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March week 2

Amidst billions of trade exchanges

Increased Sino-GCC relations entail high level of readiness in private sector, particularly property companies

Al Mazaya Report: Gulf property markets capable of luring more Chinese investments and stimulating real estate, tourist demand

The Sino-GCC relations have remarkably accelerated recently, with China enjoying an increasingly preferred status in the Gulf region’s domestic economy, a fact that can be evidently seen through the ongoing expansionary plans launched by a large number of Chinese property and non-real estate companies, including steel, construction and firms from other real estate-shared sectors. This growth in relations will generate mutual benefits, and as such will boost bilateral investments.

In this regard, the weekly report issued by Al Mazaya Holding said that a positive outlook for the level of relations between China and the countries of the region, depends on many existing and planned agreements and partnerships. Current statistics indicate that China is seeking to revive old trade relations with the Gulf region by injecting investments ranging from US$120 billion to $130 billion annually over the next five years, with banking, infrastructure, and tourism investments coming on top of the list at present and in the foreseeable future.

GCC-Chinese relations are gaining increasing momentum through the apparent alignment between the two sides in economic plans, strategies and visions in the build-up to 2030. These bilateral economic relations are expected to gain more ground, primarily with Saudi Arabia and the UAE, two countries that are now favoured by tourists from China, with data indicating that the value of trade between China and Saudi Arabia reached $63 billion, while the non-oil trade between China and the UAE amounted to $53 billion and is expected to hit $70 billion by 2020.

The purchasing power of Chinese investors is giving a compelling impetus to expand financial and trade relations between the two sides, with  Chinese investors having a proven track record of success in stimulating overseas markets, particularly in Southeast Asia, Europe and the US.

The Gulf region abounds in myriad prospects to woo Chinese investments and raise demand for real estate and tourism activities. For example, available data indicate that a large number of Chinese investors entered the Dubai real estate market with AED1.7 billion worth of investments at the end of the third quarter of last year. It is estimated that the Sino-UAE relations will witness greater strides over the next few years, depending basically on the existing commercial, cultural, tourism and investment partnerships, as well as Chinese investors' desire to seek overseas real estate investment opportunities following a decline in local real estate opportunities.

Al Mazaya confirmed  that real estate developers are set to benefit from more investment opportunities, in terms of both direct and indirect Chinese investments in the region.

Seeking to utilise the new investment landscape, Gulf property companies have started to move forward to the Chinese market to promote their real estate projects directly to Chinese investors. It has transpired that Chinese investors prefer ready-to-move-in properties as well as off-plan real estate projects and units in those locations which can retain their market value and resist industry pressures.

Therefore, the region's markets will enjoy fair demand by the Chinese investor as they maintain their fair value under all circumstances, taking into consideration the business mobility resulting from the increased number of Chinese residents in the region, a fact which will lead to tapping more investment opportunities, creating more expansion at the construction level and more demand for all types of real estate products over the coming period.

Al Mazaya report underscored the importance of deepening Gulf-China relations and partnerships in order to benefit from the myriad potential enjoyed by the world's second largest economy after the United States. China has succeeded in doubling its economic scale more than 42 times, securing a gross domestic product of $13 trillion, and becoming the world’s biggest exporter of goods, with official estimates putting Chinese annual exports in the region of $2.5 trillion, not to mention its global investment clout.

Such a coveted economic position would mean a lot to the economies of the region at the moment if they succeeded to maximise the added value created by the current and planned mutual investments with China.