UAE property prices rise for the first time in months

Property prices in the United Arab Emirates increased in April and May, according to international bank HSBC.

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.

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