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Despite rising prices, demand is growing - the emirate's real estate market attracted investments worth Dhs53 billion during the first half of the year, a 49 per cent year-on-year increase, according to a report by the Dubai Land Department.
"Dubai's real estate market is lucrative because of its stability, diversity and promise of high return on investment," said Sultan Butti Bin Mejren, director general of Land Department.
"These factors continue to inspire confidence in local, regional and international investors alike, signifying complete recovery from the global financial crisis," he added.
Dubai's notorious property bubble burst in 2009 and 2010, which caused real estate prices to crash around 60 per cent and scarred the entire emirate. Dozens of projects were cancelled or suspended, dubious developers disappeared and zealous investors lost millions.
In the last two years, strengthened regulations, increased transparency and an improving economy - mainly boosted by tourism, helped to put this shine back into Dubai's property market.
In July, Dubai's ruler HH Sheikh Mohammed bin Rashid al-Maktoum issued a decree stating that the emirate will liquidate cancelled property projects and use the funds to repay investors.
The Land Department is also putting in place new legislation, expected to be ready by 2015, to better regulate Dubai's real estate sector. Despite the positives, the market's steady acceleration towards pre-crisis conditions is ringing alarm bells.
In a recent report, the International Monetary Fund warned that Dubai might need to intervene in its property market to prevent another property crash.
"It is too early to speak of a bubble, but should price increases continue to take place at this pace, action will need to be taken to prevent a bubble," said Harald Finger, IMF mission chief to the UAE.
Mohammed Faheem, senior research analyst at CBRE Middle East agreed: "As confidence rises amongst buyers and developers, we're already seeing increasing signs that the residential sector is starting to overheat. This is a situation that will need to be monitored closely over the next 12 months to ensure that another price bubble is avoided, demonstrating that lessons have actually been learnt from 2008."
© Gulf Business 2013