The value of prime residential apartments in Dubai climbed nearly two per cent in the second quarter of the year compared to the March quarter, according to the latest report by property consultant Knight Frank.

Dubai's residential property prices recorded a 5.6 per cent increase in the first half of the year, compared to the July-to-December period in 2011. On a year-on-year basis, prices were up 2.3 per cent, Knight Frank’s Prime Global Cities Index has revealed.

The index, which tracks the performance of prime property prices in 27 cities worldwide, ranked Dubai at 12th position.

Property prices in Dubai are witnessing a recovery as demand is increasing and banks are focusing more on mortgage lending by offering attractive rates.

Total property transactions in Dubai reached Dh4 billion in the second quarter, compared with Dh3.1 billion worth of deals finalised in the first quarter, according to CB Richard Ellis, or CBRE.

“Recent sales activity has been highly concentrated within established community locations rather than new and emerging markets,” said Matthew Green, head of research at CBRE.

Dubai Land Department data showed that total transactions recorded a 15 per cent increase in the second quarter to 3,165 compared to 2,745 deals conducted in the first three months of 2012.

The value of the average transaction during the three months ending June 30 was Dh1.2 million, according to the Dubai Land Department.

According to Knight Frank, the value of prime property in the world’s key cities rose by 1.4 per cent in the second quarter of 2012, while prime prices across the 27 cities monitored increased by 3.5 per cent in the 12 months to June 2012.

“Despite the positive results in the second quarter, the overall outlook for the world’s prime markets is muted. We are unlikely to see significant sustained growth given the numerous downside risks facing the global economy,” James Price of Knight Frank’s International Residential Development team said in a report.

Since its low in the second quarter of 2009 the Prime Global Cities Index — which tracks the performance of the top five per cent of mainstream housing markets — has been largely subdued, recording an average quarterly growth of 0.8 per cent.

Buoyant Asian markets kept the index in positive territory up until the first quarter 2012 when cooling measures, and in particular restrictions on second-home ownership, led to a fall of 0.4 per cent in the first quarter of 2012.

Asia and Europe have proved critical to the index’s recovery in the second quarter. Prime prices in Asia rose by 3.4 per cent in the year to June, while the equivalent figure in March was -2.5.

Similarly, prime prices in Europe rose by 1.3 per cent in the year to June, an improvement on the 3.4 per cent decline recorded in the year to March. Asia’s resurgence in the second quarter can largely be attributed to the strong performance of its emerging markets, namely Jakarta and Bangkok, rather than its traditional powerhouses of Singapore and Hong Kong.

The growth in Europe’s prime prices has taken place despite — or possibly because of — the deepening eurozone crisis. With the prospect of more bailouts looking increasingly likely, prime buyers and investors seem to have separated European cities into different tiers.

London, Geneva, and Zurich are all positioned in the top half of the second quarter results, having recorded annual price growth of 10.5 per cent, six per cent, and 5.9 per cent, respectively.