'New wave' of Chinese investors set to return to Dubai property market

Latest: Meet the new Chinese arrivals looking to call UAE home

Chinese buyers look set to reclaim their spot on the UAE’s list of top property purchasers this year after they slipped out of the rankings during the Covid pandemic.

Driven Properties, a Dubai-based company with offices in China, said investments were starting to pick up.

The company handled more than Dh64 million in Dubai property sales to Chinese buyers so far this month and said this barely “scratched the surface” of transactions expected.

Tour groups from China will resume from February with the UAE included in a pilot list of 20 countries.

China’s Ministry of Culture and Tourism has announced that Chinese travel agencies could begin outbound tours to countries including the UAE, Sri Lanka, the Philippines, Singapore, Egypt, South Africa, Russia, New Zealand and Argentina.

In 2018, the Chinese were among the top four foreign nationalities who invested in Dubai property, alongside Indians, Britons and Pakistanis, according to Dubai Land Department data.

The pandemic and Ukraine war, however, have altered the current pecking order.

There will be even more interest now with the new visa reforms. This is initially what attracted Chinese investors in the first place

Abdullah Alajaji, Driven Properties

Russian buyers held the top spot in 2022, followed by buyers from the UK, India, Germany and France, according to the latest figures.

“There are obvious absentees from the recent list, the Chinese, and we have seen signs that the Chinese are coming back,” Abdullah Alajaji, chief executive of Driven Properties, told The National.

The company has offices in Beijing and Shenzhen and will increase the number of seminars across China and tours to the UAE for prospective buyers.

This comes after China ended Covid-19 quarantine rules earlier this month.

“We are positive about Chinese investments coming back and that is what is giving me hope that the 2023 market will still be strong,” he said.

“We believe that China is the new Russia.

“By far the largest group of investors now are Russians and buyers from Europe.

“But the trend we are seeing, and this is data only of the last two months, is that we will see Chinese investors come in.

“It will create a balance in the market because Russian liquidity will wane at some point.”

Scratching the surface

The Dubai Land Department had announced plans to increase promotional activity in China a year before the pandemic shut national borders.

Investments from China were put on hold as strict quarantine rules prevented travellers from visiting the UAE to inspect properties.

“The transaction volumes we were used to seeing, the hundreds and thousands of Chinese buyers were just not in the market then,” Mr Alajaji said.

“Come January 2023, we are just starting to scratch the surface.

“We are seeing increased momentum, a four-fold increase and this is only our own company data.”

Driven Properties' value of transactions by Chinese buyers so far this month is more than Dh64million, compared to Dh16 million in January 2022.

The total sales handled by Mr Alajaji's company from Chinese buyers between 2017 and 2019 stood at Dh1.15 billion.

The Chinese team in the Shenzhen office of Driven Properties, a real estate company in Dubai that forecasts a surge in Chinese investors purchasing property in Dubai. File photo from 2018.

“That gives us a glimpse of hope of what is coming,” he said.

“What we are doing now is programmes in China aimed at reactivating this market.

“There will be even more interest now with the new visa reforms. This is initially what attracted Chinese investors in the first place.”

Dubai attracted investors from China following the introduction of short-term UAE residency visas that came with Dh2million property investments in 2018.

A range of long-term residency options have since opened up with golden, entrepreneurship, retirement visas and expatriates allowed 100 per cent ownership of businesses.

Most sought-after Dubai areas

Buyers from China typically select studio apartments.

The popular areas include Dubai Downtown, City Walk and Business Bay.

Apartments in City Walk, Dubai are sought after among Chinese investors. Antonie Robertson / The National

“It’s interesting to see the difference in terms of different demographics,” Mr Alajaji said.

“For the Russians, about 80 per cent of their purchases were on the waterfront.

“For the Chinese, the vast majority, about 80 per cent would be studios.”

Chinese investors moving to Dubai?

Chinese buyers who bought apartments before the pandemic have not sold their properties and remain invested in the market.

“I do expect a lot of Chinese migration into Dubai and mainly due to the fact that they have been stuck for years in China and mobility became a luxury,” Mr Alajaji said.

“Also, we are not seeing properties being sold by people that were bought previously.

“Instead we are seeing buyers ask for upgrades so they want to swap a studio for a two-bedroom before handover.

“This may be because they intend to stay longer or come on longer vacations or maybe potentially move here.

“Do we see this translating from being investments transitioning to holiday homes to permanent homes? We can validate this over the next few months.

“I don’t see why the Chinese will not be the new wave.”

High interest rates

Housing markets globally that performed well during the pandemic have been hit due to rising interest rates, although the impact has not yet been felt in the UAE.

As Chinese investors typically do not take on mortgages, Mr Alajaji expects the UAE market to remain strong.

APARTMENT PRICES BY CBRE: Jumeirah: Dh2,324 per square foot — up 0.6 per cent in December, up 3.7 per cent in November, up 3.3 per cent in October, up 0.2 per cent in September, up 3.4 per cent in August, up 0.1 per cent in July, up 1.8 per cent in June, up 3.6 per cent in May, up 3.5 per cent in April. The National

“We are seeing almost all real estate markets struggle at the moment.

“If you look at mature markets like London and Paris, bigger pockets in the US like New York, Los Angeles and Houston, the majority of transactions, over 70 per cent, are mortgage purchases. In Dubai it’s the reverse,” he said.

“The worry of rising interest rates is a ticking bomb where people with mortgages would find it difficult to pay their interest and their principal.

“Among the Chinese, I can count on my two hands the number of Chinese investors that elected to take a mortgage towards their final payment.

“Way over 90 per cent is cash purchases that have no mortgages assigned.”

Luxury properties

During the pandemic, Chinese investors who lived in other countries bought second homes in Dubai’s luxury communities.

The firm handled about 30 transactions in nearly three-year period in the $10 million-plus category.

Dubai property prices: where they rose and fell in December 2022

“We have seen an emergence of ultra-high-net Chinese people who don’t live in China.

“They migrated a long time ago and live in Cambodia, Hong Kong or the Philippines and they made purchases of large villas in Emirates Hills and Al Barari during the Covid years.

“A lot of it was due to the gains made in crypto at the time but that was value focused not volume focused.

“These were not the mainland Chinese buyers we are used to, but a new category of buyers that have come in.”

Updated: January 31, 2023, 8:18 AM