One of the best things that can happen to the market is Chinese investors. This category of customers stands out for their willingness to invest large amounts of money and, most importantly, to do so in a structured and strategic way. In most cases, Chinese investments are made for the long term and are rarely marked by speculation and irregularity. Today, this kind of investment is returning to Dubai, after more than two years since the start of the COVID-19 pandemic.
- The situation in the UAE real estate market
- Chinese Investors: attractiveness factors and preferences
- Review and forecast
In 2021, abundant growth in the UAE real estate market was marked by a record number of real estate transactions. This is about 84,196 transactions that brought a total of more than $81.67 billion. And 2022 only maintained the current momentum of development and continued to break records month after month. So, in April of this year, 6,342 transactions for the sale of real estate were recorded on the market. It provided an increase of 43% year-on-year by April 2021.
However, the local market shows positive trends not only through a better situation within the country. For example, since the beginning of the Russian-Ukrainian conflict, Russia, as well as some of its most wealthy representatives, have come under the sanctions of Western countries. They began immediately to withdraw their funds from the territory of the country and from accounts in Switzerland, Great Britain (London), and the USA (New York).
The United Arab Emirates has become one of the key migration destinations. The UAE reported that in just a few months since February 2022, Russians have moved from seventh to fifth place in the top nationality-buyers of real estate. The number of purchases grew by 67% in annual terms in the first quarter.
And now that the situation has calmed and the huge influx of Russian people into the market has greatly decreased, a new wave of migration from the east has arrived: Chinese investors. It is about extremely wealthy buyers, both individuals and companies, who have begun to buy not only individual units, but also entire residential complexes throughout Dubai.
Those who have not yet started to acquire houses in the local market have already announced their intentions to do so. Thus, the Chinese Jinsha Holding Group, together with Royal Strategic Partners, announced their intention to invest $2 billion in the UAE economy, including the real estate market, before the end of this year.
It is already clear that the local market will experience an unprecedented level of investment growth from Chinese citizens. For comparison, in 2019, Chinese people invested about $1.06 billion in real estate in the UAE. A year earlier, this indicator was $463 million.
From the start of the pandemic and until about the second quarter of 2021, Chinese citizens did not want and were unable to return to the UAE real estate market. However, since then, the return has only been gaining steam. Currently, according to Juwai IQI, China is one of the four main foreign investors in the United Arab Emirates.
One of the reasons for the region’s growing popularity is its comparative affordability, for example, in comparison to London, New York, and Singapore. But there are also a number of other drivers of demand growth among Chinese investors.
A large number of Chinese companies have already established permanent offices in Dubai and other parts of the country. Real estate and IT are among the key investment assets.
According to market experts, the new, increased interest from China is caused by several factors at once, including the geopolitical situation, the weakening of the coronavirus pandemic, and reforms in the sphere of issuing long-term investment residence visas. Dubai's ability to retain buyers is another reason for Chinese investors to return According to some reports, about a third of the investors who entered the market during the past five years have repeatedly come back to the market.
The UAE is also a part of the Belt and Road Initiative (formerly known as One Belt One Road ). So, the flow of Chinese money into one of the key commercial and trade hubs of the Middle East region is a direct result of your consistent and disciplined events.
Both buy-to-live second houses and buy-to-invest properties hold an important place in the preferences of Chinese buyers. Elite and branded apartments are usually purchased for personal preferences, while villas and townhouses are used for investment. In the case of buy-to-invest options, it refers to large villas and mansions. , Most Chinese purchasers tend towards Downtown Dubai, Emaar Creek Harbour, Business Bay, Meydan, and Dubai Hills from the geographical point of view.
The growth in real estate sales of all types to Chinese citizens will continue to rise until at least 2025. By that time, demand will cool down and become stable. Currently, investment grows by a few tens of percent per year. Thus, from 2020 to 2021, the increase in sales and their value amounted to 59% and 88%, respectively.
By April, at the end of the first quarter of 2022, average property prices in Dubai rose by 11% in annual terms, but they still did not overcome the levels of 2014. At the beginning of this year, it was not predicted that the second quarter rates would overcome the 8-year-old records. But things have changed a lot since then, so we need to wait for the details.
According to CBRE, apartment prices were only 26.3% and villa prices were only 10.6% lower than their peaks at the beginning of April. According to the company, Dubai remains an island of stability for many analysts and investors despite growing fears due to global macroeconomic problems such as inflation or possible price bubbles, including in real estate markets.