Property Weekly: Tapping into China

Property WeeklyThe rooftop of Nakheel’s The Palm Tower project. The developer was among the exhibitors at the Hong Kong show l Image Credit: Supplied

With the Chinese already among the top 10 property investors in Dubai, many real estate companies are keen to display the emirate’s impressive potential to this massive market. According to the Luxury Properties Showcase, Chinese invested more than $40 billion (Dh146 billion) in overseas real estate last year, while they are expected to spend over $50 billion this year. The Dubai Property Show in Hong Kong last month was one of the more aggressive marketing efforts by Dubai developers to tap into the Chinese market. Organised by Sumansa Exhibitions and the Dubai Land Department, many UAE property companies showcased their developments to potential Chinese investors during the event.

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There’s a strong lure for potential buyers in Dubai, with return on investment in the emirate’s real estate up to 7.21 per cent annually compared with 2.82 per cent in Hong Kong, according to Global Property Guide.

“With Dubai Property Show in Hong Kong, exhibitors will be able to reach out to one of biggest realty customer bases of the UAE,” said Sultan Al Suwaidi, Partner of Sumansa Exhibitions. “The event will allow developers to build their credibility and create brand awareness through positive word of mouth, find new customers and fortify relationships with existing ones,” Sultan said.

Interest from these Asian investors seems highly likely. A survey by Chinese real estate website in September found a 1,200 per cent increase in buyer interest for property in Dubai.

Olivier de Treglode, Founder and CEO of The Luxury Properties Showcase, which is staging another property show from April 22-24 in Beijing, agrees that the Chinese market has huge potential. “According to our recent survey, 41 per cent of our Chinese investors are considering investing in the Middle East,” says de Treglode, who expects more than 5,500 property buyers to attend the property show.

Growing interest

Some real estate agents believe the recent downturn in China’s property sector could be a factor motivating investor interest in assets elsewhere. “With Chinese investors increasingly focused on globalising their property portfolios and diversifying away from the Asian powerhouse’s softening real estate sector, we are seeing fast growth in Chinese investor sentiment in the UAE,” says Yousuf Kazim, CEO of Jumeirah Golf Estates (JGE). “Chinese and Hong Kong investors typically exhibit interest in properties that blend superior quality with strong returns on investment — underscored by the properties’ proximity to key attractions.”

Kazim says JGE could potentially lure investors due to its attractive location, facilities and reasonable rental yields and capital appreciation. Investors from China are definitely after high returns on property investments, according to Alharith Almoosa, Vice-Chairman and Deputy General Manager of Falconcity of Wonders.

“They are highly interested in luxury residential units and ready-to-move-in villas, with a particular interest in spacious two- to five-bedroom villas with elegant finishes and unique designs,” says Almoosa. Falconcity of Wonders offers a payment plan that enables buyers to move in by just paying 10 per cent. Almoosa says such flexible terms are also “prime motivators for investors”.

The price of Dubai property is also a lure, agents say. Kalpesh Sampat, Founder and COO of SPF Realty, says most Chinese investors are looking for reasonably priced villas and apartments. “Generally Chinese are interested in various properties, but income-yielding is important whether it’s apartments or villas,” he said. “But villas have become prevalent if the price is right for the investment return.”

Niall McLoughlin, Senior Vice-President of Damac Properties, which began its own promotion campaigns in Asia last year with presentations in Singapore and Hong Kong, says prices in Dubai are highly competitive. He notes a Financial Times report in November stating that Dubai “remains relatively underpriced when compared with other global markets”.

“In addition, investors benefit from over 7 per cent tax-free yields, which places Dubai’s real estate market among the highest in the world, according to a recent Knight Frank report,” says McLoughlin.

Language barrier

With the Chinese showing increasing interest in overseas properties, having real estate agents who speak Mandarin or Cantonese have a huge advantage, says Sampat. “It is ideal and helps having a Chinese-speaking agent as it’s easier for the client to understand and explain what they are looking for,” he says. “But it’s not only the language — the agent needs to be knowledgeable and is expected to get them information on all their questions.”

Kazim says having an agent who speaks Mandarin as part of his sales team presented a huge advantage. “Whether speaking with buyers from India, London, Hong Kong or Beijing, our experienced team of real estate agents are well-placed to provide personalised insights and advice to prospective buyers from around the world,” says Kazim.

In addition to having a Chinese-speaking agent, the upkeep of the property is paramount. Sampat tells sellers to keep the property clean and spruced up as possible” to lure Chinese buyers. “Generally they prefer to buy a new property, but if they do decide to go for an older build then the property must look brand new.”


Zhihua Zhang, Senior Sales Consultant at Driven Properties, believes there’s a strong buy-to-let market among Chinese investors. “Since the Chinese currency devalued, there are more and more buyers investing in Dubai,” he says. “Chinese [account for] more than 10 per cent of the total Dubai population, along with the Chinese business developments and tour destination attractions for Chinese. More and more investors know Dubai and see the investment opportunities.”

Chinese investors are mostly interested in properties priced between Dh2 million and Dh5 million, says Zhang. “For most mainland investors to invest in Dubai, they are likely to take at least two-bedders,” he says.

Kazim agrees this investment trend is growing. “The majority of Chinese investor interest lies in the buy-to-let-market, as Dubai offers a high-growth investment environment, offering greater returns than property investments in more mature markets such as Hong Kong or London,” says Kazim.

Likewise, Sampat believes Dubai’s lucrative rental areas will be targeted by Chinese investors. “A strong buy-to-let market among Chinese investors will be International City, because it’s easy for them to manage it and return on investment is higher than in other areas,” says Sampat. “Last year, The Greens had an increasing rate of investors since two of the biggest Chinese companies are located nearby there.”

In terms of commercial property investment, Sampat says office building and industry plots could also appeal to Chinese investors. “Since Chinese companies are rising in the UAE, buying an office, warehouse or factory plot will be a saving in the long term as well as in terms of capitalisation,” he says. “In recent years, Chinese developers started seeking plots to share in the UAE property development market also.”

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Best sellers for Chinese buyers

While real estate exhibitions are showcasing Dubai properties in China, many real estate experts are keen to teach potential sellers what this market is looking for — including whether to furnish your property or not.
Properties in superior quality, new developments tend to attract Chinese buyers, says Yousuf Kazim, CEO of Jumeirah Golf Estates. “Luxury finishes such as granite benchtops, marble flooring and added touches such as top of the line audio-video systems by Bang & Olufsen and Miele appliances, are available in many of our prestigious properties — elements which are key to attracting Chinese investors.”
Niall McLoughlin, Senior Vice-President of Damac Properties, which has previously taken part in a property show in China, 2says furnished properties are in demand among Chinese investors. “This is to save customers the headache of preparing the property in case they want to live in it — or in case they want to rent it directly or through our rental pool system,” he says.
Possibly targeting a different Chinese market, Zhihua Zhang, Senior Sales Consultant at Driven Properties, says furnishing a property is a good idea, so long as it isn’t too expensive. “Normal furnishings are ideal for selling a property as the quality of the furniture will affect the price,” he says. “Chinese investors like the more reasonably priced properties for investment.”
Yet Kalpesh Sampat, Founder and COO of SPF Realty, believes some Chinese are not seeking fully-furnished units. “An apartment with kitchen appliances will be fine for them,” he says. “Fully-furnished will increase the cost, as well as many renters like to have their own set-up.”

Source: Andy van Smeerdijk, Special to Property Weekly

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