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There's a half-off sale in the world's tallest building.

Even with an address at the iconic Burj Khalifa, rents for residences in the tower are not immune from Dubai's real estate crash. Indeed, nearly a year after it was inaugurated with a massive water-and-fireworks display, about 825 of the tower's 900 ultra-luxury apartments remain unoccupied, according to Better Homes, a real estate brokerage in Dubai.

The cost of renting a studio with floor-to-ceiling windows, marble fixtures and wooden floors has dropped to $1,815 a month from $3,025, while a one-bedroom apartment is available for $2,722 (it used to be $4,536), the brokerage says. Two-bedroom residences are expected to get $4,310, down from $7,183. Interested parties "call every few days and go for a viewing," says Imad Ben Khadra, a Moroccan expatriate who owns two 1,000-sq.-ft. one-bedroom apartments he purchased in late 2008 for about $950,000, both of which he is trying to rent out. "We got some offers [from prospective tenants], but nobody confirms." (See pictures of the Burj Khalifa, the tallest building in the world.)

Varun Chaudhary bought two two-bedroom residences in the Burj for about $1.5 million in 2005 even before construction began. He saw the value leap from $762 per sq. ft. to $3,811 per sq. ft. at the heights of the boom. Today, those values hover just above his purchase price. But he says he isn't worried about his investment. "These properties will recuperate faster than other properties because it's an icon, because it's only one in the world," he says. "You just have to say 'Burj Khalifa.' That's the address; you don't have to explain. It's a style statement in itself." (See how the U.S. is leaning on Dubai to pressure Iran.)

Still, the Burj, with its one-of-a-kind address and amenities like the first-ever Armani Hotel, is only the most high-profile example how Dubai's once flying real estate market has crashed. Overall in the emirate, property prices have dropped an average of 50%. Some half-built projects, located away from the main highway that runs through the city, may never be completed because their values have dropped too much, analysts say.

[Photos: More of the incredible Burj Khalifa]

But it's the units that will be completed that are looming as a problem. The Dubai economy must still digest a flood of housing units coming on line or soon to be opened, which will further dampen prices. Through September, 27,000 residential units have been put on the market, and another 9,000 are expected to be completed by the end of the year, according to real estate firm Jones Lang LaSalle. For 2011, the firm forecasts that about 30,000 new units will come on line. A glut in commercial property has forced landlords to offer previously unheard-of incentives such as free rent and allowances to finish out shell construction space. "They built the infrastructure for a much larger economy than it can [now] attract," says Wissam Haroun, a Syrian expatriate who owns entertainment and technology companies in Dubai. (See pictures of Dubai.)

Worried about the glut, Dubai's Real Estate Regulatory Agency recently said it was canceling or in the process of canceling about half of all projects registered with the authority. Of about 980 developments, 495 are on the chopping block, according to a Dubai sovereign-bond prospectus made public last week.

Some, however, see opportunity in the depressed prices. "It's a massive change in terms that it's no longer the man on the street or the lady on the street buying property on spec or off plan," says Paul Devonshire, a director with Pramerica Real Estate Investors who specializes in the Middle East and North Africa region. Now, he explains, institutions or more savvy investors are moving in, eyeing distressed or repriced assets. (Comment on this story.)

But the buzz was decidedly subdued at the recent Cityscape Global, the annual real estate exhibition that in the past featured the launch of glitzy projects like the Palm Trilogy, the world's largest man-made islands. The name of the event itself had been changed from Cityscape Dubai in order to expand the focus beyond the city-state. Only a fraction of exhibitors - 200, down from around 1,000 during the boom - showed up to participate.

With speculators gone and credit still tight, Dubai is going about the hard work of adjusting to its new economic reality. Top of the list is paying back creditors that helped finance the boom. Over the past decade, Dubai amassed $109 billion in debt, with about $15.5 billion due this year, the International Monetary Fund estimates. Dubai World, one of the three main holding companies controlled by Dubai's ruler, Sheik Mohammed bin Rashid al-Maktoum, said last month that 99% of its creditors had agreed to alter the terms on $24.9 billion of its debt. Last November, Dubai World sent stock markets around the world tumbling when it announced it wanted a moratorium of its debts. "We are back. Of course we are back," Sheik Mohammed said in a Bloomberg TV interview last month while attending the Alltech FEI World Equestrian Games in Lexington, Ky.

But, having been through the financial volatility, few seem to want to part with their cash just yet. The Syrian expatriate Haroun, who has lived in Dubai most of his life and plans to raise his family there, says he would like to buy a home. But his forays into the market so far have left him unsatisfied. "People got stupid rich and stupid poor at the same time," he says. "I'm glad I stayed out of it."

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These properties will recuperate faster than other properties because it's an icon, because it's only one in the world," he says. "You just have to say 'Burj Khalifa.' That's the address; you don't have to explain. It's a style statement in itself.

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