Initially, Chinese investors were attracted to European and American real estate market due to quality education, medical care, and immigration among other reasons. Southeast Asian countries such as Philippines and Indonesia also attracted Chinese investors due to affordable prices, friendly market, etc.
However, in the recent past, a large number of Chinese investors have been entering the Dubai real estate market to buy off plan property in Dubai. A recent report by the Dubai Land Department (DLD) shows that Chinese nationals accounted for AED 1.7 billion in the first quarter of 2018. This makes them one of the highest nationalities investing in Dubai. Also, Chinese nationals are among the top twenty nationalities searching for properties online in Dubai.
Here are the top three reasons why Chinese investors are attracted to Dubai real estate market
Affordability of properties in the Dubai real estate market can be categorized into major factors; prices and flexible payment terms. In terms of price, investing in Dubai’s properties is more lucrative compared to cities in China such as Shanghai and Beijing. For instance, a square foot ranges between AED 4K and AE 6K in Shanghai while in Dubai it cost between AED 1.6K and AED 2k. On the other hand, the payment plan in Dubai is very flexible and friendly. After paying the deposit, the rest of the payment is spread over a certain period of time. Most Chinese investors prefer this option instead of paying the whole amount upfront like in China.
Sur La Mer Townhouses and Emaar Arabian Ranches 3 developments are expected to be completed soon. Since they are currently sold off plan, the price is low and payment terms are very friendly which is one of the reasons why Chinese investors invest in Dubai.
2. No property taxes
One of the most prominent features of the property market in Dubai is zero tax. The investor does not pay tax on the income on sale or rental income unlike in China. However, there are minor additional charges that the investors incur. For instance, there is a one-time registry fee/tax of 4% that is incurred when buying or selling a property. The buyer and the seller share the cost equally. For renters, there is also a 5% tax on the tenancy contract value.
3. Return on investment
Another major feature that is attracting Chinese investors in the Dubai real estate market is the high return on investment (ROI). In particular, most investors prefer rental income rather than capital appreciation. This is because rental income matures faster and is also flexible.