Gulf property firms launched $100 billion of new projects on Monday, but the news failed to restore investor confidence as fears grew that the global credit crunch is biting.

From a 350 billion UAE dirhams ($95 billion) beachfront project to a kilometre-high tower, developers at Dubai's annual Cityscape exhibition launched the usual raft of mega-developments that have propelled the Gulf Arab commercial hub to international fame.

Dubai mortgage lender Tamweel said it would launch up to 2 billion dirhams of Islamic bonds in 2009 despite the liquidity squeeze gripping world markets and Abu Dhabi's Sorouh Real Estate said all its projects were on target.

But investors in the UAE shrugged off the upbeat news to extend weeks of declines, with shares in Emaar Properties ending 10.7 percent down while Aldar Properties and Sorouh lost more than 9 percent.

And Kuwait's Abyaar Real Estate postponed the sale of its $1 billion Islamic bond due to the global credit crunch.

'The UAE is not an isolated link from the chain, from the global financial system,' said Sorouh CEO Mounir Haidar.

'However the UAE does enjoy slightly different dynamics. The UAE is an emerging economy and demand is strong. Economic policy is encouraging for people to invest in the region.'         

The Gulf's oil-fuelled boom has so far protected the region from the major upheavals that have shaken the financial and property sectors in the United States and Europe.

But the global credit crunch does mean tighter liquidity in the Gulf, and that could already be speeding up mergers.

Tamweel and fellow Dubai-based mortgage lender Amlak Finance  said on Saturday they were in talks to agree a $2.4 billion merger. A report by Zawya Dow Jones suggested that Union Properties and Deyaar, which said on Monday that the liquidity crunch could slow its international growth, were also considering a merger.

Union and Deyaar declined to comment and the report failed to lift their shares, which fell 11.5 and 9.9 percent respectively.

Real estate consolidation plans come in the midst of a government crackdown on corruption in the sector, which has already hit market sentiment and the shares of major developers.

But developers at Cityscape said property demand remained strong despite mounting fears that the UAE real estate boom has turned into a bubble and that the worst economic downturn since the Great Depression was spreading.

'Every major city around the world that has evolved has gone through short-term pain to ensure the long-term potential,' said Sina al-Kazim, chief executive of Meraas, which launched the $95.3 billion Jumeirah Gardens development on Monday.

The development will provide apartments, shopping malls and offices in some of Dubai's older districts over the next 12 years.

'The Dubai real estate market is still very strong. It is still very young.'    

Demand for UAE property has been rising faster than the developers can build as more expatriates arrive every year, pushing up both sale and rental prices and fuelling inflation.

UAE state news agency WAM said on Sunday that a shortage of at least 28,000 housing units in Abu Dhabi this year was still pushing up rents and stoking inflation. Projects that are now being completed will supply only 20 percent of housing needs.

But analysts say Dubai, which kicked off the property boom in 2002 when it became the first Gulf Arab emirate to allow foreigners to buy property, is headed for a slowdown.

Real estate consultancy Colliers International said on Sunday that Dubai's property market would slow over the next two years as tighter credit, growing supply and better regulation curb speculation that has driven up rents and fuelled inflation.

Dubai sale and rental prices are the second highest in five Gulf Arab cities surveyed by Colliers, trumped only by Abu Dhabi, where the average sale price is $6,500 a square metre.

Despite the tough financing situation, state-owned Dubai developer Nakheel unveiled plans on Sunday to build a new contender for the world's tallest tower title, while Zabeel Investments said it planned a $1.5 billion project in Dubai.-Reuters