The top three real estate investors in Dubai are not Chinese. However, in the last week, newspapers were abuzz with the news of Dubai Property Show returning to Shanghai. Although Dubai has not witnessed a major lift in its property market, somewhere in the world there is a country which is going through troubled times in its own real estate market. It’s all a matter of perspective. We live in exciting times. A good investor understands market fluctuations and holds off from putting all eggs in one basket. Reducing investment risks is a core reason Chinese investors are purchasing property abroad as it is unlikely real estate markets in various countries will crash at the same time.
Chinese investors pumped in up to AED14.3 billion ($3.9 billion) into the Dubai property market to earn better profits on their real estate purchases. The Dubai Land Department’s statistics project that the number of Chinese investors or investments will increase as real estate market in Dubai is expanding with new projects. The high demand by Chinese citizens to invest in Dubai has prompted the DLD to attend the Dubai Property Show twice in Shanghai since 2017. The DLD's attendance aims to provide insight to potential Chinese investors on leading real estate projects that offer high returns on investment in Dubai.
Dubai's real estate market witnessed more than 30,000 transactions worth approximately AED56 billion from close to 23,000 global investors in 2017. Chinese investments currently rank sixth-highest for inbound property investment having been eighth-highest as recently as May last year. Recent policy changes such as granting Chinese nationals visa on arrival in Dubai, as well as the connectivity permitted by direct flights to 13 Chinese cities have increased the emirate’s attractiveness to investors from the country.
An increase in Chinese investors in Dubai is an effect of the strong relations between the UAE and Chinese Government. The bilateral trade between both nations is expected to hit AED213 billion by end of 2018, an increase of 15% from 2017. UAE's Chinese population is approximately 200,000 out of which, nearly three quarters live in Dubai. The Emirate is increasingly becoming a vacation destination with nearly 100 flights from various Chinese cities to Dubai occurring weekly. Furthermore, Chinese citizens are encouraged to invest in Dubai because it offers higher rental yields in comparison to China's real estate sector.
China's rental yields have decreased significantly in several major cities. In the past, Beijing's condominiums offered potential gross rental yields of 9%. Beijing's villas would range from 9.5%-13%. Shanghai apartments would generate 5.4%-7%. Today, Beijing's rental yields have decreased to 2.5%. Shanghai's rental yields dropped to 3.2%. In comparison, Dubai's real estate investors typically generate around 8% profit increase annually. Investing in a foreign real estate market decreases investment risks since the volatility of real estate markets is different in every country.