Insights into the Dubai Real Estate Market: 04/05/14

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About 15 miles from the Burj Khalifa on the edge of the Arabian desert is a growing housing and retail community that would look more at home in Beijing than Dubai: Stores and restaurants have Chinese signs and a huge dragon sculpture adorns the Dragon Mart shopping mall.</div>
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After pouring billions of dollars into cities including London, New York and Sydney, individual investors and developers in China are expanding into Dubai.</div>
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About a thousand individual Chinese investors spent 1.3 billion U.A.E dirhams ($353 million) on land, residential units and office real estate in Dubai last year, according to data from the Dubai Land Department. That is a nearly threefold increase from the 486 million dirhams spent by 288 Chinese investors in the previous year.</div>
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Overall, property transactions by individuals in the emirate climbed 53% last year to 236 billion dirhams, with foreign investors buying 114 billion dirhams of land and property.</div>
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Chinese investors and developers weren't very active before 2009, when Dubai was hit by a real-estate crisis. But they now play an increasingly important role in the market, according to brokers, developers and analysts.</div>
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Demand from individual buyers is helping launch new developments and fueling Dubai's residential recovery, while Chinese contractors and banks are revitalizing high-profile projects that stalled in the previous boom.</div>
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Built in 2004 on the outskirts of the city, Dragon Mart was developed by Nakheel, one of Dubai's biggest government-owned developers. It has become such a popular mall that Nakheel is now adding 177,000 square meters (1.9 million square feet) of retail space and a hotel.</div>
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Around this retail Mecca, a Chinese community has sprung up in a residential estate called International City, which also was built by Nakheel. The developer estimates that half the population of about 100,000 in International City is from China.</div>
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What's more, about half a new development of about a thousand town houses has been sold to Chinese investors, according to Ali Rashid Lootah, the chairman of Nakheel. </div>
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Many wealthy Chinese seek to invest abroad to diversify. They find Dubai attractive partly because they believe they can achieve returns of as much as 30% annually—better than Hong Kong, Shanghai and Beijing, where real-estate markets are cooling, according to brokers, analysts and investors.</div>
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Underpinning Chinese residential investment are greater commercial trade ties between the U.A.E. and China, noticeably in commercial real estate. Chinese developers, both private and state-owned, are expanding throughout the world as they seek stable returns outside their slowing home market.</div>
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Last year in Dubai, state-owned China State Construction Engineering Corp. bought an undisclosed stake in the $1 billion Viceroy Hotel on the Palm Jumeirah. It created a joint-venture development company with Dubai-based developer SKAI Holdings to build and manage the project, and helped the venture win $201 million in financing from Industrial and Commercial Bank of China, according to executives at China State Construction and SKAI.</div>
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China State Construction is known for building some of the highest-profile works in China, including the national swimming center in Beijing known as the Water Cube and Hong Kong International airport.</div>
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<span style="font-size: xx-small;"><b>Article source: http://on.wsj.com/Od3SeJ</b></span></div>
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