Dubai can lure Hong Kong expats

  • Imprisonment and asset freeze of pro-democracy entrepreneur Jimmy Lai symbolise change in HK post-June 2020 security law
  • Dubai has liberalised its visa regime and handled Covid well: its cost of living is also over 20% below HK and Singapore
  • Property prices up 35% in HK, flat in Singapore, down 30% in Dubai since 2015; Emaar PB on a 40% discount to 5y average
Dubai can lure Hong Kong expats

The freeze of assets (on 14 May 2021) of entrepreneur, media-owner, and pro-democracy supporter, Jimmy Lai, is the latest symbol of the change in Hong Kong since the introduction of the national security law in June 2020. The asset freeze follows his imprisonment (first in August 2020).

For rich expatriates who are affluent enough to move for lifestyle and wealth preservation, as much as income generation, Jimmy Lai's example may serve as another nudge to consider cities like Singapore, a migration underway for some time judging by the anecdotal evidence of private banker relocations and hiring trends.

Arguably, a more intriguing, and less well-trodden, alternative for rich expats and global emerging market equity investors has emerged in Dubai.

For a new expatriate resident property prices have moved in Dubai's favour compared to Hong Kong and Singapore

Dubai has liberalised its visa regime, falls under the UAE's Abraham Accords with Israel, has maintained a globally rare sense of normality during Covid in terms of outdoor activities and open schools, and is efficiently vaccinating its population.

And, perhaps most importantly, Dubai now has cost of living over 20% below Hong Kong and Singapore. The main driver of this competitiveness is residential property prices which, since the start of 2015, are up 35% in Hong Kong, flat in Singapore, and down 30% in Dubai.

For global emerging market equity investors, there is one stock alone which is liquid enough to provide exposure: Emaar Properties, which has about US$12mn of ADV and is on 0.45x trailing price/book (a 40% discount to the 5-year median).

Below we chart the following:

  • Cost of living comparison between Dubai with other cities (both those considered more established expat centres, which are generally more expensive, and those which provide a potential source of new migrants, which are generally cheaper).

  • Decline in Dubai's cost of living decline over the past decade.

  • Emaar Properties and the DFM General Index trailing price/book over the last 5 years.

Dubai cost of living 22% below Hong Kong and Singapore

Dubai's cost of living has dropped about 30% from a decade ago, driven mainly by falling property costs

Emaar Properties is the only equity play on Dubai property liquid enough for global EM funds (US$12m 6 month ADV)

Related reading

Dubai house prices stable for the first time in 5 years, April 2021

UAE calls citizens of the world, January 2021

Hong Kong opposition resigns; HK property stagnates, November 2020

China, Hong Kong, Taiwan: Complacency on political risk, July 2020

China and Hong Kong: 'One country, two systems' becoming 'one world, two camps', May 2020

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