DUBAI, United Arab Emirates — Demand for property in the United Arab Emirates’ glitzy commercial capital of Dubai hit a record high for the first two months of 2023, real estate services firm CBRE revealed in a report published Thursday.

In February alone, Dubai’s residential market saw 8,515 transactions — a whopping 43.9% increase from the previous year. January and February together clocked a total of 17,741 residential transactions.

Beyond the property market, Dubai’s economic boom is evident in everyday life.

Every week, a new high-end restaurant seems to appear in the desert emirate, which morphed from a small fishing village to a bustling, hyper-modern metropolis within just the last few decades. Downtown bars are crowded most evenings. The city’s Roads and Traffic Authority recently reported record road traffic and public transport use in the last year. Residents frequently complain that ordering a taxi on any evening of the week — even a Monday night — takes longer than ever.

But while some Dubai residents — roughly 90% of whom are expats — find the struggle to book a ride or a restaurant table frustrating, it’s the sharp and often extreme increase in rents that are hitting many of them the hardest.

“A 60% increase,” one Dubai-based consultant told CNBC when asked about how much their rent had increased year-on-year. The consultant, who was living in Dubai’s high-end financial district, the DIFC, decided to relocate instead of paying the new rent. Several other DIFC residents reported landlords asking for rent increases of 50% and higher, and many of those have downsized or moved to less expensive areas as a result.

Dubai’s Land Department has a body called RERA, the Real Estate Regulatory Agency, which states that landlords cannot demand a rent increase beyond a certain percentage based on the property’s current market value. But the DIFC operates as its own legal entity, unbound by RERA rules.

“Essentially the DIFC is the wild wild West,” the consultant said, requesting to not be named due to professional restrictions. “No controls whatsoever.” The DIFC Authority did not reply to a CNBC request for comment.

Even outside of the DIFC, though, rents and selling prices are soaring.

“There aren’t enough properties; the Dubai Land Department has recorded an 8% availability which is the lowest since 2008,” said Nazli Acar, a sales and leasing agent at D&B Properties. “Property owners are aware of this, hence why they keep increasing their rental prices. And believe me, there are people willing to pay the price.”

And landlords are finding ways around RERA rules, pushing tenants out by claiming they are moving into the house themselves or selling it, and then renting it to a brand new tenant instead for whom they charge a far higher rent that goes above the RERA limits. This practice is illegal, but happens frequently because many tenants don’t know their rights, brokers say.

Acar described how rents have doubled in various Dubai neighborhoods between 2021 and now. Property prices have, too — CBRE says that selling prices are up 11.5% on average in the year to February 2023.

But many sellers have seen much larger returns. One Dubai expat, who requested anonymity for professional reasons, bought a residential property for roughly 4 million UAE dirhams ($1.09 million) in early 2021, renovated and redecorated it, and within the year sold it for double the price.

The current environment is night and day compared to early 2020.

Eeven before the coronavirus pandemic hit, Dubai’s property sector had fallen some 25% in the previous five years due largely to market oversupply. As the market bottomed out in the spring of that year, buyers snapped up cheap properties, renovated them and began renting to tenants and visitors as Dubai opened its doors to tourists and investors while most of the world remained in lockdown.

Within about 18 months, the sector had staged a dramatic recovery.

Just as many property owners are taking advantage of today’s market to make lucrative sales, landlords know that as more and more people stream into Dubai, there continue to be those willing to pay their elevated rental rates.

“I’ll start with the word bonkers. The rental market just now is absolutely crazy,” Ricardo Scala, Dubai-based luxury property broker and founder of Ricardo Scala Estates, told CNBC. “In the past year, year-and-a-half, prices have doubled and tripled.”

According to CBRE’s research, in the year through February 2023, average Dubai rents increased by 27.7%.

Dubai’s famous Palm Jumeirah, the man-made archipelago designed to look like a palm tree, is a favorite for wealthy renters and buyers looking for their own private beachfront and takes the cake for the highest rents in Dubai. Average annual apartment and villa rents there reached 260,467 dirhams ($70,920) and 1,017,614 dirhams ($277,079) in February, respectively.

It’s well known at this point that a significant proportion of the last year’s property transactions came from Russians. Take a walk around the popular Dubai Marina or Jumeirah Beach Road area and it’s almost impossible not to hear Russian being spoken.

“Due to the war between Russia and Ukraine, we have had a huge influx of Russian clients,” Acar said. “At the end of Q3 in 2022, they were the highest transacting nationality. Again, owners are aware of this and therefore capitalizing on that statistic.”

There’s also been a notable rise in buyers from Germany, Switzerland, Italy, and the U.K., Scala said.

The UAE’s policy of being open for business to all nationalities — including those from Israel, who cannot enter several Muslim countries, and from Russia which is heavily sanctioned by the West — has paid off, as well as Dubai’s openness and relative normality during most of the Covid-19 pandemic.

The country’s various liberalizing social and economic reforms over the last few years, like its remote-worker visa and allowing 100% foreign ownership of certain businesses, have also attracted new residents and companies.

“I think Dubai as a government knows exactly what it’s doing,” Scala said. “I think they’re very, very smart with their game plan. If you think about it, from a very simplistic level, whenever something happens anywhere in the world, some sort of conflict or problem, I can pretty much guarantee within 14 days Dubai will announce some form of incentive that allows more people to come to Dubai.”

In the meantime, no one expects property prices to ease up anytime soon.

Scala believes prices will stabilize for the time being, staying at the rates they are now. “I’m finding it hard, along with my colleagues in the industry, to see how prices are going to drop that much just now, when there are just people out there paying the prices. What we don’t want to happen,” he added, “is for them to go to keep on going up more and more and more.”

Hussain Sajwani, founder of major Emirati property developer Damac, is bullish on Dubai and sees the market continuing to rise.

“Dubai is becoming expensive and it will be more expensive, it’s a fact of life,” Sajwani told CNBC in January. “Because you have lots of wealthy people in large corporations, the demand goes up, and they can afford to pay higher prices,” he said.

Asked whether people will be priced out of the city, however, he replied, “No, I don’t think so.”

Some of the city’s renters may disagree.