"Keep calm. There's no bubble", proclaimed a giant poster on a 40-storey building overlooking a Dubai highway, advertising a property finding portal late last year. That may have been true at the time, but the risks are rising.
A leap in bank lending to the construction industry indicates financial institutions have resumed pouring money into real estate projects in the last few months, after cutting back sharply in the wake of Dubai's 2008 crash.
At the same time, property prices have been soaring on the back of Dubai's economic boom, increasing the chance of the market rising to unsustainable levels.
Surging supply and unsustainable demand are a risky mix - the same combination that got Dubai into trouble six years ago, forcing state firms to reschedule tens of billions of dollars of debt and jolting financial markets around the world.
This time, authorities say they are aware of the dangers, and they have taken regulatory steps to slow demand growth. But the steps are still modest compared to those by other global cities facing the same problem, such as Hong Kong and Singapore.
"It's too early to be calling top, but credit growth of that pace tells you that the cycle is accelerating rapidly," said Simon Williams, HSBC's chief economist for the region.
"Such a huge increase in lending is simply not consistent with economic order and stable asset prices. The time for policy action is now, before bubbles really get going, not when they are already in place."
Dubai house prices posted the fastest year-on-year rise of any of the world's major markets in January-March for the fourth straight quarter, soaring 27.7 percent, consultants Knight Frank said. Rents rose about 30 percent on average in the same period.
The value of real estate deals in Dubai, with a population of 2.3 million, jumped 38 percent in the first quarter to some AED61bn ($16.6bn), the Land Department said.
There are good reasons for property prices to rise, including annual economic growth around 5 percent and inflows of money from Arab investors seeking safety in a turbulent region.
While some prices have almost returned to their pre-crash peaks, they are well below some other global business cities. Prime real estate in Dubai costs between $6,200 and $7,500 per square metre ($580-700 per square foot), against $27,600-33,700 in Singapore, according to Knight Frank.
The volume of real estate deals has not reached its pre-crash peak but demand is showing signs of slowing. Propsquare Real Estate said sales volumes so far this year were down about 25 percent year-on-year as prices become less affordable.
"The gap between what the seller is asking for a property and what the buyer is willing to pay is huge at the moment," said Parvees Gafur, Propsquare's chief executive.
Yet the Land Department described the first-quarter surge in real estate deals as "impressive" and looked forward to more.
"We expect the next three quarters to be similarly active, especially as this period follows the launch of a number of stimulating economic projects in Dubai and the disclosure of some of the preparations for the city's hosting of Expo 2020," said the department's Director General Sultan Butti Bin Merjen.
The government fuelled the current property boom when it announced plans, in November 2012, for a huge development including the world's largest shopping mall, over 100 hotels and a park almost a third larger than London's Hyde Park.
Meanwhile, most of the more than 200 man-made islands off Dubai laid out in the shape of a world map that symbolised the 2008 property market crash remain empty after state-owned developer Nakheel's near debt default in 2009.
Authorities have taken some steps against price speculation and "flipping", in which investors buy and sell properties - many of them unbuilt - in quick succession. Late last year, Dubai doubled the fee charged on property deals to 4 percent, while the UAE central bank imposed caps on mortgage lending.
Some real estate developers have taken their own action; partly state-owned Emaar Properties allows resale only after about 40 percent of payment for a property has been made.
But these steps are minor compared, for example, to a 15 percent fee imposed on the quick resale of property by Hong Kong and a 30 percent fee introduced by Singapore. Last month, the International Monetary Fund warned that Dubai might need to consider such tools as well.
For now, it does not seem that the growth-hungry emirate has the will to act more aggressively. The history of the mortgage loan caps suggests it may not; the central bank watered down stricter curbs after complaints by commercial banks.
In a statement on June 9, the Land Department insisted that the property market was broadly healthy, and that rising prices were simply due to a strong economy.
In an annual stability report a week ago, the UAE central bank warned that the real estate market might be overheating. But it is unclear what further action it could take; with U.S. interest rates still ultra-low, any rate hike in the UAE is unlikely given the UAE dirham's peg to the U.S. dollar.
The supply side of the equation looks equally uncertain. Plans for real estate projects worth well over $50bn have been announced in Dubai over the past 18 months - but it is unclear how many will actually get built and how fast.
Major work is starting on some of them. After shrinking for 16 months in a row, construction loans in the UAE jumped 40.1 percent from a year earlier in December to AED181bn, the fastest rate since June 2009, latest central bank data show.
That far outpaced growth in total bank loans, which rose just 8.8 percent in December to AED1.1 trillion. And the lending boom is probably just beginning.
"We foresee an acceleration of real estate lending as developers launch new projects, and more local and expatriate customers seek to enter the mortgage market," credit rating agency Standard & Poor's said in a report last month.
A Dubai banker, declining to be named under briefing rules, noted increased risk-taking in funding to developers by local banks: "Some banks are offering 100 percent financing deals to firms on a selective basis. That's not very sustainable."
A return to the full excesses of the pre-2008 boom still looks unlikely. The crash cleared some second-tier developers out of the market, and the companies that remain still bear the balance sheet scars of the last crash; this should encourage at least some of them to be more cautious.
There are signs that developers are paying more attention to their rivals' plans and implementing projects only in stages, proceeding with each one after reevaluating the demand outlook.
"Supply is more coordinated" than it was in the past, said Fahd Iqbal, head of Middle East research at Credit Suisse.
Nevertheless, the risks may be substantial in the next few years. Any sudden loss of confidence by a large proportion of foreign investors, or sharp tightening in U.S. monetary policy, could ignite a pull-back in the market, S&P said in its report.
"What happened in 2013 was unsustainable. It is a big question mark whether or not we are going to have a sustained levelling off or whether it is going to pick up again," said Farouk Soussa, Citigroup's chief economist for the region.
"In Dubai things change quickly. If they build...all these big projects...then I think we can start to get more concerned about another massive cycle in the property sector that might be unsustainable."
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