New Wave of Chinese Investors Is Likely To Return To Dubai Property Market

Chinese Investors

They Are Set To Resume Their Place On The UAE’s List Of Top Property Buyers Once The Covid-19 Border Restrictions Are Lifted.

Following their fall from prominence during the Covid pandemic, Chinese buyers appear poised to recover their place atop the UAE’s list of top buyers of real estate this year. The Dubai-based company Driven Properties, which also has offices in China, claimed that investments were beginning to increase. This month, the company has sold more than Dh64 million worth of Dubai real estate to Chinese buyers, but this amount has only “scratched the surface” of what is anticipated.

From February, tour groups from China will resume, and a pilot list of 20 countries will include the UAE. Chinese travel agencies, according to the Ministry of Culture and Tourism of China, may now visit the UAE, Sri Lanka, the Philippines, Singapore, Egypt, South Africa, Russia, New Zealand, and other nations.

Chinese investors were among the top four foreign nationalities in Dubai property purchases in 2018, along with Indians, Britons, and Pakistanis, according to data from the Dubai Land Department. However, the pandemic and the conflict in Ukraine have changed the status quo. According to the most recent statistics, Russian buyers held the top rank in 2022, followed by customers from the UK, India, Germany, and France.

According to Abdullah Alajaji, chief executive of Driven Properties, “there are obvious absentees from the recent list, the Chinese, and we have seen signs that the Chinese are coming back.” The business has offices in Beijing and Shenzhen and will expand the number of seminars it holds across China and buyer-friendly tours to the UAE.

China has earlier this month lifted its Covid-19 quarantine regulations. He stated, “We are optimistic about the return of Chinese investments, and that is what is giving me hope that the market will still be strong in 2023. China, in our opinion, is the new Russia. Russians and European buyers currently make up the vast majority of investors. “However, the pattern we are observing, and this is data only from the last two months, is that we will see Chinese investors come in. “It will establish a balance in the market since Russian liquidity will eventually diminish,” the analyst continued.

Scratching the Surface

A year before the pandemic closed down international borders, the Dubai Land Department made plans to increase promotional activity in China. Due to tight quarantine regulations, Chinese investors had to postpone their plans to inspect homes in the UAE. According to Mr. Alajaji, “the transaction volumes we were used to seeing, the hundreds of thousands of Chinese buyers simply weren’t in the market then.”

We will only be scratching the surface by January 2023. Compared to last year, our momentum has increased fourfold, and these are just internal company numbers. Chinese purchasers have transacted for more than Dh64 million at Driven Properties so far this month, compared to Dh16 million in January 2022. Between 2017 and 2019, Mr. Alajaji’s business handled Dh1.15 billion worth of sales from Chinese clients.

That provides us with a preview of what is to come, he said. There will be even more interest now that new visa reforms have been implemented, according to the programs we are currently running in China to reactivate this market. Initially this draw drew in Chinese investors. Following the introduction of temporary residency visas for the UAE that came with Dh2 million in real estate investments in 2018, Dubai attracted Chinese investors. Since then, a variety of long-term residency options has become available. Including golden, entrepreneurship, retirement, and visas that allow expatriates to own 100% of their businesses.

Most Sought-After Dubai Areas

Chinese buyers often prefer studio apartments. Dubai Downtown, City Walk, and Business Bay are a few of the well-liked neighborhoods. Mr. Alajaji stated, “It’s interesting to see the difference in terms of different demographics.” “Around 80% of Russian purchases were made along the waterfront. For the Chinese, studios would make up the vast majority (about 80%).

Chinese Investors Moving To Dubai?

Prior to the pandemic, Chinese buyers who purchased apartments have kept their investments in the market and have not sold their homes. According to Mr. Alajaji, “I do anticipate a significant influx of Chinese migrants into Dubai, primarily. Because they have been trapped in China for years and mobility has become a luxury.”

Additionally, we do not see people selling the homes they previously purchased. Instead, buyers are requesting upgrades. Requesting to switch from a studio to a two-bedroom before handover. “This may be because they intend to stay longer, come on longer vacations, or maybe even move here.” Do we anticipate this changing from being investments to becoming vacation homes to becoming permanent homes? Over the coming months, we can confirm this. “I fail to understand why the Chinese won’t represent the new wave.”

High Interest Rates

Although the effects have not yet been felt in the UAE. Rising interest rates have hurt housing markets around the world that did well during the pandemic. Mr. Alajaji anticipates continued growth for the UAE market because Chinese investors typically do not take on mortgages. Almost all real estate markets are currently struggling. As evidenced by the fact that more than 70% of transactions in developed markets like London and Paris and larger regions of the US like New York, Los Angeles, and Houston are mortgage purchases.

The opposite is true in Dubai, he claimed. “The fear of rising interest rates is a ticking time bomb. Because homeowners would struggle to pay both their principle and interest on their mortgages. The number of Chinese investors who chose to take out a mortgage as part of their final payment. I can count on my two hands. The majority — well over 90% — are cash transactions without a mortgage attached.

Luxury Properties

Chinese investors who resided abroad purchased second homes in Dubai’s opulent neighborhoods during the pandemic. In almost three years, the company handled 30 transactions with a $10 million or more value. “Ultra-high net worth Chinese people who don’t reside in China have emerged,”

They moved long ago and now reside in Cambodia, Hong Kong, or the Philippines. During the Covid years, they made large villa purchases in Emirates Hills and Al Barari.

The gains made in cryptocurrencies at the time contributed significantly. But they were value-focused rather than volume-focused. These were not the mainland Chinese buyers that we are accustomed to, but rather a new group of buyers.

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