Dubai ripples go all the way to Turnberry

Nakheel was due to pay a $4bn Islamic bond on December 14 - relatively small beer in comparison to the sums we have become used to seeing pumped into our own beleaguered banks.

But it now appears there is no money left to finance the bond, putting nearly $60bn of further liabilities held by the company at risk of default.

Royal Bank of Scotland is known to have exposure in Dubai World, as does HSBC and Barclays, and today Lloyds admitted it also has "modest exposure" in the venture.

Property prices in Dubai are currently down between 50 and 60 per cent on their peak and $300bn of new construction projects are on hold.

For many years, Dubai was considered a finance hub with little in the way of financial regulation, and as such flourished in the days when carrying a suitcase full of cash through customs wouldn't raise an eyebrow.

For a country which only came into existence in 1971, following the UK's withdrawal from the region, the fortunes of Dubai - which harbours just 10 per cent of the UAE's vast oil reserves - took the path less travelled by its oil rich neighbour, Abu Dhabi and embraced western economic policy with open arms.

The turning point for Dubai's economy came in 1996, when it passed legislation allowing foreign citizens to own property in certain parts of the country, and a property boom of an epic scale got under way.

That boom looks all but over - at least for now - and while no one expects the richer nations making up the UAE will allow Dubai to default on its debts, the possibility it could happen wiped £44bn off UK stocks yesterday, and the the trend looks set to continue today.

Dubai, unlike its neighbours, doesn't have oil reserves to help bail it out, and with little in the way of industry bar tourism and finance its economic boom is unravelling, with potentially disastrous consequences

And if forced into a fire sale of its assets, Turnberry could once again be up for grabs.