09 - 11 Dec 2018

China's wealth becomes X factor in Dubai realty

Dubai: The China effect onDubai’s real estate market is only going to get bigger. High networth Chinesebuyers are looking at a selection of projects from Dubai’s leading developersto see what sort of exposures they can commit to.

Overthe last weekend, the Beijing-headquartered wealth management firm Letou Grouphosted a high-profile event in Dubai for up to 200 wealthy Chinese investors ortheir representatives to offer a snapshot of Dubai’s offplan projects.

And Letou, which already has an office in Dubai, could be considering some sort ofMoU (memorandum of understanding) with Damac that could see these investmentsbeing channeled into the developer’s ongoing projects portfolio, sources said.There was no immediate official confirmation from Damac about such an alliance.

Elsewherein Dubai, buyers from China have been busy acquiring property assets. Based onthe Dubai Land Department Data, in the 18 months to June 2017, they pumped inDh3.14 billion from 2,177 transactions.

“Atthis point, Chinese investors were ranked the eighth most active investor bynumber of transactions out of 217 nationalities,” said Taimur Khan, seniorAnalyst at Knight Frank, the real estate consultancy. “In 2017 Chineseinvestors remained firmly in the Top 10 most active nationalities.

“Withthe Dubai Property Show and property week being held in Shanghai in May, we maysee greater activity from Chinese investors in 2018.”

Butthe Chinese investor push into Dubai realty should be seen as part of a biggerplay. Knight Frank issued a report Tuesday that rates the UAE as having thethird highest potential among 67 countries to make full use of China’s “Beltand Road Initiative”. In fact, UAE could well be the “Hub of the Belt”.

TheBelt and Road Initiative aims to connect the world’s second largest economywith the 67 countries through a series of interlinked trade and infrastructureprojects. It would mean billions of dollars being pumped into local economies,with China’s public and private wealth paving the way for that.

“TheGCC member nations are eager to transform their economies to reduceover-dependency on oil and gas,” said Khan. "This provides fresh prospectsfor Chinese investors, especially in the real estate, high-tech and energysectors. Over this period, the UAE has become the favoured destination ofChinese capital.”

Evenoutside of any Belt and Road led initiatives, prospects for high-profileChinese involvement in the local construction sector have never been better.“The current snapshot of data shows that of the total contract value of futureprojects in the UAE (both projects in the design phase and in execution phasefrom 2018-20), Chinese firms account for 6 per cent of total value of contracts,”said Khan. “In Dubai, this is slightly higher at 7 per cent and from 2019 to2020 it is expected to increase from 7 per cent to 9 per cent.”

Andit needn’t be just on the brick-and-mortar side that China is unleashing itsinfluence on the realty and construction sectors. In September last, FiveHoldings (earlier known as SKAI) had gone in for a Dh1.1 billion syndicatedfinancing, which involved four Chinese financial institutions out of the seventhat took part. Those funds were for Five’s upscale hotel projects inDubai.

China's Belt and Road Initiative explained

·Launched in 2013, the Initiative aims to create new traderoutes, economic links and business networks. Six economic corridors wereidentified from China to Central and South Asia, the Middle East and Europe(the Silk Road Economic Belt) and, along a maritime route, from Southeast Asia,Oceania to the Middle East, Africa, and Europe (the 21st Century Maritime SilkRoad).

·It seeks to cover 69 countries and encompassing around 60 percent of the world’s population and 40 per cent of global GDP, through acollection of interlinking trade deals and infrastructure projects.

Source: Gulf News Property

Published: 01/30/18