UAE c.bank warns Dubai property bubble may be forming

Low residential rental yields in Dubai and Abu Dhabi may indicate growing imbalances and overheating in the real estate sector, the United Arab Emirates central bank said on Sunday, in the first official warning about soaring property prices.
House prices in Dubai, which nearly defaulted on its debt in 2009 after a property bubble burst, soared 27.7 percent from a year ago in January-March, leading the global rankings for a fourth straight quarter, according to consultancy Knight Frank. In some areas, prices are back near pre-crisis levels.
In an annual financial stability report, the central bank said there was no build-up of vulnerabilities in the banking system, and it did not indicate that it planned to take any concrete action towards the real estate market.
With U.S. interest rates still ultra-low, any rate hike in the UAE still looks very unlikely, especially given the UAE dirham's peg to the U.S. dollar.
But the central bank's warning was striking because authorities in the UAE almost never discuss economic risks in public, preferring to insist that the outlook is rosy.