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TEHRAN (Reuters) - Habib Mostofi is one of thousands of Iranians who believed buying property in Dubai would be safer than Iran, isolated by the West over its disputed nuclear plans. But that was before the emirate's property bubble burst.
"I invested all my family savings in property in Dubai. I thought it was near Iran, politically safe and business- friendly," the 43-year-old businessman told Reuters. "How can I tell my family I was so wrong and lost the money?"
The economy of the United Arab Emirates, the world's fifth-largest oil exporter, has surged 50 percent in real terms since 2004, but the tide has turned as slumping oil prices and a global financial meltdown put an end to Dubai's property boom.
In recent years Iranians -- as well as others from Iraq, Pakistan, Somalia, Sudan and Lebanon -- have flocked to Dubai, the Gulf trading hub where construction cranes litter the skyline. For Iranians it was a haven from sanctions over the nuclear work the West says is to make bombs. Tehran denies this.
Many Western banks and export credit agencies have quit Iran and Iranian executives face increasing difficulty opening letters of credit, vital for trade, with an Iranian address.
Some opened Dubai offices to avoid that problem, while others just saw Dubai's property boom as a surefire earner.
At the height of the real estate bonanza, mortgages were easy and property could be sold for profit even before construction was finished -- a practice known as "flipping."
Reza Dabir-Alai, a businessman, 39, bought several apartments that together measured 1,541 square metersin Dubai.
"Substantial profits could be earned in a matter of days, sometimes even hours immediately after buying a property," Dabir-Alai said, adding after signing a deal for one apartment he was offered 2 percent more as he left the real estate agent.
Then the financial crisis began lapping on the beaches of Dubai's many manmade islands. Rows of apartment blocks and exclusive villas have lost their value, as banks have reined in lending, casting a pall over corporate finance and construction.
"I cannot sell these apartments ... and I cannot cancel the contracts," said Dabir-Alai.
Shahnaz Mirsoufi, an Iranian real estate agent based in Dubai, said prices of villas and apartments in Dubai, on average, doubled since early January in 2007 but now some premier property prices have dropped as much as 50 percent.
"Even in the first quarter of the year, the price of villas and flats, many not yet built, rose by 43 percent," she said.
Analysts in a Reuters survey this month said Dubai property prices would fall 28 percent from a peak earlier this year.
Hamid Sardari, an Iranian businessman, said he was "penniless" and feared for his shipping company.
"My money that I need to run my business is stuck in Dubai property," he said. "I will be bankrupted soon."
Now some developers have put projects on hold after Dubai's real estate regulator urged developers to slow down, saying worsening financial conditions were driving up defaults.
Many foreigners were also attracted by a former promise that owning a property would secure them long-term Dubai residency rights. But Dubai's property regulator this year scrapped such a guarantee.
That spelt financial ruin for computer engineer Mohammad Reza Nouri: no visa, no job in Dubai and not enough salary from his Tehran work to pay off his UAE loan.
"My aim was to get a residence permit in Dubai. Now I cannot get the permit and I cannot pay the apartment's monthly installments," he said after investing $50,000 of his savings.
Concern about the speculation even prompted a public warning from Iran's ambassador to the United Arab Emirates in November.
"I call on Iranians to avoid buying properties in Dubai. For those who want to make profit or get a residence permit, none of those is possible," Hamid Reza Asefi told state radio.
Selling up is not always an option.
Mina Vakili, a divorcee, said she could not sell an 80 square meter apartment she bought off plan.
"I wanted to profit from my Dubai apartment to buy one in Tehran," she said. "But now, it is not clear when the project will even be finished."
Additional reporting by Daliah Merzaban in Dubai; Editing by Samia Nakhoul and Sara Ledwith