Dubai's property prices have risen for 16 consecutive months, with plush villas and apartments still far below their pre-crisis highs, according to research from Deutsche Bank.
The investment bank's property price index shows that prices bottomed during the second half of 2011 and have been steadily rising since then, gaining 6.2 per cent on average so far this year.
"The price recovery that started in late 2011 in prime properties is now spreading to second-tier communities (like JLT)," the report said.
"Despite new supply (mainly in secondary locations), investor confidence remains strong, while main master developers are accelerating project launches."
Emaar Properties and Nakheel have both announced a resumption of housing developments, with both developers experiencing heavy demand. Emaar's recent sale of Mira townhouses at a significant discount was thronged by prospective buyers, with many ultimately finding their way on to Dubizzle for resale by the next day.
Meanwhile, prices of Dubai property stocks have soared 24.7 per cent since the start of the year, the best industry performer on the emirate's stock exchange.
Rent controls in Dubai limiting how much landlords can increase prices may be having an impact in restraining the financial impact on some. In neighbouring Sharjah, where no such caps exist, residents have reported rents soaring by as much as 30 per cent.
Many property experts have warned in the meantime of signs of bubbles brewing in the property market, calling on authorities to act.
The Central Bank has tried to rein in the surging property market through a cap on mortgages, which was widely resisted by lenders after it was announced at the end of last year. The limit remains under discussion.
But outstanding mortgages fell by 1 per cent last year to Dh159.8 million (US$43.5m), according to Central Bank data, suggesting that cash buyers of investment properties are having an outsized effect on the market.
Despite the emirate's bubble fears, Deutsche Bank's research shows that apartment prices are 43.5 to 60.7 per cent below their 2008 peak, with villas 12.7 to 49.1 per cent below their pre-financial crisis highs.