The China Effect — by Abdullah Al Ajaji

Over the course of 18 months, Chinese investors pumped AED 3.1 billion into the Dubai real estate sector through the first half of 2017. Based on Driven Properties’ forecast, new investors will be investing well over AED 5 billion in 2018 alone.

Over the years, the Chinese have become synonymous with international property investing, and over the next three years the focus will be on Dubai. For more, read our article about the price trends to buy in Dubai.

In fact, China is the number one trade partner of the UAE. Currently, there are 4,200 Chinese firms based in the UAE, and the Chinese already represent around 10% of Dubai’s population — up from 2% in 2006. This is a staggering number that tends to be overlooked.

One of the most promising global initiatives is the “One Belt, One Road” plan which aims to connect China with 69 other countries through several trade and infrastructure programs. Combined, these nations represent 60% of the world’s population, and 40% of the world’s GDP.

The “One Belt, One Road” initiative and the visa-on-arrival option for Chinese tourists visiting the UAE have significantly improved the sentiment of the Chinese towards this growing market here in the UAE.

Chinese tourists have shortlisted Dubai as a favourite, and now investors are following suit…The Chinese have a history of changing markets, and in the case of Canada and Australia, that was the main catalyst for growth in both property markets.

Looking at the growth of Chinese visitors, Dubai has registered a 41% increase in 2017, an astonishing figure by all measures, with 120,000 Chinese visitors to Dubai during the Chinese New Year last February.

Taking a look at real estate, Chinese investors spent over $497 billion in the period between 2008 – 2016 in global real estate, with Canada, the United States, United Kingdom, Thailand, and Australia being the obvious winners. In 2016 alone, Chinese investors pumped $101 billion in global real estate.

I suppose this figure is telling when you look at the entire eight-year period. In certain parts of Canada — certainly in Vancouver, real estate prices rose by nearly 100% between 2012 and 2017, thanks to these Far East investors.

Just by looking at these figures, you can immediately get a feel of what’s coming to Dubai — the trend is your friend. Chinese tourists have shortlisted Dubai as a favourite, and now investors are following suit. For more, read our article Opportunity Knocks for Investors: UAE Rental Yields Hold Strong.

With the momentum we are witnessing, anything can happen. The Chinese have a history of changing markets, and in the case of Canada and Australia, that was the main catalyst for growth in both property markets.

We ran a regression in-house and looked at the trend over the past eight years, and based on the correlation year-over-year for the year 2018 we arrived at a figure that significantly surpasses AED 5 billion.

Looking on a micro-level view, Driven Properties has engaged with several partners in Beijing, Shanghai, Shenzhen, and Guangzhou since October of last year — a direct result of four years of relationship building with Chinese partners. Since then, our agency has sold over 200 apartments and villas to Chinese investors through partnerships with key developers such as MAG Group and SRG.

For two projects in Business Bay, MAG 318 and Marquise Square Tower, more than AED 250 million worth of property was sold to Chinese investors in the past six months, and this is only for two projects. The obvious next step was for us to open an office in Beijing, which opened its doors in February of this year, and we plan to open two more offices in Shanghai and Shenzhen throughout the year with channel partners.

The message is loud and clear. China is the next big thing.

 

 

By Abdullah Al Ajaji

Founder and Managing Director, Driven Properties

 

 

 

 

This article was originally published in Property Finder Trends, Vol 4. Click here to read the full report online or download the PDF. 

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