Dubai: Dubai property prices fell by 12.2 per cent during the past year, the largest drop in the world, according to real estate consultancy Knight Frank.

The decline in the twelve months through June was the biggest in 56 mainstream residential markets and larger than the 12 per cent fall in real estate prices in Ukraine, which has been hit by almost two years of protests, a separatist insurgency, and political upheaval, Knight Frank said Tuesday in a report. Prices in Dubai fell 2.8 per cent in the second quarter. Hong Kong was the best performing residential market, with prices up by 20.7 per cent.

“Weaker demand, a strong US dollar and ongoing cooling measures have dampened sales volumes in the mainstream sector,” Knight Frank said.

The slump in Dubai real estate looks set to continue, according to a separate report released on Tuesday by Cluttons. Villa prices will fall by a further 5 per cent to 7 per cent in the second half of the year, it said. Rental prices are also weak and are expected to drop another 1.5 per cent to 2 per cent in the second half, Cluttons said, although apartments continue to be “viewed favourably” by some investors.