Patrick Collinson

Dubai, once home to the world’s biggest construction boom, is now the scene of the world’s biggest property slump, according to figures published by real estate agent Knight Frank.

House prices in the desert sheikhdom dropped by an extraordinary 40 per cent in the first three months of 2009, outpacing falls anywhere else in the world, after an investment bubble burst.

Singapore saw the second biggest fall, with property prices down 16.2 per cent in the quarter. Bucking the trend were Finland, where house prices rose 4 per cent over the three months, and the Island of Jersey, where prices surged by 5.6 per cent. A 16.5 per cent price fall in the U.K. over 12 months placed it among the five countries with the biggest annual decline.

The global turnaround in house prices has been remarkable. A year ago, homes in Dubai were spiralling upwards on an annual growth rate of 48 per cent. The boom spawned developments such as the Palm Jumeirah and Burj Dubai, the world’s tallest tower, but now apartment blocks stand empty or half-finished. Fears are growing that many of the region’s biggest property companies are close to bankruptcy. — © Guardian Newspapers Limited, 2009