Investment funds focusing on distressed property are forming in the UAE, helping to solve some of the problems caused by disputes between developers and investors that have hit tower builders' cash flows.

Their emergence has coincided with a recovery in prices in some parts of Dubai and Abu Dhabi, raising hopes that the property market may have turned the corner after a sharp downturn.

'The arrival of these funds marks the beginning of the upturn in the market,' said Hamish Walton, a partner in the financial services practice at the law firm Clyde & Co in Dubai. 'I think the market in many ways has already hit the bottom. These transactions will be the first signs of recovery.'

The National