First with Financial Comment from Arabia

Chinese investors shopping for property in Dubai

with 2 comments

Towards the end of next month representatives of more than 20 companies from the Chinese city of Wenzhou will visit Dubai to shop for property bargains.

According to The Financial Times the Wenzhou Business Development and Promotion Association has been attracted by news that Dubai property prices have fallen by half and that the UAE’s economy has started to recover.

Global bargain hunters

Famed as a city of millionaire entrepreneurs the good burghers of Wenzhou make two or three real estate shopping expeditions per annum, and last year visited France, Germany and the USA. And apparently some 20,000 of the 150,000 Chinese living in Dubai are from Wenzhou.

Dubai’s remaining real estate agents only have a few weeks in which to master the Mandarin for ‘great sea view’ and ‘global business hub city’. More seriously it is a glimmer in the darkness of the oversupply that looms above the city this year.

A glance at the northern end of the Dubai Marina and the perhaps dozen super-tall towers now coming up towards completion (super-tall is 80-floors plus) leaves open the obvious question of who is going to live in these apartments and when will they come.

At the moment with the Dubai economy expected to hover close to zero growth this year it is hard to say, even a small population decline is predicted for the once super-growth city.

The FT reports that Wenzhou buyers think Dubai is cheap because apartments in the Burj Khalifa are similarly priced to residential properties in their city per square metre. But you have to wonder if these globally mobile property speculators are looking at prices from the right angle.

China bubble trouble

Could it not be their own property prices that are in a bubble, and unsustainably expensive, not Dubai that is now so cheap?

Indeed, the 30 per cent money supply growth in China last year – and a similar hike in property prices in key urban locations – is remarkably reminiscent of what happened in the Dubai boom the year before the crash. Since then property prices have fallen by half and then rebounded a little in Dubai.

Might not the same misfortune be about to hit Wenzhou? It is funny how nobody ever thinks a property crash might happen to them.


Written by Peter Cooper

January 19, 2010 at 9:35 am

2 Responses

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  1. Perhaps we could also sell them some condos in florida.


    January 20, 2010 at 11:18 am

  2. Maybe they are looking for the trade of a lifetime
    – Sell Wenzhou, Buy Dubai!
    Be a genius trade if the China property bubble unwound and they got out in time and got into Dubai at a rate that is currently lower than replacement cost. maybe a bit more to fall but a lesser evil.
    There are enough desperate, 3rd rate developers who’s customers have folded and they need to continue to pay the contractor.
    These guys could do with a cash infusion!


    January 19, 2010 at 11:04 am

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