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Sat 20 Aug 2011 09:42 AM

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Chinese playing key role in Dubai recovery

Dubai sees a surge in investors, shoppers and tourists from China this year, say analysts

Chinese playing key role in Dubai recovery
Chinese playing key role in Dubai recovery
(Bloomberg Images)
Chinese playing key role in Dubai recovery
Chinese labourers working in the UAE

Dubai has seen a surge in investors, shoppers and tourists from China this year, analysts and industry experts across a number of sectors have reported.

Dubai was one of the major real estate markets affected by the global recession, with around half of projects put on hold and prices dipping up by up to 60 percent in some areas.

While investment levels have not fully recovered, China is one of the regions where investors are beginning to show interest again, said Matthew Green, head of research and consultancy at real estate agency CB Richard Ellis’s Dubai office.

“There is definitely [investment] coming back into the residential at the high end, but to be honest there is a lot of interest from Chinese investors,” said Green.

“The number of transactions is still down, but there has been a pickup in overall value, which is a positive sign,” he added.

Chinese investors have also shown interest in Dubai's commercial sector, according to Nick Maclean, managing director of CBRE Middle East.

“There are some significant companies at the moment... Hong Kong companies representing Chinese companies,” he added.

Unlike Western firms from the UK and US, which prefer to lease office space, Chinese firms are bucking the trend and are interested in buying whole floors or buildings.

“They take a slightly different view to Western companies in that they take a longer view, they are here long-term and they are, to buck the trend, in the buyer market,” Maclean added.

One reason Chinese firms are coming to Dubai is to set up a hub in order to access the African markets, said Nasser Saidi, chief economist of the Dubai International Financial Centre (DIFC) said this week.

In the first quarter of the year, China exported AED10.68bn worth of goods to Dubai and was the second biggest export partner in the first three months of 2011.

"The Chinese side is willing to further expand areas for its cooperation with the UAE and enhance the two countries' cooperation in such fields as energy sources, finance, telecommunications, railway and project contracting," He Guoqiang, a senior Chinese official, said this month during visit to Dubai for a meeting with Sheikh Mohammed bin Rashid Al Maktoum, Dubai's ruler.

Chinese tourists and shoppers are also opting to visit the emirate’s shopping malls and hotels.

Maclean reported Chinese consumers have been highly visible in the retail sector and are one of the strongest buyer groups in Dubai this summer.

“Chinese buyers within the retail sector dominated the first quarter results. They were among the top three or four for the first time. Some retailers have said to us they have replaced the Russian, who were previously very high. The Russian were the big spenders and now the Chinese seem to be the big spenders,” said Maclean.

With increased flights between Dubai and China, with Emirates operating regular scheduled routes China Eastern Airlines launching services earlier this year, the number of Chinese tourists in Dubai hotels has surged.

Dubai’s Jumeirah Group, which opened its first hotel in China in March this year, has identified Chinese travelers as the fastest growing group of guests in its hotels.

Chinese customers now represent about five percent of guests, up from less than one percent three years ago, Gerard Lawless, chairman of Jumeirah Group, said.

“On February 14 [Chinese New Year] we were looking at almost 80 percent occupancy [of Chinese guests] within Burj al Arab,” he added.

The newly opened Ibn Battuta Gate Hotel, which is operated by Movenpick Hotels & Resorts, has also seen a surprisingly high number of Chinese guests booking into the hotel during the quiet month of Ramadan.

A spokesman for the hotel said Chinese guests had booked nearly 1,000 nights during August.

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Johnny 9 years ago

I am a Chinese real estate broker in Dubai. Chinese investors are showing interest in this sector, yet most of us are not convinced that the price is bottomed out. Now we are just show some interest, not really placing the orders. Maybe in two or three years, we are gonna see how the market goes.

Varsha 9 years ago

Welcome any investors to the Dubai Real Estate market. Let it be Chinese investors. It's good for the overall stability of the UAE and the region.

AW 9 years ago

Be it Chinese or national of any country living in a big city such as Tokyo, HK, Singapore, KL, Bombay, Karachi, Istanbul, Paris, Milan, Moscow, London, NY etc. OR for that matter any city in the world with a cosmopolitan life style, you will find Dubai is the cheapest place to invest among all.

If we look at the rates scenario we are already there commercially because none of these cities have prices less that US$300 per sq-ft in a good locality/well-connected location. So, what is missing?

In one word if I put the missing link is "Clarity", that is most of the investors are doubtful about their investment protection, which may be due many factors such as, lack of confidence in the rules laid down by the concerned authorities, few high level employment opportunities and so forth.

Conclusion, if once this sectors is opened in the real sense with maximum transperancy & the investor are convinced that their investments are protected then I think we are there, the place will boom !

Telcoguy 9 years ago

Am I the only one thinking that China may be home to the mother of all real estate bubbles?

rey kardoso 9 years ago

Hopefully the chinese investors will put their money where their mouth is and not just go on a fishing expedition for ideas and not build a dubaitown in China the other way around. Real estate hot money is the worse kind of inflow any country can have, let's keep our fingers crossed (again...). It would be nice instead for Chinese investors to build a chinatown in Dubai complete with all the quality chinese food , the traditional chinese ambiance and culturally-stimulating serving styles. Welcome!

Stefan 9 years ago

Watch & see.....they'll undercut businesses, construction costs and force real estate prices up like they've done throughout East Asia.....this is gonna hurt in the next 2 years

John 9 years ago

Forcing real estate prices up is the best thing that can happen to Dubai. Individual landlords became desperate and reduced rents to unsustainable levels. The market needs strong minded landlords who will rather their property lies empty than be rented out for peanuts.

Jack J 9 years ago

John, who exactly would benefit from these empty properties that produce no income?
No sane landlord would leave their property empty in the hope that they can dictate the market price. The market decides the price, not individuals.

MSM 9 years ago

Wishful thinking. Real Estate prices are not going to recover for next couple of years at the least.

Telcoguy 9 years ago

@Johnn you are certainly right if there is anything the chinese know a lot about is empty real estate!
Both office "And famed short-seller Jim Chanos estimates that China's completing 30 billion square feet of office space right now. Never mind all the existing office space already sitting vacant; that construction alone could put every Chinese man, woman, and child into a five-by-five-foot cubicle." (http://www.fool.com/investing/international/2011/01/07/chinas-risk-to-your-portfolio-in-2011.aspx)
And residential "Ordos, China: A Modern Ghost Town" http://www.time.com/time/photogallery/0,29307,1975397_2094492,00.html
The chinese real estate bubble will dwarf anything we have seen. And still we will have people thinking that bubbles are a good thing.