DUBAI (Bloomberg) — The classified ads in Dubai read like an obituary for a real-estate market that until a few months ago seemed immune from the global credit crisis.

A Turkish investor, who identified himself as Sebat, took out 10 bright yellow ads in the November 25 edition of Gulf News, the United Arab Emirates' biggest newspaper, with the headline: "DIRECT FROM OWNER DISTRESS SALE!!!" Sebat said he used to be able to buy four or five properties at a time and sell them the next day for a profit of as much as five percent.

"There is panic in the market," said Sebat, 52, who wouldn"t give his full name because he's juggling 60 properties.

The property bubble in the desert emirate, home to the world"s tallest building, most expensive hotel suite and largest man-made islands, is bursting as scarce credit and slumping oil prices have international investors scurrying to dump assets. That may shatter Dubai's goal of creating a sustainable economy by building the Persian Gulf hub for finance and tourism, forcing it to depend on oil-rich neighbor Abu Dhabi for financing.

"Dubai is more precarious than it has ever been," said Christopher Davidson, author of "Dubai: The Vulnerability of Success" (2008, Columbia University Press). "If the property industry collapses in Dubai, it will be finished. Dubai"s relative autonomy will come to an abrupt end."

The emirate's push into luxury property developments and tourist attractions was diversification on "paper sand", said Davidson, a professor of Middle Eastern affairs at Durham University in the UK.

Real-estate prices may drop 20 percent or more, analysts at EFG-Hermes Holding SAE, the biggest publicly traded investment bank in Egypt, said in a report this week.

Nakheel PJSC, the Dubai state-owned developer of three palm-shaped islands in the Persian Gulf, said last month that it is scaling back or delaying work on some of its $30 billion in projects, including the 62-story Trump International Hotel & Tower near the Mega Yacht Club on the trunk of Palm Jumeirah.

The sheikhdom may need help from Abu Dhabi and the U.A.E. to service its debt, according to Moody"s Investors Service. Dubai borrowed $80 billion to finance its transformation and make up for a lack of natural resources. It has just 4 billion barrels of oil reserves, compared with Abu Dhabi"s 92.2 billion barrels.

Dubai officials say the emirate can weather the storm.

"The real estate sector is witnessing a healthy correction," Mohammed Ali Alabbar, chairman of Emaar Properties PJSC and head of a committee studying the effects of the global credit crisis on Dubai"s economy, said in a November 24 speech. "This is a consequence of global financial conditions and is inherent to the very nature of the market."

Dubai will meet its debt obligations, he said.

Led by Sheikh Mohammed bin Rashid al-Maktoum, Dubai attracted investment with no income tax and free-trade zones. Dubai, the second-biggest of the UAE's seven states, benefited from an inflow of international investors eager to tap the Gulf"s wealth after a six-year surge in oil prices.

Real-estate values surged fourfold over the past five years, fuelled by a supply shortage and an influx of expatriates.

Borrowers tapped mortgages for as much as 90 percent of a property's value to buy homes on the man-made fronds of the Palm Jumeirah and villas with gardens or golf-course views in developments such as Emirates Hills, The Springs and The Lakes.

Now the credit crunch is coming to Dubai. It"s being aggravated by oil prices that have tumbled 68 percent since reaching a record $147.27 a barrel on July 11.