DUBAI: House prices in the United Arab Emirates may drop an additional 25 percent to 30 percent as population growth stagnates and more properties are put onto the market, according to Dubai investment bank Rasmala.

Prices have declined as much as 55 percent from their peak in 2008 and both Dubai and Abu Dhabi, the biggest of seven sheikhdoms in the UAE, are affected by “a low appetite for new housing as financing remains tight and negative equity concerns linger,” analysts Saud Masud and Divya Arora wrote in a report dated Thursday. “The good news is that much of the property correction is already accounted for.”

Dubai house prices slumped 62 percent from their peak in mid-2008 after the global credit crisis caused mortgage lending to dry up and speculative demand waned, Deutsche Bank AG said on Feb. 14. In neighboring Abu Dhabi, prices slid 45 percent, Jones Lang LaSalle Inc. estimated.

Rasmala initiated coverage of Emaar Properties PJSC and Drake & Scull International with “buy” ratings, while Arabtec Holding Co. was started with a “hold” recommendation. Abu Dhabi-based developers Aldar Properties PJSC and Sorouh Real Estate Co. were rated “hold.”

Uncertainty about political unrest spreading across the region may further hurt stocks of real-estate developers and contactors in the UAE as investors try to avoid risk. That may also spill over to companies with regional operations such as Emaar, Drake & Scull and Arabtec as the “unrest contagion may lead to investors heavily discounting their respective international franchise values,” the report said.

Dubai’s DFM General Index dropped 11.4 percent since the beginning of 2011. That compares with a 24 percent slump in the Dubai Financial Market Real Estate Index during the same period. Property stocks in Abu Dhabi slumped 38 percent so far this year, compared with 4 percent drop for the general index.

Rasmala estimates 26 percent of Emaar’s value is tied to international projects, while Drake & Scull and Arabtec have 69 percent and 52 percent of their order books in the Middle East, North Africa and South Asia belt, the report said.

Real estate and construction industries represent as much as 30 percent of Dubai’s economy and nearly 50 percent of employment, the analysts wrote.