The reason that the UAE property bubble is bursting is because it is a bubble. It was an inherently unstable and unsustainable situation fueled by hubris and the myopic belief that things could only get better.

Now the global economy is tanking, we're starting to see reality reasserting itself.

People thought blindly buying apartments and homes in Dubai was like printing money - their investment was bound to shoot up in value. They took a gamble and lost - tough luck.

People handed over money before projects were even confirmed - what did they expect?

So eager were they to get in on the property market that they gambled without even weighing up the risks, and at the end of the day, there is no such thing as a free lunch, and no such thing as free money.

This was unsustainable growth - it was never going to last.

As Joachim points out, things going Pop! is the natural conclusion to any bubble. Dubai was the next big thing; now it's yesterdays news, at least as far as investors are concerned. A market correction is probably the best thing that could happen to the sector in the long-term, bringing a sense of realism to proceedings – although that'll be small consolation for those property buyers saddled with worthless investments.

The problem with Dubai is that it is all about vanity. All the property developers were concerned about was being bigger and better than the rest and creating projects that made headlines. Very little thought was given to the long term sustainability of these developments. The majority of the developments are luxury properties and only accessible to a small sector of the population. Regardless of what people may think - the majority of the people living in Dubai are not multi millionaires. Most earn a very modest salary and cannot afford to live in the any of the buildings under construction. Many end up sharing rooms with several others and the city is full of advertisements - not for rooms but for bed shares.
The one affordable part of the city - Satwa - is being largely bulldozed to make way for more luxury properties - leaving thousands of people looking for another cheap alternative that doesn't exist anymore. That is the reality of Dubai and that is why today -developers are paying a price for their greed.

Expats dumping their cars at the airport in Dubai and running. Some have left maxed out credit cards in the glove compartments.