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DUBAI, UAE-According to a Morgan Stanley report issued this week the United Arab Emirates is experiencing a severe market downturn, with property prices plummeting, the rental marketing weakening and project delays. The recent findings are in stark contrast to the peak in September 2008.

The 14-page report claims “UAE property prices have fallen off a cliff” from the peak level just 5 months ago. Asking prices in Dubai and Abu Dhabi fell 25% and 20% respectively. For example, the asking price for a high end apartment in Dubai in July 2008 was $11,040 per square meter. In January that number fell to $7,041.

Even more indicative of the weakening real estate market is the delay and haulting of new projects. At the end of 2008 the value of UAE property projects exceeded $1,250 billion. However, the report indicates $263 billion of projects have been either delayed or canceled.

Some of the UAE’s biggest projects are on hold until the market strengthens. For example, The $98 billion mixed-use Jumeirah Gardens being developed by Meraas Investment Co., which was announced in the middle of last year has been put on hold. So has the $60 billion Mohammed Bin Rashid Gardens, and the $38 billion Nakheel Skyscraper.

Morgan Stanley lists a number of altering market fundamentals that are to blame for the changing of the tide. Deteriorating economic conditions, job losses, speculators losing interest and corporate scandals all made the list.

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