Once reporters were sent to count the lights at night at Dubai’s luxury Jumeirah Beach Residence as a gauge of the scale of the emirate’s property crash after 2008. The city staggered out of the downturn bruised, property prices slashed by up to 60 per cent. The market had recovered by 2012, only to teeter once more, the International Monetary Fund warning a bubble was forming unless prices stabilised.
Government regulation and increasing supply have since cooled one of the world’s hottest property markets. Considering the volatility in the United Arab Emirates’ equity markets, the strengthening US dollar and the effect of lower oil prices, Dubai might still seem to be off its best. But with moderate corrections of 9.5 to 12 per cent in the property market, Dubai’s lights are slowly blinking back on, albeit cautiously.
South Asian, British and Chinese investors are now viewing the emirate favourably as its economy matures and its demographic expands. Recent figures from the Dubai Land Department show Chinese investors make up 2 per cent of the expat residential property investor market. Emiratis are the largest group, at 20 per cent, followed by Indians, 15 per cent, and Brits, 10 per cent. With attractions such as the Louvre and the Guggenheim due to open within the next few years in nearby Abu Dhabi, Dubai is likely to become an even bigger draw for the 300,000 Chinese that currently visit every year.
“It’s not just interest in villas and homes,” says Craig Plumb, head of Middle East and North Africa research at JLL. “There’s an interest from Chinese retailers, hotel chains and developers. A number of the Chinese contractors have become major players in the market here, particularly China State Construction. In the retail space, a mall called Dragon Mart—it’s basically Dubai’s Chinatown—has just doubled in size and it’s a very major growth market.”
In terms of residential properties, Chinese interest ranges from luxury apartments in premium locations, such as Downtown Dubai, Business Bay and Palm Jumeirah, to themed developments like Falcon City of Wonders, Jumeirah Golf Estate and Al Marjan Island.
Dubai, says CBRE’s head of research and consultancy, Matthew Green, is synonymous with luxury brands, and that resonates strongly with Chinese investors. “China is a growing part of the market despite the slowdown there,” he says. “In terms of the companies here, we’ve got China State Construction winning large building and infrastructure projects. There’s China National Petroleum Company and other oil companies who have headquarters in Dubai servicing the wider region, so there are definitely growing ties.”
The city, he says, is now second only to London in terms of its brand exposure and, like London, is coming to be seen as a stable haven for property investors. Economic diversification, an expanding and diverse demographic, and the fact tourism still plays an important part in market growth have helped Dubai mature. Above all, says Green, Dubai has been willing to learn some hard lessons from the crash. “A lot of regulations were brought in,” he says. “Developers can’t, for instance, launch a project without owning the land. They’ve brought in some other draft laws relating to strata properties. They’ve done a lot of things to push the market towards maturity.”
Tighter liquidity from banks and the cautious return of off-the-plan sales—one of the factors contributing to the crash—are all signs of a return to normality in Dubai. “It’s an attractive market because it’s a safe haven within the region,” says Green. “It has the best infrastructure, the best airport, the best hotels, best malls. It’s where people want to visit and where people want to buy a house. Whether you’re Russian, Chinese, Indian, Pakistani or British, if you’re going to invest in the region, then you’re going to invest in Dubai.”