I do believe the prices are justified. I have invested in the Pixel development at the Dubai Waterfront at 2,000 AED per sq ft on the higher floors with some friends. We believe ithe prices are justified as the building quality is superb (famous architect etc...) and is located right on the coast overlooking the Palm Jebel Ali.
Jebel Ali will take off in a big way. The Palm Jebel Ali has just announced amazing plans for a Busch Gardens, Sea World, Discovery Cove and Aquatica WaterWorld to be at the tip of the Palm on an island shaped like a whale.
The whole area of Jebel Ali will be better planned than Dubai as they have learnt from Dubai. Jebel Ali is also home to the new airport (to be the worlds largest).
Also, from an economic point of view, Jebel Ali is the only area between Abu Dhabi and Dubai. Bear in mind that Abu Dhabi is richer than Dubai and has the highest GDP per capita in the world. So I think its expensive but a very good investment.
Also, bear in mind that all new developments announced will be more expensive as construction costs have shot up by around 50% (labour and materials and inflation in Dubai). Which is why its good to buy now, as these are still rising.
If you are interested I can send you the detail of the Pixel development at the Dubai Water Front at the base of Palm Jebel Ali.