Emirates property prices 'fall off cliff' in meltdown

Property prices in the United Arab Emirates "fell off a cliff" after banks reduced lending and speculators withdrew from the market because of the global economic crisis, Morgan Stanley said in a note to investors.

In Dubai, prices have slumped 25 per cent from the market's peak in September, while Abu Dhabi prices have declined 20 per cent, according to the US investment bank. There were sharp falls in the number of transactions during the fourth quarter, the bank said.

Deteriorating economic conditions, job cuts and the unavailability of mortgages had "resulted in a worse than expected performance in the UAE property market, especially in Dubai", Mai Attia, an analyst based in the sheikdom, said.

Dubai opened its property market to foreign investors in 2002, while Abu Dhabi allowed foreign ownership three years later, fuelling a boom that was boosted by low interest rates.

Banks including HSBC Holdings and Lloyds TSB Group clamped down on mortgages in the last quarter as the global recession started to affect the region, forcing construction companies to scale back projects and cut jobs.

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Posted: 4 Feb 2009

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