Dubai may have held on to its real estate prices even during the height of international recession but recent data shows that the real estate sector in Dubai is slowly succumbing to pressure. The price of freehold properties in Dubai has gone down by as much as 70% since March 2008 and is expected to reach bottom levels in six months.

Real estate brokerage New World Capital managing director Mohammed Khan said they expect the plunge in Dubai’s property prices for the next eight months. The continuous plunge is expected to bring the property prices here down to the original levels five years ago. So far, prices have already plummeted down by up to 70% of the 2005 level.

The 25% surge in Dubai’s property prices during the first half of 2008 was attributed to speculative investments, the increase in expatriate population and the rise in construction cost. However, property prices have drastically declined during the last quarter of 2008 due to the global crisis. Lower cost developments have also suffered from price declines albeit minimal.

Investment bank EFG-Hermes forecasted overall price declines of up to60% from the 2008 peak prices. The bank referred to this as a period of correction for Dubai’s real estate market after a sustained period of buoyant activity.