Dubai's property market is bucking the negative global trend.
The world recovery in property "faltered" in the first quarter, posting a 1.8 per cent increase from a year earlier, the smallest growth since the last quarter of 2009, according to the latest Knight Frank Global House Price Index. Twenty-five of the 50 countries in the index were either flat or reported negative growth for the quarter, compared to 18 countries in the same period a year ago.
Dubai home prices were down 8.2 per cent from March last year, the property firm reported. But prices have increased 2.1 per cent since October, including a slight 0.6 per cent bump in the first three months of the year, the property firm reported.
"The consensus is the [Dubai] market is stabilising following the volatility observed in 2008 to 2010," said Liam Bailey, the residential research director for Knight Frank, which is based in London.
Local property agents report a similar trend.
"Over the last six weeks there has been a marked increase in the activity in the Dubai property market," said Tom Bunker, an investment sales consultant for Better Homes.
Social unrest in parts of the Middle East and North Africa, debt problems in Europe and the US and the perception that prices are close to a bottom have aided sales, Mr Bunker said. But the positive signs are most evident in high-demand areas such as Palm Jumeirah, downtown Dubai and the Springs, while other areas continue to see declines, he said.
"At the moment, the prices of prime properties, those in good locations, built to a high degree of quality and managed properly are firming up and in some cases are starting to rise," Mr Bunker said. "There are other properties that are still devaluing and will probably continue to do so for some time."
Other experts disagree with Knight Frank's assessment that the Dubai market may be on the rebound. Prices are likely to continue falling for the next few months, a recent report issued by Deutsche Bank concluded.
"Even if we believe the worst of the downtrend is now behind, new supply, lack of homebuyers' appetite and anaemic transaction activity point to further weakness," Deutsche Bank said.
But Dubai performed better in the first quarter than many other well-established markets, including Spain, the US, Australia and Italy, which all reported drops, Knight Frank said
Most of the global price growth of last year came in Asia, led by a 24 per cent jump in Hong Kong, the largest growth in the world, Knight Frank reported. But even Asia showed signs of slowing down, the company found.
Overall, prices in Asia increased 8.4 per cent in the past year, but that compares with 17.8 per cent in the same period a year earlier.
"The efforts of Asian governments to cool house price inflation … have been largely successful," Mr Bailey said.