A welcome note showing signs of upturn

It was an investment bank research report that pricked the UAE property bubble last summer; perhaps now another analyst’s note will set in train the process of reflation across the crucial real estate sector.

As the UAE sizzled last August, Morgan Stanley produced an innocuous-seeming piece of research into the property sector, which forecast a 10 per cent dip in property prices for the rest of the year. The rest, as they say, is history. The equity market went into a tailspin as it found confirmation of long-held fears that real estate, the dynamo of the UAE, and especially Dubai, economies, was overpriced.

Although there were more significant dog days to come – notably the collapse of Lehman Brothers the following month – from that August day onwards the market knew that something was wrong in the UAE and a reckoning was looming.