Investing is always a challenging game. Investing in property, so popular and common, may be tricky though. With ever-changing markets, you should keep yourself up to date to know when and where to invest. Times change so do the front-runners, and other cities are coming to replace former favourites or at least to stand on a par with them.
Hong Kong known to be a conventional heavyweight has been attracting investors from all over the world since the 1970s. It is a city with significant agglomerations of personal wealth, numbering 71 billionaires (Forbes, 2020). Today though we see that the priorities of the wealthy change and more and more people from Hong Kong turn to Dubai to diversify their portfolio, expand business or buy a second or third home.
Economic might, steadily growing year by year allows Dubai to enter the list of the most coveted cities in terms of residence and dependable investment.
Historically Dubai has been a frequent choice for natives of India, Pakistan, Saudi Arabia and Great Britain, which are the biggest property buyers due to Dubai Land Department analysts. Remarkably, within the last five years the portion of Chinese purchasers, interested in Dubai’s land and real estate property, has been growing at an exponential rate. According to the Dubai FDI Monitor, the total FDI capital inflow from Hong Kong to Dubai reached USD 75 million (around AED 275 million) between 2015 and 2018, with a total of 13 ongoing projects.
The growing engagement of Hong Kong financiers in Dubai was supported by an official initiative: in March 2019 two cities, Dubai and Hong Kong submitted a Memorandum of Understanding to boost economic and investment business relations on strategic sectors, particularly on real estate. That means corporate entities and privates get legal frameworks that will ease investing, expanding business and trading and catalyze economic opportunities.
So, why do foreign investors prefer Dubai now, in times of great uncertainty and restrictions? Living in a new pandemic world changes the priorities and the need for a safe haven is stronger than ever. Dubai is a perfect escape in terms of a comfortable lifestyle, safe living, well-developed health care and not so high density of population (compared to overpopulated Hong Kong). Besides, there’s a myriad of reasons to invest in Dubai, the best economic performer in the Gulf and a bustling cosmopolitan metropolis. Let us investigate and see in detail what benefits Dubai may offer against Hong Kong?
Hong Kong is a crowded city, reaching the mark of 7,08 million in population and 6.480 people/km2 density. Dubai is not so big and cramped: only 2,26 million inhabitants live in Dubai with a density of 400 people/km2.
On the one hand, big economies offer better employment, favourable environment for business and culture, but on the other hand, overpopulated cities experience troubles in relation to infrastructure overload (that refers to transportation, medical service, education, etc.) and high prices for homes.
In terms of the median age of the population, Hong Kong appears to be the city of more aged people and the reference looks as follows:
Dubai 27 years vs Hong Kong 41,7 years
Cities and countries with younger population are usually estimated as more perspective in place of future development. Young societies are more energetic, creative and progressive.
Needless to say, that Dubai is open-minded and welcoming innovations, geared towards the quality of living growth. Digital services widely implemented in each and every sphere of social life places the city in line with the most advanced metropolises in the world.
Dubai City 8% vs Hong Kong 0,76%
An average growth rate reflects an annual increase or decrease in population. The higher the population growth index the more dynamic the city is.
Hong Kong is a full-fledged member of the World Trade Organization, having its own political system, currency, trade policy and financial regulation. Thanks to its status and position, it serves as the flood-gate between two contrast political systems: communistic Chinees and democratic Western, which allows mutual trading and investing, which is measured by hundreds of billions of US dollars. About 60% of Chinees outward direct investments and 70% of the called-up capital flow through Hong Kong.
What made Hong Kong a powerful financial centre was a strong independent court system, guarding the interests of the owners and investors. If the situation with the ultimate protection of the rights and interests of investors aggravates large international corporates will leave Hong Kong.
Actually, this is already happening: the city economy suffers from a trade war between China and the USA. Investment flow decreases, as large-scale Western companies are moving the business from China to other countries and holding money back. The turbulent social situation caused by public protests against government policy ward off tourists and private investors.
In this light, Dubai looks far as appealing for foreign business expand or investments. It stands out most assuredly against other cities in Asia, which conduct mild business policy parallel to low taxation and minimal barriers for investments.
First of all, the government of Dubai ensures and provides safe and peaceful co-living for multi-national communities it is home to. Due to the global report of Numbeo’s 2020 related to crime index the UAE ranks third with a safety index of 84,55, leaving behind Hong Kong in the sixth place and scoring 79,09. The political and social atmosphere is even and hasteless. The UAE has one of the highest per capita income levels in the world and a highly developed welfare system.
Total public debt is low, estimated at 20.1% in 2019 with a stable outlook for 2021 (20.3%). UAE’s Central Bank and sovereign wealth funds own important foreign assets, providing the country with a large liquidity cushion and making it a net creditor at the global level.
The United Arab Emirates is the world’s 8-th largest oil producer with significant reserves. Its oil and gas reserves are estimated to last approximately 100 years at the current rate of consumption. The country diversifies its oil-dependent economy, developing strong financial and tourism sectors primarily. The last one, in particular, has a total contribution of around 12% of GDP, driven by the emirate of Dubai most of all.
Dubai and Hong Kong both are fascinating, multicultural, rich city-states with impressive skylines, stunning architecture and views, beautiful coastline, upscale food scene and shopping. The cities offer the widest range of resort-like entertainments, so the residents may enjoy the same activities as the vacationers, including lounging on the beach, deep-water fishing or diving.
Hong Kong is well-known for its legendary shopping, sometimes it really seems like there are no other venues in the city except endless chains of shopping centres. But surely, there are a tremendous number of opportunities for those wanting to exercise and socialize: concert halls, art galleries and other cultural hotspots, sports clubs as well as fine dining.
Dubai ranks high with its exceptional entertainment attractions, astonishing theme parks, to name a few Motion Gate or Legoland and waterparks, such as Worlds of Adventure and ultimate luxury shopping in megamalls, with the world biggest Dubai Mall. Dubai is a blend of modern and glamorous, oversized man-made constructions side-by-side to a traditional old town around the Creek with bustling souks and wind towers.
The climates differ from each other: an average yearly temperature reaches 27,5C in the dry climate of Dubai and it is about 23,24C at high humidity levels in Hong Kong. Dubai is stuck between the Arabian Gulf and the arid desert, while Hong Kong is near the tropics.
Due to weather conditions Hong Kong boasts lush greenery, but isn’t that fascinating and charming when in Dubai you see numerous fountains, manicured gardens and parks scattered all over the city? let’s take Dubai Miracle Garden – a mega flower garden, and you’ll never believe you are in the desert city.
16 in Hong Kong vs 46 in Dubai
Universities, as important centres of education, culture, scientific and research works are success keys for any city. Dubai hosts to international universities, branch campuses, private and municipal colleges with undergraduate and postgraduate programs. Well reputed in the Middle East they attract students from the Gulf and MENA regions.
3,2% in Hong Kong vs 0,4% in Dubai
A low unemployment level indicates better opportunities to make a living and a career. Dubai draws young professionals from all over the world with a multitude of trade, hospitality and real estate careers and as it is seen from above, has the lowest unemployment rate in the world.
As it comes to the cost of living, Hong Kong is far more expensive than Dubai in a number of parameters: housing (rent +44,63%), including utility bills (+25%), groceries (+58,36%) and childcare (+52,77% for 1 year of education in a private international school).
Consumer prices are 19,15% higher than Dubai, while the average salary is lower: in Hong Kong USD 2.716,32 vs in Dubai USD 3.323 (Wikipedia, cities, statistics, 2020).
Hong Kong is consistently ranked as one of the most expensive cities globally to rent property and floorspace here may be scarcely be compared to anywhere else in the world. Adding to that, landlords yield roughly 2% ROI.
The rental cost of a typical 1-bedroom flat in the centre of the city:
In Hong Kong USD 2.198 vs in Dubai USD 1.764 (source: numbeo.com, 2020)
Dubai’s properties offer better numbers in return on investment: about 7-12% if taken on average. Evidently, investors share more lucrative opportunities to capitalize in Dubai, than in the tropical city. Besides, in recent years threshold has been lowered, as the share of affordable residential properties in the market climbs excessively.
Summarizing all the aforementioned up, Dubai clearly excels in main vital characteristics, as comfortable resort-style urban living at lower costs, than in Hong Kong, and a safe environment to run business and invest.
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