Dubai’s residential property market recovery is gathering pace, according to the latest Middle East market outlook from Cluttons.

Residential values plunged by at least 50% in Dubai five years ago but now stand 36.9% above their market low in the second quarter of 2009.

The report shows that residential capital values have risen by close to a third during the first six months of 2013 but they are still 31% below the market peak in the third quarter of 2008.

However, surging demand so far this year has helped to push rental values up by 11.3% across Dubai during the first six months of 2013 and Sharjah is benefitting from a demand overspill from Dubai, with average rental rises of 7.1% in the first half of 2013.

The Summer 2013 report from Cluttons states that the heightened economic activity in Dubai has undoubtedly been supported by the recovery of the emirate’s real estate sector. During the second quarter alone, villa values rose by an average of 21% while apartment prices increased by 25.1% in the second quarter, almost double the corresponding 2012 figure of 13.4%.

Overall however, values still remain 31.1% below the previous peak.