By Shane McGinley
Group sees big business opportunities in property and export trading.
A group of Chinese investors are due to arrive in Dubai next month with the aim of taking advantage of distressed properties currently available in the market, according to media reports posted on the Chinese Ministry of Commerce official website.
The group of twenty investors from the Zhejiang province in eastern China plan to make the trip towards the end of February.
"When they learned of such an opportunity to visit Dubai, more than twenty members expressed an interest in joining the visiting group," Zhou Dewen, head of the Wenzhou SME (small and medium-sized enterprises) Business Development and Promotion Association, told the English-language China Daily newspaper.
"Although the economy there has not revived yet, we believe big business opportunities exist not only in property, but also in export trading," he added.
Investors from Wenzhou were hit by the downturn in their local property market and Zhou estimates that the group may have lost up to $7.4bn on their investments in the region.
It is for this reason that they are now looking overseas and Dubai is one of the locations on their radar.
The region already has a direct property link to the emirate. Around 150,000 Chinese expatriates live in Dubai and the report says around 20,000 of them are from the Wenzhou region.
Zhou says Wenzhou investors living in Dubai have already spent nearly $750m on property. While they have lost nearly $150m in the price slump, which has seen prices drop by 60 percent from the peak, he says that it is small compared to what they have potentially earned overall.
A Wenzhou buyer is also reported to have invested $28m in an island on The World, a project being developed by Nakheel.
This week, Arabian Business reported how the Palm Jumeirah had witnessed its first property repossession, resulting in a local Dubai bank selling an apartment for just AED745 per square foot – nearly 35 percent below the current market rate.
Prices in the emirate were this week forecast by UBS to fall another 30 percent from current levels as the bank believes there could be up to 150,000 units lying empty due to the oversupply in the market.
"We reiterate our view that by end of 2011 Dubai property oversupply on residential and commercial properties may reach roughly 40 to 50 percent and house prices may decline another 30 percent from current levels," analyst Saud Masud said in a research note.
In September, Moody’s estimated that 12 percent of the 27,000 residential mortgages in Dubai would default within 12 to 18 months.
Masud added that property investors in the UAE may find prices to be 40 percent cheaper in the auction market as higher default risks lead to more bank repossessions.
This sounds like a story of an old lady, a once upon a time young bride to be, who met a number of suitors, but none proposed.