House prices in Dubai, which suffered a property market crash in 2008, topped the global rankings in January-March for the fourth consecutive quarter, soaring 27.7 percent from a year ago, a report by Knight Frank property consultancy said.
At the same time, rents surged 30 percent on average but have doubled in some of the emirate's popular residential areas, nearing record highs.
Last month, the International Monetary Fund warned that Dubai, whose government and state-linked companies need to repay over $50 billion of debt by 2016, may need stronger tools to rein in speculation.
In contrast to the months preceding the UAE's 2008 property crisis, the current property market recovery is not marked by rapid credit growth, the central bank also said, adding that banks' exposure to the sector totaled 287 billion dirhams ($78.1 billion), or less than 23 percent of overall loans.
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Real estate-related lending accelerated slightly in 2013, with the growth rate above 10 percent or one percentage point higher than overall loan book growth, the report said.
Bank finance for the purchase of residential property increased 12 percent in 2013 or by 12.7 billion dirhams, the central bank said, adding that bank lending was not a significant driver of real estate prices.
"While this indicates that banks were increasingly participating in financing the real estate recovery, the funds provided by the banking sector were only enough to finance the purchase of less than 30 percent of the residential properties that were completed in 2013," the central bank said.