The United Arab Emirates' monthly purchasing manager's index (PMI) rose to an all-time high, further fueling fears of a repeat of the property bubble that hit the region in 2009.
HSBC said April's reading increased to 58.3 from 57.7 in March – an all-time high in five years the survey has been running -- signaling a solid expansion.
"At 66 points, new orders were also exceptionally strong, suggesting that the robust performance is likely to persist," Simon Williams, Middle East Chief Economist at HSBC, wrote in the bank's latest report.
In the note, HSBC pointed to the UAEs' resilience despite emerging economies in Latin America, Asia and Europe appearing to lose momentum.
"Cost pressures are relatively contained and the benefits of growth are feeding through into stronger employment", Tim Fox, Chief Economist at Emirates NBD, told CNBC. "The data presents conditions in the UAE very favorably".
Stocks on the benchmark Dubai Financial Market (DFM) closed 0.8 percent higher on Tuesday, bringing year-to-date gains to over 55 percent.
Property Boom a Growing Concern
Property has been a popular investment play in Dubai forover a decade, a trend that accelerated with the advent of the Arab Spring in 2011 as more capital sought a safe haven.
In the first quarter of 2014, average residential sales prices in Dubai jumped 33 percent year-on-year, according to Jones Lang La Salle (JLL), rekindling memories of the property bubble that burst dramatically in 2009.
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"Our concerns for the UAE focus not on its capacity to generate growth but its ability to manage its pace and direction to ensure that the excesses of the last cycle are avoided," Williams added.
Meanwhile, the International Monetary Fund (IMF) was quick to renew its warning about excessive speculation in the local real estate market.
At a presentation of its Regional EconomicOutlook in Dubai earlier Tuesday, IMF director for the Middle East and Central Asia Masood Ahmed believed measures taken by authorities over the past year were only one step int he right direction. "It's time to consider stronger measures," he explained.
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However, theInstitute of International Finance (IIF) took a more moderate view on Monday when it released its report arguing it was not concerned in the near-term about a bubble in asset prices in the UAE, citing slowing credit growth.
The IMF expects the economy of one of the world's largest oil exporters to expand 4.4 percent in 2014.
Despite these concerns, the DFM is still the best performing equity market in the world and is due for officialinclusion in the emerging market list by index compiler MSCI this month.
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