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Will Dubai Creek Harbour be the Next Chinatown in the Middle East?

It seems that the stars are aligned for Chinese investors aiming to foray into the UAE real estate market with the government’s new favourable policies in place. Based on the 2018 report of the Dubai Land Department (DLD), the investment of Chinese nationals in Dubai accounted for a whopping AED 1.7 billion of the total transactions in the first nine months of the year. Statistics also revealed that Chinese investors landed on the list of the top four foreign nationalities who invested in Dubai, which clearly indicates a soaring interest in the region’s real estate market.

A New, More Attractive Visa Policy

What’s more, the government’s latest policy decision of offering long-term visas to property owners has paved the way to make investing a more alluring venture, especially for those who plan to stay in the UAE for more than five years. Particularly, this new directive is seen to incentivise more investment in key communities that were previously not within the reach of several residents. This year, this trend is anticipated to continue with the influx of more local and foreign end users investing mainly in the off-plan property market.

While the interest in secondary property in major areas is increasing, the primary market is expected to gain traction for the highly anticipated Expo 2020. Inexpensive units are eyed to make up a huge part of off-plan developments in contrast with high-end luxury, and quality will continuously be a focus for those planning to purchase. Moreover, increased attraction from foreign investors specifically Chinese nationals, is highly anticipated.

Statistics show that the number of Chinese expatriates in Dubai has skyrocketed by 53 percent over the last five years, with approximately 230,000 Chinese nationals currently living in the emirate and roughly 4,000 Chinese firms operating here. Another factor that paved the way for the strong ties between China and the UAE was the visit or Chinese President Xi Jinping in the country in July last year.

Factors at Play on the Rise of Chinese Investment in the UAE

The UAE government’s launch of preferential policies for China, such as listing Chinese as the third major language in over 100 schools in Dubai makes the emirate a more attractive investment destination for Chinese nationals.

A number of other economic factors such as the depreciation of the Chinese yuan, the current trend of the stock and real estate markets in China, and the benefits of the Dubai real estate market, which include affordability; tax-free investments; high rental yields; availability of investor’s visa and mortgage for non-residence visa holders; and freehold ownership will also propel Chinese investment into the UAE in 2020.

In terms of affordability of property prices, investing in Dubai is considered a more lucrative option versus investing in major cities in China such as Shanghai and Beijing. In Downtown Shanghai, property prices are approximately AED 4000 to AED 6000 per sq. ft. compared to Dubai’s range between AED 1600 and AED 2000 per sq. ft. on a similar investment opportunity. This offers investors a chance to obtain higher return on investment (ROI).

Meanwhile, when it comes to the flexibility of payment terms, Dubai provides investors with the option to pay instalments over a certain period of time than paying the full amount upfront. This prompts a number of investors to set their sights on the region’s off-plan property market rather than on ready properties, as there is no need to fret about taking out a mortgage and payments can be made over a period of what is offered by the developer.

The ongoing trade war between the US and China as well as the US State Department’s announcement to halt the acceptance of applications for the EB-1 visa from Chinese nationals have also sparked a decision among investors to divert focus into Dubai. As the financial centre of the Middle East, it boasts a strategic geographical location between Europe and the Far East, as well as daily direct inbound flights from China.

Speaking in an interview with CNN, Stephen Yuen, chairman of Hong Kong-based Affluent Partners Holdings Limited, highlighted that more Chinese investors are diverting to Dubai not only for residences, but also for offices and other investments. He also cited the city’s attractive yields and political stability as two of the key criteria that investors are searching for.

In December last year, Emaar started business development operations in China in efforts to promote Dubai as a leading investment destination and to bolster tourism from Asia’s biggest economy. The Dubai-based real estate giant revealed that it started the design and fit-out of two offices in Shanghai and Beijing, which consist of a team recruited from China. The two showrooms will reportedly be used as a platform to exhibit the UAE as an investment destination, with a prime highlight on property, healthcare, and educational opportunities.

Dubai Creek Harbour—Soon to be the Largest Chinatown in the Middle East

To honour Chinese expats in the UAE, Emaar also announced plans to build the largest Chinatown at Dubai Creek Harbour. The development, which is the company’s latest mega-project spanning six-square kilometres, will feature a host of world-class leisure developments, commercial districts, parks, residential neighbourhoods, and the iconic Dubai Creek Tower, which is set to break the record for being the tallest tower in the emirate. Other vibrant lifestyle elements soon to become a common sight in the destination include cycle paths, pedestrian walkways, landscaped promenades, canals, a museum and cultural facilities, and a marina.

Strategically located 10 minutes from Burj Khalifa and the Dubai International Airport, Dubai Creek Harbour will also boast luxurious waterfront living, breathtaking views of the city’s skyline, and the Ras Al Khor Wildlife Sanctuary which is home to more than 450 migratory birds and animal species.

What’s Next for Dubai and Chinese Real Estate Investors?

This year, Dubai targets to attract more than AED 1 billion Chinese real estate investments and to enable several UAE-based developers to expand operations to China. With a number of breakthroughs happening in the sector, the investment of Chinese nationals in the region’s property market is anticipated to increase followed by an economic boost.

Stephanie

Stephanie Liu

Senior Investment Advisor

Stephanie Liu