But apartments still offer the best rental yields, the report from Bahrain-based investment bank SICO highlights.
The upward trend in villa prices is expected to continue as they are in short supply and large numbers of bankers, lawyers, stock brokers and other finance workers moving to Dubai are pushing up demand.
'This is a reflection of the preference for expatriate families to live in a villa rather than an apartment, with a garden, parking and independent access,' the report says.
'Then there is the simple fact that about ten times more apartments have been built than villas since 2002, so villas have both a scarcity value as well as being perceived as the better lifestyle choice,' it continues.
The figures show that since 2002 villas have appreciated in value by twice as much as apartments while rental yields presently stand at around 5% for villas and 8% to 8.5% for studios and one-bedroom apartments.
Another report has found that the price of renting apartments on the Palm Jumeirah has soared by more than a third in the last six months.
Research by Arabian Business has revealed that rental costs for two and three-bed apartments on the Palm Jumeirah, one of three artificial palm-shaped islands in the Emirate, offering a mix of upmarket hotels and residential properties, have risen by 37.5% and 33%. Since March, the cost of renting a villa has increased by 20%.
A spokesman for Dubai-based Better Homes, one of the biggest estate agents in the Emirate, confirmed the rises. 'The high demand and low levels of available rental properties on the Palm Jumeirah has forced prices up quite significantly over the last six months,' he said.
