Prices in Dubai and Abu Dhabi rose 4% in April compared with March and 5% in May, says the bank's latest transaction survey. But it warned that it is too early to call it a trend.
'Market data from April and May show a range of positive indicators. Agreed property sale prices are rising, volumes are holding up well, and banks have loosened their lending criteria,' said David Lepper, head of equity research for the region.
'However, we will not be able to discern a sustainable trend until later in 2009 and while we note these positive developments, the market as a whole is coming off a very low base, given the sharp declines since the market peak. Credit growth remains subdued, and the UAE economy still has challenges to deal with,' he added.
A survey of brokers by the bank also confirmed that prices have started to stabilise on the back of renewed interest and sellers pulling their properties off the market or putting them up for lease.
'Foreign investors also seem to be back in the market and the majority of transactions are being conducted in cash,' says a report from a team of analysts.
However compared with the peak in the market last September property prices are still considerably lower. Agreed prices are down 23% while asking prices were 65% lower.
The result is a lot of price confusion in the region's real estate markets. Panic selling by Dubai property speculators is driving prices down, eroding confidence and making banks reluctant to lend, according to Mohammed Nimer, CEO of MAG Group Properties.
He believes that a mass sell-off by speculators has contributed to Dubai's housing crash. 'Speculators were originally responsible for driving property prices to unrealistic levels. Now, although they are on the receiving end of the slump in prices, they are still blighting the real estate landscape by panic selling and undercutting the fair market price,' he said.
