Dubai house prices plummeted by 45 percent, making it the worst performing real estate market in the world, according to The Wealth Report 2010.
The new study, produced by Citi Private Bank and property consultancy Knight Frank, also showed that Dubai was the biggest faller in the list of the world's 40 most influential cities.
The emirate, which has been hit hard by the impact of the global economic crisis, fell three places to 31 in a list based on their economies, political power, knowledge and quality of life.
The list was headed by New York which took over London's top spot this year, as the UK capital also struggled with the financial downturn.
High-end home prices in three out of four global locations fell in 2009, but Dubai prices were by far the worst hit, with Dublin seeing the second highest declines (25 percent).
The Wealth Report 2010 said luxury home prices rose more than 40 percent in the Chinese cities of Shanghai, Beijing and Hong Kong.
Liam Bailey, head of residential research, Knight Frank, said: "This year, we expect positive annual growth in many more of the locations covered by the Prime International Residential Index (PIRI). We are already seeing prime property prices start recover in places like New York as confidence returns to the market.
"Those markets that could continue to struggle for a while longer are those like Dubai that were primarily driven by investors, and those like Dublin where the credit crunch still continues to bite."
He added: "The Wealth Report 2010 reveals that the global market for prime residential property polarised during 2009. While some Asian cities saw phenomenal growth as China recovered strongly from the global recession, most locations around the world recorded price falls. The hardest hit were those such as Dubai and Dublin that really soared during the height of the property boom that preceded the credit crunch.
"I do believe, however, that we will see this gap narrow again in 2010. It seems unlikely that property prices in cities such as Shanghai can continue to grow at these kind of rates, and in many locations there was positive growth in the latter half of 2009."