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Half of prospective Gulf property buyers believe prices are too high

Half of those responding to the online poll by Arabian Business said that they will never buy a property in the Gulf because real estate is just too expensive.

Even price falls of up to 30% were not enough to tempt them. They believe that owning a property in the region is an impossible goal because of the expense.

A further 25% said they believed property prices would not hit rock bottom until next year and so were not tempted to invest in real estate at present.

However, a more positive 16% said that recent price drops might encourage them to buy, but they would wait a few months more to see if prices fall further. Just 9% said they were actively searching for a property to buy at present.

Overall, Dubai real estate has dropped 25% from its September peak as a result of speculators leaving the market in the wake of the global downturn, and banks curbing their lending policies, according to Morgan Stanley.

However, in some projects falls of up to 50% have been seen and many major developers have reduced prices considerably in the face of a huge lack of buyers.

Developers are currently trying to talk up the market. They are claiming that a fall in construction costs is allowing them to drop prices and they predict a recovery later in the year.

But this goes against a lot of analysis published recently and this latest poll also shows that real estate investors don't believe it either.