Real estate companies in Saudi Arabia said the price of new apartments and villas are falling because of a lack of buyers and the downturn could see falls of 12%.
'There is a drop in demand for apartments,' said Mohammed Al-Sobai'e, a real estate office owner in Jeddah. He added that he expects a slowdown in the construction of new apartments to avoid the market being flooded.
Construction companies are struggling financially according to Maher Bundugji, a member of the contractors committee.
And in Qatar there is concern about the bust in Dubai spreading. A report from Kuwait investment bank Markaz shows that a large percentage (38%) of the population work in the real estate and construction industries and so a fall in prices could severely impact on jobs.
'Qatar's property market needs to be closely monitored to avoid a Dubai like situation in the future,' the report concludes.
The report also warns of a property bubble in Bahrain, and a potential bubble in Kuwait, although analysts believe that action by the government in Kuwait to curb lending on real estate will ease any damage.
'Our study finds evidence of a bubble in Bahrain although it had a less significant impact on the overall economy than in Dubai, while in Kuwait we expect a less painful correction,' the report concludes.