Land reclamation projects are already being scaled back, prices are falling and lending conditions tightening in a property market that has boomed since it was opened up to foreigners in 2002.
But few are facing up to the reality, it is claimed. 'Let's face it, every Tom, Dick and Harry became a developer. Now is the time when you differentiate the men from the boys,' said Mohammed Ali al-Hashimi, executive chairman of Zabeel Investments.
'At times like these, it doesn't matter if you're in real estate or whatever sector, it becomes Darwinian. The strong will survive, weak ones will fall. The good developers will become better,' he warned.
There has been a lot of speculation that that two real estate firms – Deyaar and Union Properties – will link up. Both firms have denied merger talks but were unable to say if the government was looking into ordering a tie-up amid tightening liquidity.
'The fact that prices are coming down elsewhere means that the relative pricing and the relative attractiveness of investing in Dubai and a few other places in the region has been eroded,' said Ramin Takin, managing director of Essdar Capital, a Dubai-based financial advisory firm, whose clients include regional sovereign wealth funds.
'I think there may be a slight decline or growth stopping. But the particulars of that will depend on how the various investors, developers and government handle the supply-demand equation for the real estate,' he added.
Dubai house price growth slowed down to 16% in the second quarter, compared with 42% in the first quarter, real estate consultancy Colliers International said last month, and analysts expects the market to slow over the next two years.
Even before the global financial woes began, Morgan Stanley said in August that property prices would likely fall 10% by 2010 as the supply of real estate units outpaces demand.
'If it goes through a gradual or soft landing, it is not a bad thing for the UAE, it is not a bad thing for the long term and for the economy,' said Mohammed Ali Yasin, head of Shuaa Securities brokerage.