Dubai's Palm Jumeirah sees prices fall as crunch moves in

Dubai's Palm Jumeirah sees prices fall as crunch moves in
Property prices on the Palm Jumeirah, the island in Dubai that has been dubbed the ‘eighth wonder of the world’, have plummeted by as much as 40pc since September amid fears that the global credit crisis is stalling the emirate’s economy.

By Louise Armitstead
Last Updated: 6:36PM GMT 20 Nov 2008

The Atlantis hotel is one of the biggest on the Palm The economic concerns come as the world’s biggest man-made island, which is created in the shape of a date palm, prepares to throw a $20m extravaganza for today’s launch of the £1bn Atlantis hotel on the Palm.

More than 2,000 world celebrities are due to attend the event tonight including Oprah Winfrey and actors Robert De Niro and Denzel Washington. Sol Kerzner, the South African billionnaire owner of the Atlantis is organizing the launch party.

A four-bedroom villa on the Palm, which is run by the state-owned developers Nakheel, is now selling for 10 million UAE dirhams (£1.8m), down from 15 million dirhams in September, Dubai-based property consultants Engel & Volkers told Reuters.

When work started on the Palm in 2001, the villas were snapped up for as much as £5m each and sold to buyers including footballer David Beckham and racing driver Michael Schumacher. In the following hype surrounding the island, nearly a quarter of the villas were sold to British buyers.

Nakheel said earlier this week it has witnessed a slowdown in the rate of real estate sales. Last month the developer announced it had scaled back dredging work on its massive Palm Deira project, the largest of three palm archipelagos that is planned to house more than 1 million people.

Meanwhile buyers are struggling to get mortgage loans in the region. Dubai Islamic mortgage lender Amlak told Reuters today it had suspended new mortgage loans as Dubai’s real estate sector shows further signs of stress.

Dubai-based Elysian Real Estate this week sent out a text message to up to 40,000 mobile phones advertising distressed property sales, offering a luxury six bedroom, six bathroom villa in Dubailand, a multi-billion-dollar luxury theme park.

The Palm is the flagship part of Dubai’s ambitious ‘Universe’ development. The Universe will extend Dubai’s coastline to around 625 miles (calculated by measuring the coastal circumferences of the various manmade archipelagos), around 15 times its natural 43 miles.