Glitter finally comes off Dubai market

A six-year property boom in Dubai is ending, according to agents who say sales are collapsing.

Billions of pounds have been spent on extraordinary development schemes in the United Arab Emirate, where most of the buyers have been overseas off-plan investors – many from the UK.

Its schemes have included huge shopping malls, the world’s tallest buildings, manmade islands, theme parks and entire themed areas, including The World – a replica of the globe – plus locations dedicated to academia, IT and business.

But because so many of these schemes are off-plan, the overall impression of Dubai today is that it is a building site. A significant problem has been getting enough builders into the emirate to handle the construction, with the result that many completions have been delayed. Some critics have also described the architecture in less than flattering terms.

Until now, none of this has been enough to halt the runaway boom.

Dubai was the first UAE to allow foreigners rights to buy and hold property, but recently banks, including HSBC, have tightened their lending criteria, making it impossible to buy without a large deposit.

“Last month was a real disaster and worse is coming, I guess,” Mehdi Zoghbi, an agent at Middle East Real Estate Consultants, told newswire Dow Jones.

Another agent, Khaled Daji, at Al Jabal Real Estate, said “The most hit are the projects under development and those luxurious high-ends. We plan to survive for another six months to see how this crisis unfolds.”

The report is the third such warning this year. Consultancy Colliers International reported that property inflation in Dubai had slowed abruptly from 42% in the first quarter of this year to 16%, while in August, Morgan Stanley warned of a 10% fall in prices by 2010.