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Dubai's property bubble hits investors
Source: Xinhua |
December 7, 2009, Monday
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Print Edition
Print Edition
WHEN many mega-constructions, including Dubai Tower, the world's tallest building, kept on rising from the sands in the Middle East, Chinese investors' confidence in Dubai's property market had been sky high as well.
But all that seems to have become a passing memory, as the confidence was humbled by a debt crunch that pricked the property bubble in the emirate.
"Investing in real estate was quite popular among Chinese businessmen in Dubai for quite a long time. No one expected the property market would tumble: The property price rose only to about 20,000 to 30,000 yuan (US$2,927 to US$4,392) a square meter in the emirate favored by global investors," said Chen Zhiyuan, director of Wenzhou Chinese Chamber of Commerce in Dubai.
Dubai is the first emirate in the United Arab Emirates to allow foreigners to buy property. Although Dubai's economy was originally built on the oil industry, the emirate's main revenues are from tourism, property and financial services.
Global stock markets fluctuated after Dubai on November 25 said it was asking for a six-month reprieve on paying Dubai World's US$59 billion debts as a first step to restructure the emirate's leading state-owned company.
"More than 100,000 Chinese are running businesses or working as laborers in Dubai and most businessmen bought property after having worked there for more than two years," Chen said.
Local property prices tripled or rose fourfold in 10 years, said Wang Weisheng, board chairman of the Dubai-based Asia Business TV.
"Villa price was only 8,000 yuan per square meter in 2001, but common apartment prices had soared to 20,000 to 30,000 yuan a square meter before the crisis," Wang said.
Speculation in property was quite profitable before the bubble burst, he said. "It yielded money more quickly than traditional businesses and thus attracted increasing hot money."
He said Chinese investors initially bought one or two apartments, then the profits drove them to team up and buy a whole floor or building.
But all that seems to have become a passing memory, as the confidence was humbled by a debt crunch that pricked the property bubble in the emirate.
"Investing in real estate was quite popular among Chinese businessmen in Dubai for quite a long time. No one expected the property market would tumble: The property price rose only to about 20,000 to 30,000 yuan (US$2,927 to US$4,392) a square meter in the emirate favored by global investors," said Chen Zhiyuan, director of Wenzhou Chinese Chamber of Commerce in Dubai.
Dubai is the first emirate in the United Arab Emirates to allow foreigners to buy property. Although Dubai's economy was originally built on the oil industry, the emirate's main revenues are from tourism, property and financial services.
Global stock markets fluctuated after Dubai on November 25 said it was asking for a six-month reprieve on paying Dubai World's US$59 billion debts as a first step to restructure the emirate's leading state-owned company.
"More than 100,000 Chinese are running businesses or working as laborers in Dubai and most businessmen bought property after having worked there for more than two years," Chen said.
Local property prices tripled or rose fourfold in 10 years, said Wang Weisheng, board chairman of the Dubai-based Asia Business TV.
"Villa price was only 8,000 yuan per square meter in 2001, but common apartment prices had soared to 20,000 to 30,000 yuan a square meter before the crisis," Wang said.
Speculation in property was quite profitable before the bubble burst, he said. "It yielded money more quickly than traditional businesses and thus attracted increasing hot money."
He said Chinese investors initially bought one or two apartments, then the profits drove them to team up and buy a whole floor or building.
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