Dubai property market set for 'year of Chinese investors' in 2024, experts say

Reopened borders, property crisis and economic slowdown are driving buyers from China to buy homes abroad

Chinese investors, pictured inspecting models of properties in Dubai during a 2018 trip, are returning in bigger numbers this year, estate agents and analysts say. Photo: Driven Properties

Chinese buyers are returning to Dubai's property market in increasing numbers, experts have said.

This comes after China reopened its borders following the Covid pandemic, while its property crisis has prompted investors to seek safe havens for their capital globally.

Chinese investments into projects by Emaar Properties, Dubai's biggest property developer, roughly doubled to comprise 7 per cent of total sales in the first half of 2023, from about 3 per cent to 4 per cent in the same period a year earlier, according to the company.

“Pressure on the property market in their home country and relaxation of travel restrictions are driving Chinese investors to return to the Dubai property market,” Sara Boutros, CI Capital's sector head for Mena real estate and financials told The National.

“Dubai’s attractive residential rental yields of 6 per cent to 7 per cent and its investor-friendly environment – including low transaction and rental income tax, a US dollar-pegged currency and zero capital gains – all support international flows into the sector.”

Dubai's property market is booming amid strong demand and robust economic growth. The sector's post-pandemic recovery was helped by government initiatives such as residency permits for retirees and remote workers. Fuelled by an influx of incoming expats – including cryptocurrency executives and wealthy Russian buyers – the property market boom is not expected to slow down soon, as a rising population, minimal taxes and the global economic climate continue to drive optimism, analysts say.

The emirate's residential property prices rose 17 per cent in the second quarter on an annual basis, marking the 10th consecutive quarter of expansion, according to the latest report by global consultancy Knight Frank.

Driven Properties, a Dubai-based company with offices in China, recorded about Dh1.25 billion ($340 million) worth of properties sold to Chinese and Hong Kong investors in the first half of 2023, more than tripling from Dh351 million in the same period last year, according to Abdullah Alajaji, the company's chief executive.

China's borders reopening “helped massively”, while Beijing's property debt crisis is sparking fears among local investors who view property as a safe haven to park their capital, prompting them to seek other markets abroad, Mr Alajaji said.

“This year we see more Chinese tourists and visitors coming to make investment decisions here, because Dubai has always been an attractive destination and because of what's happening in China,” he said.

The company expects property investments from Chinese buyers to grow to nearly Dh2 billion in 2023 from Dh721 million last year, as China's property woes persist and its economic growth decelerates, Mr Alajaji said.

“We're barely scratching the surface, because the last quarter of the year for the property market in Dubai is the most liquid and records the most transactions, from both local and international buyers,” Mr Alajaji said, adding “2024 will be the year of Chinese property investors”.

The company, which has an office in Shenzhen, is already seeing the growth momentum rise based on data from July and August and large groups of investors visiting Dubai to inspect properties, he said.

Asked about the momentum for Chinese investment growth in 2024, Ms Boutros said: “We expect growth to sustain within the luxury segment. Prices of luxury real estate units in Dubai are exceptionally attractive when compared to both London and New York as well as other global real estate markets.”

While Dubai has witnessed an increase in home property prices to record highs, the demand from Chinese investors is not expected to further inflate market levels, some analysts said.

With “Chinese buyers slowly coming back to the UAE, investment momentum in the country is expected to pick up”, said Fadi Moussalli, executive director of international capital coverage at property consultancy JLL.

“However, we do not anticipate this to disrupt the property market or put more upwards pressure on property prices, as the momentum currently is already very strong, and international demand is continuing and robust,” Mr Moussalli said.