The price of villas in Dubai has risen by 19.9 percent in the past year, according to the Knight Frank Prime Global Cities Index for the third quarter of 2012.
The global index, which rose by 1.1 percent in the three months to September down from 1.4 percent in the previous quarter, also showed that villa prices in Dubai rose 2.9 percent in Q3.
The price growth for the six months from March to September was recorded at 11.1 percent, making Dubai the second best performing market of the 26 cities tracked by the index, behind Jakarta.
Five cities recorded double-digit price growth in the year to September - Jakarta, Dubai, Miami, Nairobi and London.
"Cities such as Dubai, Miami, Nairobi and London are increasingly considered investment hubs for high net worth individuals (HNWIs) in their wider regions," Knight Frank said in the report.
"In the wake of the Arab Spring, Dubai has been seen as a relative safe haven for MENA buyers while Venezuelan and Brazilian investors have looked to Miami to limit their exposure to domestic political and economic volatility."
Property prices in Dubai soared after the city opened its real estate sector to foreign investors in 2002, granting them freehold ownership rights at many developments.
From start-2007 to mid-2008, prices rallied almost 80 percent, Morgan Stanley estimates showed, with billions of dollars worth of new projects launched by local developers.
But home prices in Dubai suffered the biggest reversal seen in the Gulf property market as result of the financial crisis, declining on average 60 percent.
Fifteen of the 26 cities (58 percent) recorded flat or positive price growth in the year to September, but over the last quarter that increased to 20 of the 26 cities.
The index now stands 18.7 percent above its financial crisis low in Q2 2009 with Hong Kong, London and Beijing having been the strongest performers over this period, recording price growth of 52.9 percent, 45.4 percent and 39.5 percent respectively.
Cities in Europe remained the weakest performers, recording a fall of 0.5 percent on average in the last 12 months, the index showed.
In Paris, although prices held firm in the third quarter, sales activity was muted as buyers of all nationalities adopted a “wait and see” attitude.
Knight Frank said vendors are unwilling to reduce prices until there is greater clarity from President Hollande and the Eurozone leaders in relation to the debt crisis.
"Asia’s prime markets look to be entering a period of more moderate growth due in part to the regulatory measures aimed at cooling prices and improving domestic affordability," the report added.
James Price of Knight Frank’s International Residential Development team said: “Aside from London, it would appear the other strong performers are either those established international markets that experienced a lull but are now ‘kicking on’ again (such as Miami, Dubai) or those that could be described as second tier international cities – strong established markets, but not global ‘gateway’ cities (Zurich, Vienna, San Francisco), where interest has driven price rises from a lower base.”