real es­tate

Dubai has bounced back from its post-2008 prop­erty crash. Peter Shad­bolt as­sesses a mar­ket in which Chi­nese in­vestors are show­ing in­creas­ing in­ter­est

Hong Kong Tatler - - Contents -

Chi­nese in­vestors are show­ing in­creas­ing in­ter­est in Dubai as it bounces back from its post-2008 prop­erty crash

Once re­porters were sent to count the lights at night at Dubai’s lux­ury Jumeirah Beach Res­i­dence as a gauge of the scale of the emi­rate’s prop­erty crash after 2008. The city stag­gered out of the down­turn bruised, prop­erty prices slashed by up to 60 per cent. The mar­ket had re­cov­ered by 2012, only to teeter once more, the In­ter­na­tional Mon­e­tary Fund warn­ing a bub­ble was form­ing un­less prices sta­bilised.

Gov­ern­ment reg­u­la­tion and in­creas­ing sup­ply have since cooled one of the world’s hottest prop­erty mar­kets. Con­sid­er­ing the volatil­ity in the United Arab Emi­rates’ eq­uity mar­kets, the strength­en­ing US dol­lar and the ef­fect of lower oil prices, Dubai might still seem to be off its best. But with mod­er­ate corrections of 9.5 to 12 per cent in the prop­erty mar­ket, Dubai’s lights are slowly blink­ing back on, al­beit cau­tiously.

South Asian, Bri­tish and Chi­nese in­vestors are now view­ing the emi­rate favourably as its econ­omy ma­tures and its de­mo­graphic ex­pands. Re­cent fig­ures from the Dubai Land Depart­ment show Chi­nese in­vestors make up 2 per cent of the ex­pat res­i­den­tial prop­erty in­vestor mar­ket. Emi­ratis are the largest group, at 20 per cent, fol­lowed by In­di­ans, 15 per cent, and Brits, 10 per cent. With at­trac­tions such as the Lou­vre and the Guggenheim due to open within the next few years in nearby Abu Dhabi, Dubai is likely to be­come an even big­ger draw for the 300,000 Chi­nese that cur­rently visit ev­ery year.

“It’s not just in­ter­est in vil­las and homes,” says Craig Plumb, head of Mid­dle East and North Africa re­search at JLL. “There’s an

WITH AT­TRAC­TIONS SUCH AS THE LOU­VRE DUE TO OPEN WITHIN THE NEXT FEW YEARS IN NEARBY ABU DHABI, DUBAI IS LIKELY TO BE­COME AN EVEN BIG­GER DRAW

in­ter­est from Chi­nese re­tail­ers, ho­tel chains and de­vel­op­ers. A num­ber of the Chi­nese con­trac­tors have be­come ma­jor players in the mar­ket here, par­tic­u­larly China State Con­struc­tion. In the re­tail space, a mall called Dragon Mart—it’s ba­si­cally Dubai’s Chi­na­town—has just dou­bled in size and it’s a very ma­jor growth mar­ket.”

In terms of res­i­den­tial prop­er­ties, Chi­nese in­ter­est ranges from lux­ury apart­ments in pre­mium lo­ca­tions, such as Down­town Dubai, Busi­ness Bay and Palm Jumeirah, to themed de­vel­op­ments like Fal­con City of Won­ders, Jumeirah Golf Es­tate and Al Mar­jan Is­land.

Dubai, says CBRE’S head of re­search and con­sul­tancy, Matthew Green, is syn­ony­mous with lux­ury brands, and that res­onates strongly with Chi­nese in­vestors. “China is a grow­ing part of the mar­ket de­spite the slow­down there,” he says. “In terms of the com­pa­nies here, we’ve got China State Con­struc­tion win­ning large build­ing and in­fra­struc­ture projects. There’s China Na­tional Pe­tro­leum Com­pany and other oil com­pa­nies who have head­quar­ters in Dubai ser­vic­ing the wider re­gion, so there are def­i­nitely grow­ing ties.”

The city, he says, is now sec­ond only to Lon­don in terms of its brand ex­po­sure and, like Lon­don, is com­ing to be seen as a sta­ble haven for prop­erty in­vestors. Eco­nomic di­ver­si­fi­ca­tion, an ex­pand­ing and di­verse de­mo­graphic, and the fact tourism still plays an im­por­tant part in mar­ket growth have helped Dubai ma­ture. Above all, says Green, Dubai has been will­ing to learn some hard lessons from the crash. “A lot of reg­u­la­tions were brought in,” he says. “De­vel­op­ers can’t, for in­stance, launch a project with­out own­ing the land. They’ve brought in some other draft laws re­lat­ing to strata prop­er­ties. They’ve done a lot of things to push the mar­ket to­wards ma­tu­rity.”

Tighter liq­uid­ity from banks and the cau­tious re­turn of off-the-plan sales—one of the fac­tors con­tribut­ing to the crash—are all signs of a re­turn to nor­mal­ity in Dubai. “It’s an at­trac­tive mar­ket be­cause it’s a safe haven within the re­gion,” says Green. “It has the best in­fra­struc­ture, the best air­port, the best ho­tels, best malls. It’s where peo­ple want to visit and where peo­ple want to buy a house. Whether you’re Rus­sian, Chi­nese, In­dian, Pak­istani or Bri­tish, if you’re go­ing to in­vest in the re­gion, then you’re go­ing to in­vest in Dubai.”

SLEEK DE­VEL­OP­MENTS Dubai is in­creas­ingly be­ing seen as a sta­ble in­vest­ment des­ti­na­tion

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