Most probably this crisis will lead to a market correction. But - so what? It was blown out of proportion and will come back to some sort of reality. This should calm down the real investor and scare away the speculator, something you'd like to happen if you're a home owner.
At the moment the spectre of correction sets in with a loss of 15 - 20% already, thus the gloomy comments. It's composed of the ~11% interest on personal loan and ~7% of mortgage rate all the low profile speculators have to fork out for their investments. If the downfall exceeds this percentage, they'll be forced to give it up. Now what do you think will happen? Already now there are so many appartments up for panic sale, that there are not enough free to rent and the rents go up. This in turn might trigger some of the panicers to rent because there's no market for a sale. At the same time not many want or are able to get a mortgage for a home, the banks will sooner or later have to rethink rate and conditions or lose that business. As a estimated 80% of landlords are locals, the pressure on the govt will increase to adjust conditions as not to lose tenders or buyers. The contractors try to shelve workers, they're scarce anyway, and to defer the backlog as to have work for more years and the promotors are quite happy not having to pay the construction at the moment, as there are not that many buyers off the shelf. Rents are so high that some companies opt out of Dubai, the economical turn around might diminish and with it tourism as long as the municipality consideres **** on the beech as Allahs will. The whole conjucture will slow down and exerce huge pressure on the gvmt to better the overall conditions.
Now what was i describing? - An econmical cycle. We witnessed such a cycle, due to other circumstances, in 97 in HKG. The same predictions about crashes, corrections etc. etc. were published then. But eventually the situation calmed down and was back to almost normal within 5 years.
Go back in history and you will see that any downturn was followed by the reverse. Why should it be different now? If you have some stamina, an investment even in Dubai will turn out as good as another. Nothing is ever sooooo special, not our time, our generation, our crisis and certainly not Dubai and the UAE.
I think the 30% own participation to real estate is not a bad idea at the moment. It will be softened, sure enough, but you need to get the small speculator out of the business, the one who borrows every dirham on one side to invest in another. This was one reason for the collapse in the states. This kind of investment is not sound. It will also inhibit the fast buying and selling with profit taking as we see with stocks. This will lead to an appeasement of the market.
To buy right now might be early. To wait for a correction in the 30 - 40% and then buy will put you on extensive hold and might just not happen.
To doom the market in this part of the world, as even the yanks come on their knees and beg for money, is somewhat hasty.