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By Jason Benham
DUBAI Nov 13 Dubai property shares plunged and
its biggest private developer slashed jobs this week as the
global financial crisis tightened its grip on the tiny emirate,
until now synonymous with the Gulf Arab real estate boom.
Dubai's glittering skyline and luxury tourism sector have
lured investors in droves over the past five years. But property
prices have begun to fall, according to brokers and banks, in
one of the clearest signs to date that the bubble has burst.
A real estate crash in Dubai would call into question the
futures of millions of immigrant workers, many from India and
Pakistan, and whether energy exporter Abu Dhabi would run to the
rescue of its high-flying but poorer neighbour.
"Villas that were very hot before the crisis have fallen.
The buyers were chasing the sellers but now it's the other way
round," said Quaid Abbas, property consultant at Engel &
Volkers. "Small real estate companies are going to close down."
Secondary prices in Dubai and Abu Dhabi fell 4 to 5 percent,
with Dubai's advertised villa prices falling by 19 percent
month-on-month in October after several banks tightened lending
conditions in August and September, HSBC said.
Apartments in the Dubai International Financial Centre, the
nexus of the banking and investment sector, fell as much as 30
percent, it said.
Rehab Gouda, senior sales agent at Al Jabal Real Estate,
said that property prices had fallen 30-35 percent in Dubai
A three-bedroom villa in the unbuilt Jumeirah Park project,
a sought-after area of the seaside emirate, which was worth
around 4.8 million dirhams ($1.3 million) in August, is now
valued at roughly 3.8 million dirhams, she said.
"The market is going through a tough time," said Sana
Kapadia, associate equity research at EFG-Hermes in Dubai.
"Whether or not it is the end of the market, remains to be
Times are certainly tough for the real estate sector with
shares tumbling this year due to the crisis and a number of
highly publicised investigations into alleged corruption.
Emaar Properties EMAR.DU, the region's largest property
developer by market value, fell 5.6 percent on Thursday to mark
a drop of over 80 percent this year. Union Properties UPRO.DU,
which has dropped around 78 percent during 2008, fell 6.7
Scaled-back projects and job cuts among developers provide
more evidence that the financial crisis has hit Dubai, which
boasts man-made palm islands, an indoor ski resort and the
world's tallest building.
Emaar said on Thursday it was reviewing its jobs policy
after Damac Holding, Dubai's largest private property developer,
said earlier this week it was cutting 200 jobs, or 2.5 percent
of its workforce.
The cuts follow news that developers are scaling back
projects as funding becomes harder to secure.
State-owned Nakheel said recently it was slowing down on
dredging work on its massive Palm Deira project, the largest of
three palm archipelagos that, when completed, is planned to
house more than 1 million people.
While soaring inflation has triggered civil disturbances in
Dubai in recent months, a property collapse could trigger the
same if the government decides to ship home thousands of
labourers who climb scaffolding and pour concrete every day.
Dubai's ambition to be a regional economic hub would also be
dented by a property crash, though some are optimistic that Abu
Dhabi would intervene and that long-term growth prospects for
the region would support the financial sector.
"Dubai appears to be able to continue to attract people and
talent and this looks poised to maintain its standing as a
regional power house," Kapadia said.
(Reporting by Jason Benham; editing by Thomas Atkins, John