“We have witnessed a strong return of risk appetite, not just for global equities in general this year but specifically for Middle East and North Africa-based property stocks after the sharp sell-off in 2008,” the brokerage said. It appears that investor risk appetite in the UAE has made itself felt most keenly among blue-chip names like Emaar Properties, Aldar Properties and Arabtec, which offer relatively high liquidity levels and/or a greater cushion of government support, UBS added.

The brokerage, however, noted that despite a decline of more than 50 per cent in property prices in Dubai, they could still drop further from current levels.Continued population outflows from the region and new units still coming on-stream could leave the residential property market with more than 25 per cent oversupply by the end of 2010, UBS said.

Earnings of property companies in the UAE are likely to remain choppy and demand drivers soft in 2010, the brokerage added. It raised its price targets on shares of Aldar Properties to Dh4.50 from Dh3.20 and on Emaar Properties to Dh3.50 from Dh2.10.  —