Investors from the eastern Chinese city of Wenzhou, widely known for their “shopping trips” to target global real estate markets, have gotten burned in Dubai, the desert oasis turned to mirage.
Millionaires from the isolated coastal city of Wenzhou, a centre of Chinese private enterprise, have fanned out across China and overseas over the last decade in search of property that they buy, and often quickly resell at a profit.
They may collectively face about 1 billion yuan ($146.5 million) in losses as the Dubai real estate market contracts, the head of the Wenzhou SME Business Development and Promotion Association said.
“Wenzhou people had always had high hopes for Dubai. But now we think investors should be extremely prudent and avoid blind investing,” said Zhou Dewen, head of the association.
“This is one regret we have.”
Global markets took a pounding when news broke last week that state-controlled Dubai World, which led the emirate's transformation into a regional hub for finance, investment and tourism, had sought an extension on its debt payments.
Visitors to Dubai tell of empty buildings and vacant lots, after the global financial crisis put the emirate's glamorous projects on hold.
{{/usCountry}}Visitors to Dubai tell of empty buildings and vacant lots, after the global financial crisis put the emirate's glamorous projects on hold.
{{/usCountry}}It was a Wenzhou native who bought into Dubai's World Islands project, in which artificial islands were built to look like a map of the earth. Hu Bin, chairman of Shanghai Zhongzhou Group, bought the Shanghai island for $28 million in 2007, the China Daily said.
Altogether, Wenzhou investors have put down about 5 billion to 6 billion yuan on Dubai real estate since 2005, Zhou estimated.