Prime properties in Dubai are forecast  to see the largest price growth in 2014, according to Knight Frank's recently-released Prime Global Forecast. Despite Dubai prices rising by around 20% in both 2012 and 2013, far outperforming all prime property markets over a two year period, Knight Frank expects prices to increase by a further 10-15% this year. Even though property prices are soaring, the UAE central bank hasn't changed its base rate since February 2009, when it reduced the rate by 0.50% to 1.00%.

However, while the price surge is also part of a large 'bounce back' as Dubai property also fell further than any other prime market (down almost 60% from peak to trough in 2008-2009), the question is how much further will it rise this time, and is it susceptible to another downturn at a later date?

According to Knight Frank, 75% of buyers of prime property in Dubai are domestic buyers, compared to 50% in London so foreign buyers that got their fingers burned previously may be reluctant to return to the market. However, it could also be a reflection of the fact that non-residents are unable to get a mortgage in Dubai at the moment. 

According to local reports, banks in the UAE are still wary of giving mortgages to overseas buyers of Dubai property. Banks lost heavily when property prices crashed in Dubai and have largely ceased underwriting mortgages to overseas buyers, whose missed payments are more difficult to collect because of limited legal recourse.