist attractions.
In the last two years, however, we have seen a large number of Chinese investors entering the Dubai real estate market. According to a recent Dubai Land Department (DLD) report, investments by Chinese nationals accounted for Dh1.7 billion in the first three quarters of 2018. This figure makes them the sixth highest nationality investing in the emirate during this period, compared to ranking 15th in 2017.
Dubizzle Property has also identified that Chinese nationals were among the top 20 nationalities searching for properties on the platform in the first three-quarters of 2018.
The number of Chinese expats in Dubai has increased by 53 per cent over the last five years, with around 230,000 Chinese nationals currently living in the emirate and around 4,000 Chinese companies with a presence here.
So, what are the drivers behind this rapid growth in investment by Chinese nationals?
Following the visit of Chinese President Xi Jinping in July 2018, the ties between China and the UAE became even stronger, particularly from a trade, culture, tourism and investment perspective. With the UAE government issuing a number of preferential policies for China, such as listing Chinese as the third major language in more than 100 Dubai schools, and Emaar's plans to develop the Middle East's largest Chinatown in the retail district of Dubai Creek Harbour, Dubai has become a second home for Chinese nationals.
What are Chinese investors interested in?
Chinese investors are interested in both ready and off-plan properties. Location, annual yield and selling prices are the three of the key factors considered when making purchasing decisions.Downtown Dubai, Greens and International City are the three most popular areas for Chinese investors to buy ready properties.
Downtown Dubai
Chinese investors are well-versed in the importance of location. It determines the value and the safety of the investment as property in prime areas of the city not only have room for appreciation, but can also maintain their value during tough market conditions. At present, the average price of resale properties in Downtown Dubai is between Dh1,700 per sqft and Dh2,200 per sqft, which is equivalent to one-fourth to one-sixth of the selling price of Downtown Shanghai, China. For Chinese investors, this price for a fitted flat with a free parking in the heart of Dubai is very cost-effective. The yearly yield in Downtown Dubai is around 6 to 7 per cent, slightly lower than the annual average yearly yield of 8 per cent in Dubai, but because of the above two advantages, Chinese buyers accept this.
The Greens
Most large Chinese companies are located near the Greens, so this area is a popular choice for Chinese investors. The proximity to large enterprises (such as Internet City and Media City), public transport as well as the beautiful community environment, family-friendly facilities and amenities including schools, supermarkets and restaurants, make this area very attractive and highly occupied. The average selling price of the Greens community is between Dh1,200 per sqft and Dh1,500 per sqft. The yearly yield in Greens is around 8 per cent.
International City
Dubai's most famous Chinese gathering area is the International City next to Dragon Mart. Dragon Mart is one of the largest trade centres in Mena, jointly created by the Dubai and Chinese government. It is specially designed for Chinese businessmen to operate trade business here. In addition, many Chinese restaurants, clothing stores and supermarkets have been opened here, which have provided daily necessities for Chinese people living in Dubai. Therefore, business owners and employees working in Dragon Mart, including other Chinese nationals who want to live a convenient life, will choose to buy or rent an apartment here. The average selling price in International City is Dh700 to Dh980 per sqft and the yearly rental yield is around 9 to 10 per cent which ranks No.1 in Dubai. Dubai Creek Harbour, Meydan and Madinat Jumeirah Living are top three areas for Chinese investors to buy off-plan properties.
The writer is a property consultant and team leader, Coldwell Banker UAE. The article also quotes dubizzle Property data. Views expressed are her own and do not reflect the newspaper's policy
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