A crowd of over 120 people queued up outside Nakheel's Dubai sales office, some through the night, to get one of the new 360 developed villas.

Nakheel staff handed out bottles of water to those standing in the heat, some of whom were paid a couple of hundred dirhams by investors to keep their places.

Despite the heat, the atmosphere was calm and orderly. Potential buyers waited to try and purchase one of the Dh4 million and Dh5million four and five-bedroom villas, set to be developed at Nakheel's 3.5 square kilometre Jumeirah Park scheme in Dubai, over the next three years.

"Without doubt we are seeing a recovery across all Nakheel schemes," said Ali Rashid Lootah, Chairman of Nakheel. "The market is strongly recovering. Prices are improving; volumes are improving but we haven't really quantified the figures. But I can tell you it's much better than previous years. We are launching new projects. We have no supply of properties. All the existing property in the pipeline is already pre-booked."

Local agents said that by the afternoon all of the prime five-bedroom properties had been sold for about Dh4.7m each. However, they reported, some villas in the scheme remained available and unsold.

"You have to bear in mind that sellers might well be asking for a 25 per cent premium but that doesn't mean buyers will pay that amount," said Mario Volpi, a sales and leasing manager at Cluttons, an estate agent. "At the end of the day it's like water. It will find its own price."

The scenes came just as the property agent Jones Lang LaSalle published its market report for the three months to the end of last month, revealing prices for villas in Dubai had increased so quickly over the period that they now cost 14 per cent more than they did in early 2008. It said villa prices in the city rose by 23 per cent over the past 12 months alone, as demand began to return to the property sector.

Apartments in the city also rose in price, recording a 4 per cent increase in sales values. However, they still cost 18 per cent less than they did during the market peak four years ago.

The number of homes in Dubai increased by 2,000 in the third quarter of this year, reaching a total of 349,000.

However, in Abu Dhabi it is a different picture.

Average asking prices for homes in the city's investment areas dropped by a further 3 per cent in the quarter, to Dh10,200 per square metre, representing a total fall of 53 per cent from the market peak of Dh21,500 sq metres at the end of 2008.

With nearly 6,000 units scheduled for completion in the fourth quarter, the total stock could reach 208,000 units by the end of the year, although further delays were expected.

However, Jones Lang LaSalle said, the sales market in Abu Dhabi had shown signs of increased activity in the third quarter, with interest mainly from Emirati buyers.

"Market sentiment is definitely improving and both Dubai and Abu Dhabi remain major drivers in the regional real estate market. But we are continuing to move away from one holistic model," said Alan Robertson, Chief Executive of Jones Lang LaSalle, Middle East & North Africa.

"As the market continues to mature we will see more divergence. Well managed, high-quality assets in prime locations will continue to perform while those in secondary locations will need to be ever more creative to attract and retain tenants who now have more choice and are moving with their feet to source and find the best deals available".

"In terms of market specifics, it's a very fragmented picture. Dubai is generally ahead of the curve as rents are finally starting to pick up while indicators suggest Abu Dhabi has yet to bottom out.

Source: The National