SHANGHAI: Property speculators from Wenzhou who contributed to the sky-high real estate prices in the country's largest city are moving their cash into debt-laden Dubai.
Dubai's Burj Khalifa tower, the new tallest building in the world. [Photo/Agencies]
A group of 12 Wenzhou entrepreneurs just came back from a four-day visit in Dubai last Friday to scout the dwindling real estate market.
"Since the recession on real estate in Dubai, I've led three groups of investors to Dubai to investigate properties," said Chen Zhiyuan, the president of Wenzhou Chamber of Commerce in the United Arab Emirates.
Chen, who led the team of investors from Wenzhou, said they haven't made any investment plans because the purchasing time is not mature yet.
"We'll still wait and see what the local government will do to propel the dwindling property market," Chen said.
Wenzhou, China's private capital powerhouse in the southern province of Zhejiang, is among the richest areas in the country and the birthplace of self-made billionaires who are manufacturing clothes, shoes, and other small commodities like lighters.
Chen said he came to Dubai with nothing a decade ago. "As a Chinese businessman, I have the advantage of getting products from factories directly in a shorter period and with a lower price. I saw the great potential from the popular Chinese-made products."
Chen opened the first China town hall in 2000 in Dubai, where hundreds of commodity shops were built, run by Chinese merchants mostly from Wenzhou. Chen launched two more small commodity malls to unite Wenzhou businessmen because he believes that solidarity is always a tradition for Wenzhou merchants.
The real estate industry in Dubai has already bottomed out during the recession, he said. The peak price for the blocks surrounding the Khalifa Tower reached 140,000 yuan ($20,505) per square meter in 2008, while the current price has been dramatically chopped by nearly 70 percent.
Dubai's crisis began at the end of November last year, when the emirate said its investment arm, Dubai World, would not be able to make on-time payments for some of its $59 billion in debt, leading to a meltdown in the real-estate market.
On the back of the economic recession in the country, Chen, along with eight other Wenzhou locals, set up the Wenzhou Merchants' Dubai Investment Group to build up the union among successful Wenzhou businessmen for a win-win situation in property market and export trades.
The main projects of the investment group focused on the commercial and residential blocks surrounding the Khalifa Tower, the well-known skyscraper in Dubai. Another priority is the shift of the commodity market in Yiwu to Dubai as an expansion of the small commodities industries.
"Nine of us gathered together for group investments in order to catch the attention of the local government to establish certain stimulus policies on boosting the real-estate market. I believe that our investments will push the recovery of property market forward with the assistance of local government," Chen said.
The average price for the properties in the city center of Dubai ranges from 20,000 to 60,000 yuan per square meter, said Lin Chunping, chairman of Wenzhou Taifeng Sewing Equipment Co., Ltd. Lin is also a member of the investment group.
Lin started her property bargain-hunting trip in Dubai in September last year. This recent February trip, with eight other members, was her second time to look into the real estate in Dubai.
"We're still waiting for a perfect chance to recover the property market along with the momentum of tourism around the Khalifa Tower," she said.
One group of merchants left for Dubai yesterday morning and many more investors are on their way before and after the Chinese New Year, according to Lin.
"Nine of us will depart for Dubai again after the Spring Festival for further negotiation. Hopefully we can reach a more detailed agreement with the local property agent," Lin said.
Chen also talked about the stimulus policies and their affect on the soaring prices of real estate in Hainan province.
"Since the official policies have been established by the State Council to promote Hainan as an international tourist island on Jan 4, the prices of properties in Haikou, Sanya and Qionghai have risen dramatically. The boost of real estate in Hainan is totally owing to the stimulus policies put forth by the government," Chen said.