More and more Chinese investors are tapping into Dubai's real estate sector to multiply their fortunes, here's why

By Bayut.com

While the world's tallest building in Dubai and the world's largest factory in China speak volumes about the two's knack for all things great, the two have much distance to cover when it comes to mutual business and financial collaboration.

Fortunately, the thriving real estate sector of Dubai is providing an apt chance for both sides to benefit each other. Chinese investors looking for international avenues to pour money into have a lucrative opportunity for profits in Dubai's realty sector. This has been the reason that Chinese investment in Dubai's real estate went reasonably over RMB 2.2 billion in 2014, a mega increase of 300 percent over the previous year.

Dubai (PD)

'Realty' of the situation

Given the current realty landscape in China, the rise of overseas investment by Chinese is not much of a surprise. A rising level of prices in Chinese real estate markets – which in many cases is driven by speculation, more than the property's worth and beyond the buying power of an average investor – is contributing to eastward movement of investors. In Dubai they find greater wealth security, better opportunities of education and a chance of a peaceful post-retirement life by the sea. Increasing taxation of the Chinese real estate markets is another factor encouraging investors to look for opportunities elsewhere. Chinese buyers are the fastest-growing nationality in global property scene, with over $37 billion in sales registered in 2013 alone.

Ticks the right boxes

As Chinese investors flex muscles in the global property markets, the preference for Dubai only seems natural. According to the Dubai Land Department, Chinese spent a total AED 1.2 billion in Dubai's realty sector in the first half of 2015.

Dubai becomes all the more important when considered the rental returns its realty market offers. With average yields clearing the 7% mark with ease, Dubai has outshone all of its competitors, especially those with imposing names like London, Singapore and Hong Kong.

But that is not the only benefit the Chinese see in Dubai. Dubai's is only a stone's throw away from China. A Chinese investor could literally fly out to Dubai in the morning, spend a day wrapping up business deals and be back home in China by supper. But even more appealing is the idea of a tax-free income generation opportunity in Dubai. There's completely no tax on profits generated from real estate.

Two other factors that remain key for Chinese investors' exodus to Dubai are their natural ability for turning anything into a business and Dubai's environment being extremely open to innovation and creativity.

Dubai is a hotchpotch of cultural and ethnic diversity and opens many more avenues for entrepreneurs to identify consumer needs and provide solutions. And with Dubai voted number 1 by thousands of expats for the ease of starting a business, the opportunities seem to be boundless.

Great expectations

With rents being stable and prices stabilizing, Dubai's real estate sector is as enticing a business prospect as any. UAE's leading real estate web portal Bayut.com opines the current trend of falling prices is likely to reverse early next year and prices will start rising again as a rising population begins demanding more and more housing units.

Dubai is one of the fastest-growing economies in the world, and real estate, hospitality, tourism, finance and leisure & entertainment sectors make up its strong foundations.

As the emirate heads draws closer to the World Expo 2020, business activity will increase manifold, making way for more jobs and a larger population.

The stepped up Chinese interest in Dubai appears a prep to gather the windfall gains of the future, its time others wised up as well.

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