Dubai's property bursts

"There is fear the worst is yet to come as a glut of properties arrives on the market. About 70,000 units are scheduled for completion in 2009, more than half were originally planned for 2008 or even earlier, according to a September report from EFG-Hermes. Buyers willing to commit to purchases before construction are harder to find now. Before the credit crunch, speculators accounted for 50 percent of the market." yousef abdulla

Banks have tightened lending or frozen it altogether. Amlak Finance PJSC, one of the biggest mortgage lenders in the UAE, announced on November 19 that it had suspended new home loans. London-based Lloyds TSB Group Plc stopped offering mortgages for apartments in Dubai on November 11 and reduced the amount it will lend for villas from 80 percent to 50 percent of the price. This has naturally had a negative effect on property values. For instance, in November, the cost of a seven-bedroom villa on Palm Jumeirah dropped to 19 million dirhams ($5.2 million), still an exorbitant price, down from 30 million dirhams in September, according to the Dubai unit of German real estate company Engel & Voelkers AG.

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