A flag for property company EMAAR is seen near the Burj Khalifa, the tallest building in the world. ─ Reuters Lower oil receipts have tightened liquidity. Government deposits in the UAE banking system fell by 56bn dirhams in the 12 months to September 2015, National Bank of Abu Dhabi reported.
"This will have a direct impact on the mortgage market, which is already very restrictive," said Clutton's Durrani.
Project funding is likely to be a problem this year.
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"There are a lot of new projects being announced but where are they all going to get the money from?" said Craig Plumb, JLL MENA Head of Research.
Of the four developers that dominate in Dubai, three ─ Emaar, Nakheel and Dubai Properties ─ are ultimately state-controlled, making it easier to coordinate supply.
Currency fluctuations are another factor. Foreigners accounted for four-fifths of the combined value of Dubai property purchases in 2015, CBRE says, with Indians, Britons and Pakistanis among the biggest non-Emirati buyers.
The dollar, against which the UAE dirham is pegged, has gained about a fifth versus the euro and sterling since mid-2014. The Indian rupee has likewise lost ground.
This has made Dubai property more expensive for potential buyers with money in those currencies, but has also offset the drop in values for existing owners from those currency zones.
"People who really want to sell are willing to accept considerably lower prices," said Alexander von Sayn-Wittgenstein, sales director at luxury property broker Luxhabitat. "The official price may be the same but when a buyer makes an offer that is much lower, the seller is more flexible and will likely accept a price they wouldn't have a year ago."