According to analysts, Dubai's residential property prices will decline by up to a third by the end of the year as new housing is ready.

Saud Masud, an analyst in Dubai for the Zurich-based bank UBS, in an interview with Bloomberg, said: "Prices will drop an additional 33 per cent to about Dh600 (US$163) a square foot."

Though other analysts too forecast a decrease; however, they are a little more conservative. Sajeer Babu, an analyst at the National Bank of Abu Dhabi, said: "By the year end, you can expect 10 to 15 per cent fall from the current level."

"You rarely find any buyer today even though there are more transactions than in the first quarter."

As per the property consultant Jones Lang LaSalle MENA, this year approximately 22,400 units are expected to be handed over.

Mr Masud said: "People feel the market is coming back and they are trying to hold off for a bit." "But that is not going to last because when more inventory hits the market and someone's apartment sits vacant for six to nine months, they are going to cave in and that's when we'll see the re-pricing of assets."

Based on transactions, a decrease between 40 and 42 per cent over the past two quarters, in selling prices in Dubai, has been forwarded by Colliers International in its latest report.

Colliers said: "It is reasonable to assume that as new stock continually comes online that the downwards trend in the market will continue throughout 2009 and is unlikely to stabilise before" the second quarter of next year."

Mr Masud said that presently the market is in a "numb phase" and optimism was based on "few transactions".

He said: "Next year is going to be tough, and I would be shocked if we started talking about a recovery in 2010."