By Hu Yuanyuan (China Daily)
Updated: 2010-03-20 09:43
BEIJING: More wealthy Chinese are buying overseas properties for better investment returns as skyrocketing property prices in the country makes domestic home purchases more risky.
Santhosh Joseph, the developer of a $4 billion hotel and residential project in Dubai, said on Friday that among the 10 percent of buyers of his project from Asia, half were from China.
“Considering the huge potential purchasing power in China, the first leg of our road show in Asia took in Beijing, Shanghai and Hong Kong,” said Joseph, founder and chief executive officer of Pearl Dubai FZ LLC.
The project, named Dubai Pearl, comprises four 73-story towers connected by a single roof less than a mile from the emirate’s palm-tree shaped artificial islands.
“Among the Chinese buyers, many are doing so for investment purposes, as the price has been quite attractive since the global financial crisis,” said Joseph.
Dubai, the second-biggest sheikhdom in the United Arab Emirates, experienced the world’s worst property slump during the global recession, with sales prices falling nearly 50 percent and project cancellations exceeding $300 billion.
The company is selling residential space at $6,130 per square meter, while furnished and serviced apartments are selling starting at $10,000 per sq m. Prices have been slashed by about 30 percent, he said.
Andy Zhang, a businessman from Zhejiang province, said he went to Dubai in January to investigate the property market.
“Buying low and selling high is the golden rule for any investment. So, after the property price in Chinese major cities almost doubled last year, buying overseas real estate is a safer bet,” said Zhang.
He sold two of his three apartments in Beijing at the end of last year.
Prices in 70 major Chinese cities rose 10.7 percent year-on-year in February, the fastest pace in almost two years, fueling concerns that an asset bubble is forming in China.
In Beijing, the unit price of the most expensive apartment has exceeded 120,000 yuan ($17,576) per sq m, and the figure in Shanghai is even higher.
Since the beginning of last year, a growing number of Chinese property purchasing delegations have visited the United States, Australia, the United Kingdom and other countries seriously hit by the global recession, but the actual transaction volume was not big due to economic uncertainties at the time, said Grant Ji, director of Savills (Beijing), a UK-based real estate service provider.
“But as the global economic picture is much clearer now and domestic property prices are pretty high, it is quite natural for Chinese investors to buy real estate overseas for higher yield,” Ji said.
