Dubai has defended its title as the world's best performing stock market in the first quarter of this year, gaining another 34 percent after more than doubling in 2013.
And barring any major shocks to the global economy, the positive momentum is likely to continue, analysts have told CNBC.
"The rally still has legs on a selective basis," Mahdi Mattar, CEO of CAPM Investment, told CNBC. "But it's now a story of quality names and not the broad-based, macro-driven gains you saw last year".
An upgrade to emerging market status by index compiler MSCI, and securing the right to host the world's fair in 2020 were only some of the notable sentiment-boosters that have made the country's equity markets such an attractive play for investors.
As a relative safe haven, the United Arab Emirates (UAE) as a whole has benefited from the persistent turmoil in the region, bringing in capital and tourists from places such as Egypt, Syria and Iraq. Neighboring oil-rich Abu Dhabi is up some 16 percent in the first three months of 2014, placing it among the top five globally in terms of year-to-date performance. Still, some analysts appeared more cautious in their expectations for the remainder of the year.
"One area of concern, which no one is talking about, is anecdotal evidence of a slowdown in transactions in the completed properties," according to Hasnain Malik of Frontier Alpha.
A weakening in the completed properties transaction segment could mark the beginnings of oversupply. The strong growth in the property market has not gone unchecked by local regulators who are keen to prevent a replay of the price bubble that burst spectacularly in 2009. Several measures have already been implemented, and more could be in the pipeline.
In its recent research update, Knight Frank said prime apartment and villa prices in Dubai grew by 15 percent year-on-year in the fourth quarter of 2013, describing the number as "notably slower compared to the preceding four quarters".
Debt-laden Dubai is still reeling from the after-effects of the crisis. On March 16, it refinanced $20 billion of maturing debt with the government of Abu Dhabi, but still has $40-50 billion in government-related entity (GRE) obligations to sort out by 2017.
So what else could dampen the euphoria for Dubai stocks? Cuts to the U.S. Federal Reserve's monthly bond buying program appear to be less of an imminent risk. Yet a derailment of the ongoing progress in resolving the international standoff with Iran's nuclear program could have a significant impact. Iran has historically been a key partner for the UAE, with trade peaking at an estimated $12 billion in 2007.
"Certainly Iran matters more as a fundamental driver than, for example, Expo 2020," Malik explained. "And relative to other frontier and emerging markets, particularly dollar-pegged ones, the equities rally is looking stretched".
"There is a risk this year of the market overshooting," Mattar agreed. "But we're not there yet".
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