Over the last decade an oasis has opened up in the Arabian Gulf.  First, The Palm Jumeirah grew from the sandy depths of the Jumeirah coastline, followed by its bigger siblings, The Palm Jebel Ali, The Palm Deira, and of course, The World.

These major land reclamation projects, funded by Nakheel Properties, were stimulated by the growth of the financial and entertainment prosperity of Dubai during the time of escalating crude prices and easy money.

Well, Dubai may have benefited from grandiose economic times, but the new world icon is not impervious to other end of an economic cycle.

The economic impact felt in Dubai has become evident with the halting of construction work on the Nakheel Tower; a building that would rise more than 3,290 feet to be the world’s tallest when completed.

Additionally, according to the Colliers International House Price Index, overall house prices in Dubai have dropped by 8% in the fourth quarter of 2008.

Other developments in Dubai have been affected as well, including the Trump International Hotel and Tower, Frond N villas, and Gateway Towers, as well as parts of the Waterfront and Palm Deira.

It’s been clear to me that Dubai has gambled big on its real estate ventures, with massive capital outlay for oasis-like resorts to draw in tourists to compliment the attraction to the financial sector.

Dubai House prices have in­creased 42 per cent in Dubai between the last quarter of 2007 and the first quarter of 2008, ac­cording to a report re­leased recently by global property consultants Col­liers International. -Source

What goes up like a rocket, comes down like a lawn dart!

Crude oil prices have fallen 75% since their highs during the summer of last year.  The global financial industry hasn’t fared well either, and Dubai is not immune to real estate whoas.

Late last year, Nakheel laid off 500 employees, about 15 per cent of its labor force, due to global market conditions.  Seeing as how the Nakheel Tower was to take 10 years to complete, a stoppage in construction and a layoff of a good chunk of their employees is a sign that the company doesn’t expect a quick turn around in global economic conditions.

It will be interesting to see how Dubai weathers this global economic storm.

Finance, Real Estate Dubai, global markets, Nakheel Properties, Real Estate, The Palms, The World