GLOBAL: Dubaii - Home of world's biggest property slump

Dubai, once the location of the world's biggest construction boom, is now the scene of the world's biggest property slump, according to figures published yesterday by estate agent Knight Frank.

House prices in the desert sheikhdom dropped by an extraordinary 40 per cent in the first three months of 2009, outpacing falls anywhere else in the world after an investment bubble burst.

Singapore, the nation worst hit by the collapse in world trade, saw the second biggest fall, with property prices down 16.2 per cent in the quarter. Bucking the trend were Finland, where house prices rose 4 per cent over the three months, and Jersey, where prices surged by 5.6 per cent. The fall in sterling has prompted foreign buyers to snap up property in the channel island tax haven, making homes even more out of the reach of local buyers.

A 16.5 per cent price fall in the U.K. over 12 months placed it among the five countries with the biggest annual decline, but its quarterly decline, at 4.5 per cent, was exceeded by many other countries.

The global turnaround in house prices has been remarkable. A year ago, homes in Dubai were spiralling upwards on an annual growth rate of 48 per cent. The boom spawned developments such as the Palm Jumeirah and Burj Dubai, the world's tallest tower, but now apartment blocks stand empty or half-finished. Dubai's ruling family, the Maktoums, have already sought a £13.5-billion ($21.1-billion Canadian) emergency loan from their oil-rich neighbour Abu Dhabi, and fears are growing that many of the region's biggest properties companies are close to bankruptcy.

Dubai "is in a mess," said Nick Barnes, head of international residential research at Knight Frank.

In Germany, prices fell by just 1.5 per cent over the year. Price in Latvia fell 36 per cent over the year and in Poland by 13 per cent, but neither country has yet provided figures for the first quarter of 2009.

(prepare by Patrick Collinson/Globe and Mail)