DUBAI (Bloomberg) — House prices in Dubai, the debt-laden city-state in the Persian Gulf, could fall faster than expected because of Dubai World's possible default, according to UBS AG.

"I've said several times before they could go down by a further 30 percent by the second half of 2011," UBS analyst Saud Masud said in an interview. "Now I think it may very well happen earlier, perhaps even within the next nine months.

"Technically, neither Nakheel nor Dubai World has defaulted yet, but if restructuring is the final option, I wouldn't be surprised to see others follow suit — on a case-by-case basis, of course. This may result in property prices going down further."

Dubai's construction boom ended in the third quarter of 2008 after banks tightened lending and speculators withdrew from the market.