By Stefania Bianchi and Mirna Sleiman
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)–A six-year real estate boom in Dubai that spurred a $475 billion building frenzy has ended, according to agents who say sales are collapsing amid fears that the global economic downturn will hit the sheikdom.
“Last month was a real disaster and worse is coming I guess,” Mehdi Zoghbi, an agent at Middle East Real Estate Consultants, told Zawya Dow Jones Sunday.
Zoghbi says that desperate sellers are now offering off-plan properties on the secondary market for a zero premium, effectively accepting a loss on their investment in order to offload quickly.
Dubai, the first Gulf sheikdom to allow foreigners rights to buy homes, may also be the first to see a crash in property prices as uncertainty over the region’s prospects and the global credit crunch have undermined investors’ confidence.
“Our commissions have fallen by up to 70% recently,” said Khaled Daji, an agent at Al Jabal Real Estate. “The most hit are the projects under development and those luxurious high end. We plan to survive for another six months to see how this crisis unfolds.”
Daji says that Dubai’s real estate watchdog needs to do more to stop the practice of “flipping” property and the payment of “key money” to reserve real estate.