TEHRAN: Habib Mostofi is one of thousands of Iranians who believed buying property in Dubai would be safer than Iran, isolated by the West over its disputed nuclear plans.

But that was before the emirate’s property bubble burst.

“I invested all my family savings in property in Dubai. I thought it was near Iran, politically safe and business-friendly”, the 43-year-old businessman told Reuters. “How can I tell my family I was so wrong and lost the money?”

The economy of the United Arab Emirates, the world’s fifth-largest oil exporter, has surged 50 per cent in real terms since 2004, but the tide has turned as slumping oil prices and a global financial meltdown put an end to Dubai’s property boom.

In recent years Iranians – as well as others from Iraq, Pakistan, Somalia, Sudan and Lebanon – have flocked to Dubai, the Gulf trading hub where construction cranes litter the skyline. For Iranians it was a haven from sanctions over the nuclear work the West says is to make bombs. Tehran denies this.

Many Western banks and export credit agencies have quit Iran and Iranian executives face increasing difficulty opening letters of credit – vital for trade – with an Iranian address.

Some opened Dubai offices to avoid that problem, while others just saw Dubai’s property boom as a sure-fire earner.

At the height of the real estate bonanza, mortgages were easy and property could be sold for profit even before construction was finished – a practice known as “flipping”.

Reza Dabir-Alai, a businessman, 39, bought several apartments that together measured 1,541 square metres in Dubai.

“Substantial profits could be earned in a matter of days, sometimes even hours immediately after buying a property,” Dabir-Alai said, adding that after signing a deal for one apartment he was offered two per cent more as he left the real estate agent.

Then the financial crisis began lapping on the beaches of Dubai’s many man-made islands. Rows of apartment blocks and exclusive villas have lost their value, as banks have reined in lending, casting a pall over corporate finance and construction.

“I cannot sell these apartments ... and I cannot cancel the contracts”, said Dabir-Alai.

Shahnaz Mirsoufi, an Iranian real estate agent based in Dubai, said prices of villas and apartments in Dubai, on average, doubled since early January in 2007 but now some premier property prices have dropped as much as 50 per cent.

“Even in the first quarter of the year, the price of villas and flats, many not yet built, rose by 43 per cent,” she said.

Analysts in a Reuters survey this month said Dubai property prices would fall 28 per cent from a peak earlier this year.

Hamid Sardari, an Iranian businessman, said he was “penniless” and feared for his shipping company.

“My money that I need to run my business is stuck in Dubai property,” he said. “I will be bankrupted soon”.

Now some developers have put projects on hold after Dubai’s real estate regulator urged developers to slow down, saying worsening financial conditions were driving up defaults.—Reuters