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China construction giant, developer remain upbeat on Dubai

Xinhua, September 9, 2015 Adjust font size:

Leading Chinese construction and real estate companies on Tuesday assured their confidence in Dubai's property market which is faced by current headwinds such as low oil prices and emerging markets' currency devaluation.

Yu Tao, president and CEO of the Middle East subsidiary of the world's largest construction company, China State Construction Engineering Group (CSCEC), said he remains optimistic on Dubai as a real estate investment hotspot.

"In the past few years, property prices in Dubai were increasing substantially. Therefore, a consolidation over a period of time is good so that demand and supply is balanced," Yu said at the annual Cityscape Global, world's largest networking exhibition and conference on property development.

Yu's remarks pit against Standard and Poor's recent prediction that property prices in the Gulf Arab emirate are poised to decline by 10 to 20 percent until the end of the year, mainly due to increased risk aversion among investors following the slump in oil prices.

The CSCEC entered a joint venture with Dubai-based Skai Holdings in 2013 and invested about one billion U.S. dollars into the hotel project, Viceroy Dubai Palm Jumeirah, which marked the Chinese firm's first investment in the Middle East in its 61 years of history.

The project is partly financed by the Dubai branch of China's biggest lender ICBC which provided in January 2014 a loan of 201 million U.S. dollars.

The Chinese construction giant is also building another five-star hotel for Dubai-based developer Arenco Real Estate on the man-made island palm Jumeirah.

In addition to the CSCEC, the first Chinese developer based out of Dubai, Honest Real Estate Development, also unveiled its newest project, Royal Pearls, a community that spans over 420,000 square meters near the Dubai hippodrome Meydan Grandstand and consists of 34 buildings or 10,000 apartments, according to Liu Yongsheng, the company's vice president.

Despite current headwinds such as oil price decline and emerging market currency devaluation, Liu said potential clients from China, local emirates, the Arab world, Europe and even United States have showed significant interest.

"We see a long-term benefit because the emirate will host the world expo in 2020 as the first Arab metropolis," Liu added.

Echoing Liu, the CSCEC's Yu said despite the recent devaluation of the Chinese currency, more Chinese investors are considering property purchases in Dubai, because high net-worth Chinese families are increasingly using overseas investments to diversify their portfolios. Endit