David Beckham, Brad Pitt, caught in Dubai debt spiral

By Emma Thelwell, ninemsn Money

Brad Pitt, Angelina Jolie and David Beckham are set to lose millions on their luxury homes in Dubai, as the emirate's debt spirals out of control leaving the future of the housing market hanging in the balance.

Stock markets across the globe tumbled last night after Nakheel, a subsidiary of Dubai's main development company Dubai World, pleaded with the government for it to freeze repayments of its $64.38 billion debt.

Dubai World accounts for the lion's share of Dubai's debt, and is also owner of DP World, the former P&O ports operator.

Nakheel's Palm Jumeirah development sold 2,000 luxury villas and apartments within a month in 2002, amid the explosive growth of investment in Dubai.

At one point, Dubai was said to house 80 percent of the world's cranes.

In 2002, the England football team was passing through Dubai en route to the World Cup in Japan.

A host of star players signed up for million dollar villas on the manmade island, including David Beckham and Michael Owen.

Film stars Angelina Jolie and Brad Pitt are also said to own properties on the island, which is yet to be finished by developers.

With Nakheel unable to pay its debts, construction is likely to stall on the island, leaving the luxury villas surrounded by an ugly building site – which could see property values plunge.

House prices in Dubai fell 47 percent in the second quarter, compared with a year ago, and Dubai World may be forced to sell off assets – including Nakheel developments - in order to repay its vast debt.

According to UK reports, British companies are owed $363 million by Dubai's government-owned firms.

All said, the state-backed networks dubbed Dubai Inc are $85.85 billion in the red and the emirate have already been handed a $11 billion bailout earlier this year from its oil-rich neighbour Abu Dhabi, the capital of the United Arab Emirates.

Investors were spooked across the globe yesterday by Dubai World's cry for help, which could have serious repercussions.

"Dubai's standstill announcement ... was vague and it remains difficult to discern whether the call for a standstill will be voluntary," research group Eurasia said.

"If it is not, Dubai World will be going into default and that will have more serious negative repercussions for Dubai's sovereign debt, Dubai World and market confidence in the UAE in general."

In Australia, stocks slid 3 percent today, as shares in mining and banking companies were pulled down by the debt crisis in Dubai.