Rising inflation is blamed for struggling property prices

The value of residential property under construction in Dubai declined in the third quarter, according to specialist research firm Colliers International.

The news is more confirmation of the stalling market in Dubai which has seen a number of high-profile schemes, such as the Trump Tower project, suspended in recent weeks.

Colliers International said rates per sq ft² for homes still being built fell by 0.4% from a second quarter price of Dh1,908 (£354) to hit Dh1,901 (£352) in the period between July and the end of September.

But the firm's house price index for Dubai, which it established back in January along with five banks including HSBC, Barclays and Dubai Islamic Bank, said prices for completed properties rose by 7% in the same period. These now stand at Dh1,913 (£355) per ft compared to Dh1,784 (£331) for the three months to the end of June.

It said rising inflation, which is expected to be up 8% in Dubai this year to end up at 12%, was one of the reasons behind the hike in rates for completed properties. And it said increased rental rates, particularly for townhouses and villas, meant more ex-pats were deciding to buy rather than rent.