Let’s face it, for the modern traveler, one would not think of Dubai as a destination place. With underlying Muslim laws and restrictions it can be dangerous for Western tourists.

But it had a great draw. With the rise in oil prices Dubai became an economic center. The petro dollars allowed construction of some of the most amazing buildings in the world and the recreational facilities were beyond compare. For the international business crowd getting close to where the money is was key, but all of a sudden they could have a great time too.

But that was at 120 dollar a barrel oil. Now we are at 50 dollar oil and the float is gone for the Emirates. Add to that a tough worldwide credit crunch and Dubai real estate has hit the wall. The largest lending institutions are merging and the government is stepping in to keep the economy from falling apart completely.

The moves come amid a sudden slowdown in Dubai’s once-red-hot property sector. Real-estate agents report that buyers have dried up, while asking prices are falling amid tight credit, falling stock prices and the departure of spooked international investors.

In a rare public statement, the Dubai government said it had already moved to “actively manage” the current and future supply of new property coming onto the market. Property analysts had long suspected that government-controlled developers, who dominate the market, could reduce supply to support prices. via WSJ.com.

Now is Dubai a place to stay away from. Nope.

$50 barrels of oil are not the norm, they are an aberration. But as long as the money has stopped rolling in and buyers are staying away, you may face a tough time buying and profiting in Dubai realty. Think of it as California real estate in 2006.

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