The property market in the United Arab Emirates is showing signs of recovery with an increase in transaction volumes in June and July, according to the latest real estate guide to be published.

Volumes in June and July reached levels similar to the third quarter of last year with end users dominant in Abu Dhabi but real estate investors still the majority of buyers in Dubai, the August sales guide report from property consultants Landmark Advisory shows.

'Sales in both emirates during June and July 2009 have been the most active since Q3/Q4 2008, with the majority of transactions in Abu Dhabi focusing on nearly completed developments, while market prices in Dubai are stabilising in preferred locations and for specific unit types,' the report said.

In Abu Dhabi, which has weathered the property downturn better than neighbouring Dubai, apartment prices have fallen 10 to 15% in the last four months, the report added.

Villa prices in the UAE capital are stabilising after dropping 45% since the third quarter last year and some properties in Abu Dhabi's Al Reem Island and in the Arabian district of Al Reef Villas have increased between 5 and 10% in the last few months.

The Landmark report describes the outlook for Dubai as less positive. Falling rents in the long term could drag down sale prices, which are currently stable, it said.

However, demand for one and two bedroom apartments in Dubai was found to be strongest both in the sales and leasing market, the report said.

Meanwhile another report indicates that property auctions could become more popular in the region as the real estate industry looks for new ways to boost the market. So far a handful of auctions have proven to be less than popular.

According to Harbour Real Estate the increased transparency and regulation of an auction would be advantageous during the current sector crisis and as Dubai's property market matures, it will see an increased number of auctions, similar to other markets around the world.

'It is not likely to replace the traditional ways of selling but will rather enhance selling operations and give the buyers in this country more options,' said Mohanad Al Wadiya, managing director of Harbor Real Estate Brokerage.