Downturn Hits Dubai

It seemed for awhile that, buoyed by oil money, the Arab states might withstand the housing downturn. But The Wall Street Journal reports today that the average asking price for homes in Dubai fell 4 percent in October and prices on upscale villas fell by 19 percent. In Abu Dhabi, housing prices fell by 5 percent. The global financial crisis froze up credit markets and scared away the international speculators who were so important to Dubai’s 6-year housing boom. Unlike its neighbors, Dubai has diversified its economy away from oil in recent years with heavy international borrowing. Its government is heavily invested in the property market, so falling prices raise concerns about its ability to repay its debt.