(Bloomberg) -- Chinese investors are gradually returning to Dubai’s real estate market, joining Russian and other international buyers who have already pushed property prices in the emirate to record levels.

At the city’s largest developer, Emaar Properties PJSC, buyers from the Asian nation doubled to 8% of the total during the first half of 2023 from 4% through 2022, according to a report by CI Capital, which cited an analyst call with the firm’s management. While those levels are still below the peak of 13% to 14%, Chinese demand could become a key factor in helping to shore up demand in the emirate’s property market.

Russians were the biggest buyers of Emaar developments during the first quarter and demand remains strong, according to the report’s author Sara Boutros. CI Capital estimates that Emaar sales are likely to reach 33 to 34 billion dirhams ($9.3 billion) this year, a 10% increase from 2022.

“Emaar’s nationality mix is important because the company acts as a proxy for the wider real estate market in Dubai,” she said, adding that the developer has the biggest market share with around 30% of all home sales ahead of construction.

Dubai’s property market has been booming, bucking the trend in many parts of the world, where home values have dropped amid surging interest rates and a darkening growth outlook. The recovery, which capped seven years of price declines, started after the pandemic and was fueled by an influx of newcomers — from crypto millionaires and bankers relocating from Asia to wealthy Russians seeking to shield assets. 

Opening Up

Chinese investors topped the list of buyers in Emaar developments in 2018 and 2020, but slipped to fifth on the list in 2022 as the Asian nation’s strict Zero Covid policy restricted travel, according to CI Capital. With the country now opening up, many are seeking to invest their money overseas. 

Earlier this month, Dubai-based property broker Allsopp & Allsopp said sales to Chinese citizens surged 130% in the first half of the year with cash purchases making up 78% of transactions. 

“Chinese transact with cash frequently for property deals,” Allsopp & Allsopp Chief Financial Officer Faline Huang wrote in the report. “They have accumulated enough wealth before moving for overseas investment, so they can pay full cash to enjoy the easiest transaction process.” 

In April, Morgan Stanley estimated that a return of Chinese buying activity to pre-pandemic levels could add 1 billion dirhams to Emaar’s sales this year compared with 2022, without accounting for additional demand.  

“With the easing of the Covid restrictions in China, we believe the return of Chinese demand to Dubai could provide additional support in 2023,” analyst Nida Iqbal wrote in a report at the time. 

Meanwhile, Dubai is also predicting that air traffic from China will rebound in the fourth quarter, raising the need to boost capacity at its international airport, the world’s busiest.

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