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Dubai and its proliferation of stunning and glittering property developments reached a stand-still during November 2009 when the Government-backed Dubai World Conglomerate sent tremors through global markets issuing a statement that it could not pay its debts of $22 billion. Dubai World had asked their creditors for more time to repay debts, and then to suspend debt repayments. Dubai was thrown a $10 billion financial lifeline from its’ neighbour Abu Dhabi last week, which amounted to the third loan this year: not good news.

Crisis talks are happening quickly to tackle their huge debt problems and to establish a way forward on how to pay it off and stabilise Dubai’s economy, and this situation has inevitably impacted the Dubai property market, although not necessarily in a negative way. Those who have purchased in the last year, with high property prices and mortgage rates, will have to hold on and wait until the economy settles, as most are likely to have negative equity. Those buyers that bought before 2007 will be safe, and may even make a profit if they chose to sell.

For those investors who have an interest in securing discounted deals in commercial property in Dubai, as well as houses and apartments, and who may have large deposits to put down, now may be the best time to pick up a bargain. Dubai property prices have dropped by as much as 50 percent from the property peak in the latter part of 2008. Some commercial, financial and retail property developments have been put on hold or cancelled as Dubai tries to stabilise its financial position and economy.

Dubai was racing ahead with a significant number of developments, and there were also attractive visa terms available if they bought a Dubai property. However, the bubble has now burst, and Dubai’s first priority is to resolve its current financial crisis and determine how it is going to move ahead and reassure nervous global investors and organisations who have already invested millions into the Dubai property market. Another problem with the Dubai property market, was its oversupply of developments, and the speed at which the development happened. Most of the property purchases were bought speculatively off-plan, and there was a surge in overseas buyers wanting a slice of the Dubai property market. This was an increasingly growing bubble that has now burst.

However, it’s not all bad news. Dubai still has a strong tourism and retail industry, and its bid to become one of the world’s most important financial centres can still become a reality if they can reassure global markets and companies to stick with them and invest in them. Abu Dhabi’s loan has helped to calm nerves, and with other help, over time Dubai can recover. Dubai property is a very attractive deal currently, although purchasers should hold on to see what plans are offered to help Dubai recover.