Chinese investors surge back into Dubai real estate market with remarkable 130% jump

The spike is seen as the classic case of China’s loss becoming Dubai’s gain, as it comes amid an estimated 27 percent plunge in apartment sales in the Far East country – far below what was expected given the country’s urbanisation trends and the high demand for improved housing – in the wake of its economy growing at a slower rate of 3 percent in Q2, 2023 over the same year-ago period, industry insiders said.

The Chinese investors are also now investing in spacious housing units in prestigious areas such as Downtown Dubai and Jumeirah Golf Estates which has seen a substantial rise in average property prices in recent times, as against their preference for smaller studio and one-bedroom apartments in the pre-pandemic period when they were the leading overseas investors in the emirate, the half yearly market report by Allsopp & Allsopp, Dubai’s leading independent real estate agency, showed.

Cash is now king for Chinese investors

Interestingly, the report also highlighted the shift towards cash payments by Chinese investors, with as high as 78 percent of buyers from the country currently opting for cash as their mode of payments for buying houses in Dubai.

“Chinese [investors] transact with cash frequently for property deals. They seem to have accumulated enough wealth before moving for overseas investment, so they can pay full cash to enjoy the easiest transaction process,” Faline Huang, Chief Financial Officer of Allsopp & Allsopp, told Arabian Business.

In early 2023, Chinese travel restrictions were lifted, enabling Chinese investors to once again directly access the Dubai property market. This marked a turning point for Dubai’s property market, with Q2 2023 witnessing the highest number of sales transactions and total sales value in the city’s history, the Allsopp & Allsopp H1 2023 report said.

Chinese staging a forceful comeback to reclaim their pre-pandemic position

Industry insiders said in the years prior to the breakout of the Covid-19 pandemic, especially in 2019, Chinese investors have consistently been among the top foreign nationalities investing in the Dubai property market.

However, the onset of the pandemic and subsequent travel restrictions led to a decline in Chinese investment in Dubai real estate, with the void quickly filled by an influx of Russian buyers due to escalating conflicts in Ukraine.

By the end of 2022, Russian nationals emerged as the leading property buyers in Dubai.

“Despite the slower Chinese economic growth – and the attendant fall in apartment sales in that country – real estate investment numbers in H1 in Dubai reflect the completely opposite result when analysing Chinese buying behaviour since they made a comeback on the real estate charts this year,” Allsopp & Allsopp said.

“Foreign overseas investment will continue to pour into the Dubai real estate market – especially off-plan sales, with China increasing buyer activity and set to rival Russian investment levels by the end of the year,” Lewis Allsopp, the firm’s CEO, told Arabian Business.

He also sees the luxury real estate sector in the city to continue to thrive, with branded luxury developments and mega-villas setting new sales records, aided by the rising Chinese preference for bigger housing units in Dubai’s high-end locations.

“Demand for established residential villa and townhouse communities and premium water-facing apartments will continue to increase [in the second half of 2023] in line with H1 trends,” Allsopp said.

Backing up the CEO’s predictions, Huang said the strong and rising relationship between the UAE and China will add to the rising Chinese investment in Dubai’s property market going forward.

“UAE and China governments have tight relationships and very strong bilateral trade ties. Dubai’s commercial-friendly environment attracts Chinese investment as a low-tax and safe emirate, providing a comparably desirable yield on investments,” she said.