Gulf markets surged yesterday, sending markets in Dubai and Doha to record their biggest gains in months as signs emerged that property prices may be levelling out in the UAE. Dubai stocks surged their most in more than three months after HSBC said UAE property sales prices might be stabilising. Qatar's property sector also received a boost when the government offered to buy local banks' real estate portfolios. Shares in Doha rose 5.9 per cent. HSBC said agreed selling prices in the Emirates rose 5 per cent last month compared with April, on top of April's 4 per cent gain on March. That helped Dubai shares close 4.8 per cent higher while Emaar Properties, the UAE's largest developer, gained 10.2 per cent to its highest close in six months. "Market data from April and May show a range of positive indicators: agreed property sale prices are rising, volumes are holding up well and banks have loosened their lending criteria," said David Lepper, the head of UAE equity research at HSBC Global Research. Liquidity is returning to the market and mortgage providers have started to raise their loan-to-values (LTVs) and relax their loans criteria, the bank said in its Property Ladder report. But it cautioned that a discernable trend may not become clear until later in the year. "Credit growth remains subdued and the UAE economy still has challenges to deal with," Mr Lepper said. Gulf markets have seen renewed interest from international investors in recent months as global emerging markets have rallied on signs that the recession may be easing. UAE property prices have fallen sharply from their peak in September last year after the financial crisis put a sudden halt to a five-year boom fuelled by high oil prices and cheap funds. Other real estate markets in the region have also suffered declines. Property prices in Dubai are down 65 per cent from their peak in September last year, HSBC said. Dubai's economy would go through a structural shift over the next few years towards sustainable sectors such as transport, health care and financial services, Dr Omar bin Sulaiman, the Dubai International Financial Centre Governor, said yesterday. Dr bin Sulaiman said the shift was taking place faster than originally envisaged in the Dubai Strategic Plan 2015 because of the global financial crisis. A separate report released yesterday from the property consultancy Landmark Advisory said the number of property transactions in Abu Dhabi has risen in recent months as more finished properties hit the market. HSBC said several banks, including Barclays and Standard Chartered, had eased their lending requirements and at the same time increased their loan-to-value ratios (LTVs), which effectively means borrowers have to provide a lower percentage of the property price. But it may take a longer until relaxed mortgage lending would filter through to the market, said Damian Hitchen, the managing director at Gulf Lenders Network, which liaises between mortgage providers and brokers. "The fact is that it is just as difficult to find a mortgage as it was four weeks ago. It will be October or November until it becomes reality," Mr Hitchen said. HSBC said the number of sales were generally lower in the summer, while more supply coming on to the market at the end of the school year "could lead to renewed weakness". Shares in Qatar were the strongest gainers in the region, with the Doha Securities Market rising 5.9 per cent after the country's government offered to buy local banks' real-estate investments. Qatar's government will spend US$4.1 billion (Dh15.05bn) on acquiring the property portfolios of nine local banks to boost the domestic real-estate sector, Kuwait's official Kuna news agency reported on Thursday. uharnischfeger@thenational.ae