When many mega construction projects, including the world's tallest building, Dubai Tower, kept rising from the sands in the Middle East, Chinese investors had sky-high hopes about the Dubai property market.

But all seem to have become a passing memory, as the global debt crunch pricked property bubbles in the emirate.

"Investing in real estate was popular among Chinese businessmen in Dubai for quite a long time. No one expected the property market would tumble," said Chen Zhiyuan, director of the Wenzhou Chamber of Commerce in Dubai.

"The property price rose only to about 20,000 yuan to 30,000 yuan per sq m in the emirate favored by global investors," Chen said.

Dubai is the first emirate in the United Arab Emirates (UAE) to allow foreigners to buy property. Although Dubai's economy was originally built on the oil industry, the emirate's main revenues now are from tourism, property markets and financial services.

Global stock markets fluctuated after Dubai on Nov 25 said it was asking for a six-month reprieve on paying Dubai World's $59 billion debt as a first step to restructure the emirate's leading State-owned company.

"More than 100,000 Chinese are doing business or working as laborers in Dubai, and most businessmen bought property after having worked there for more than two years," Chen said.

Local property prices tripled or quadrupled in the past 10 years, said Wang Weisheng, board chairman of Dubai-based Asia Business TV.

"A villa was priced at only 8,000 yuan per sq m in 2001, but the average apartment price had soared to 20,000 yuan to 30,000 yuan a sq m before the crisis," Wang said.

Before the bubble burst, speculation in property was profitable, he said.

"It yielded money more quickly than traditional business investments and thus attracted more hot money," Wang said.

He said Chinese investors usually bought one or two apartments at first, but then the profits inspired them to collectively purchase a whole floor or building.

Wenzhou investors, for example, would decide over dinner about which project to purchase and how much they would invest, Wang said.

Wenzhou, in Zhejiang province, is known for its emigrants who leave their native land to do business overseas.

Most investors believe the sudden downturn in Dubai's property market was a warning bell for China's property market.

"China's property market took off almost at the same time as Dubai's, but at a speed much faster than Dubai's in the past 10 years," Chen said.

In many larger Chinese cities, average apartment prices have exceeded 30,000 yuan in core areas, Chen said.

Feng Fei, director of the Research Department of Industrial Economy under the Development Research Center of the State Council, said China should closely watch for bubbles in property and stock markets amid today's rich capital fluidity.

Despite losses in property investments, Chinese businessmen reported few effects from Dubai debt woes in other sectors.

"The crisis was mainly caused by debt woes in mega projects and an exodus of foreign investment, hitting property and financial services. Imports and exports with Dubai are not seriously affected," said Fang Xiaoqiang, general manager of Longfei Import and Export Co Ltd, based in Yiwu, Zhejiang province.

Chen echoed Fang's opinion, saying that only those who borrowed large sums to speculate in property suffered great losses.

He said most Chinese businessmen felt lucky, since they spent a smaller portion of their capital on property investments and did not give up their main businesses.

Hu Bin, board chairman of Shanghai Zhongzhou International Group Co, invested $28 million to buy an artificial island in Dubai in 2007.

Construction of the island, with 1.2 billion yuan in investments, was scheduled to be finished in 2010. But the project has been suspended in the wake of the financial crisis, Hu said.

"It's normal for businessmen to suffer in a crisis. The Dubai World debt crunch this time is not as devastating as the global financial crisis last year," Hu said.

"Despite a lot of uncertainties around, most Chinese investors are confident in Dubai's future and the recovery of its property market," Chen said.

Xinhua

(China Daily 12/14/2009 page5)