Why rich Chinese investors are making a beeline for Dubai’s realty

With China’s realty market being impacted adversely by over-saturation, low rental yields and high prices over the last few years, affluent Chinese investors are now making a beeline to invest in Dubai’s lucrative property market.

According t a leading website, Chinese investors were the seventh biggest investors in Dubai last year (2015) having invested approx USD 460 mn in the first nine months of 2015. Industry data also reveals that interest shown by Chinese investors in Dubai’s realty market had risen by a whopping 1,200% by August 2015 vis-à-vis the same period in the preceding year.

So what makes the Dubai property market so attractive for rich investors from China? Here’s a look at the 6 key factors that have made this possible.

Higher Yields & Capital Appreciation:
With rental yields in the range of 8-10% for apartments and approx 5-6% for luxury villas, Dubai offers an attractive investment destination for global investors including the Chinese. Annual capital appreciation (for apartments) around 20-30% and approx 15% for villas in Dubai, is the icing on the cake for such prudent investors.

What’s more there is a huge difference in realty prices between Dubai and Hong Kong where the returns stand at a meager 2.82%, adding to the lure of the former.

Huge Chinese expat population:
With business ties between the UAE and China growing, Dubai currently hosts a large number of Chinese residents.  As per current estimates the number stands at approx 230,000, having grown by approx 53% in the last five years alone.

UAE also plays host to an estimated 4,000 Chinese companies that have set up operation’s here to leverage its strategic location and growing commercial clout.

No dearth of opportunities:
As a growing commercial and trade hub of the Middle East, Dubai offers foreign investors a slew of incentives for investing in its realty sector. This includes: reasonable realty prices, investor security, residence visas (for realty purchases above AED1 mn), chance to enjoy a excellent lifestyle, attractive rental & capital yields, tax-free profits and a secure environment for their investments.

Close business partners:
China and Dubai enjoy close business ties with the former being Dubai’s largest trading partner in addition to being its second-biggest  trading partner after India. This has ensured that investments in Dubai’s realty remain a very profitable proposition for Chinese investors regardless of the devaluation of its own currency.


Reasonable realty prices:
With property prices skyrocketing back home especially between April-June last years, Chinese investors have been scouting for more profitable options. With its lower prices, better yields and zero tax status, Dubai has ticked all the right boxes for such investors who are now making some serious investments in its property market.

Realty Expos attracting investors:
The consistent efforts by the UAE government to showcase its realty potential by way of several global exhibitions  and targeted business expos is paying rich dividends in terms of attracting serious foreign investors to its shores.

A case in point is the rise in Chinese investment to the tune of 300% to touch AED 1.3 bn in 2014, as compared to 2012. Dubai has amply reciprocated this faith by showering investors with handsome returns on their realty investments.
  
Clearly Dubai’s property market is proving to be an investment magnet for global investors for its many positive attributes and with the city pulling out all stops to host the World Expo 2020 and further enhance its global appeal, it’s a trend that only likely to be accentuated as we move forward.