Dubai’s real estate market is set for natural growth, reflected by increasing property values, a surge in new tower developments, and higher sales and rental transaction volumes.
The Dubai Land Department (DLD) has unveiled the Smart Rental Index 2025, a transparent system that will regulate residential rents. This innovative approach incorporates advanced building classification methods to create a fair and transparent process, aligning with Dubai’s Digital Strategy and Real Estate Sector Strategy 2033.
The Smart Rental Index 2025 leverages a detailed classification system to evaluate properties based on key factors such as:
- Technical and Structural Integrity: The property’s design and durability.
- Finishes and Maintenance Standards: Quality and upkeep of the property.
- Prime Location: Accessibility and strategic importance.
- Spatial Efficiency: Optimisation of usable space.
- Facilities and Services: Maintenance, cleanliness, and parking facilities.
This data-driven system ensures precise rental valuations, accurately reflecting each property’s attributes and value.
Majid Al Marri, CEO of the Real Estate Registration Sector at DLD, described the initiative as transformative for Dubai’s real estate sector. “By integrating artificial intelligence and a robust classification system, the index offers reliable and equitable rental assessments. This reinforces Dubai’s reputation as a leading global investment destination,” he stated.
In 2024, Dubai registered over 900,000 rental contracts, marking an 8% increase from the previous year. This growth underscores rising confidence in the market and supports informed decision-making among stakeholders.
Anticipated Rental Market Trends
Rental prices are projected to see notable growth, with short-term rentals expected to rise by 18% and long-term leases by 13%. The index incorporates unified standards and a flexible framework that evolves with market dynamics, ensuring landlords and tenants are well-served.
- To simplify processes and enhance efficiency, DLD has introduced several innovative tools:
- Digital Rental Contracts: Streamlined registration, renewal, and cancellation of agreements via the Dubai REST app.
- Interactive Property Management Contracts: Smart app-based management, eliminating traditional paperwork.
- Model Tenant Classification System: Advanced credit-rating tools integrated with Ejari for stakeholder insights.
These initiatives align with Dubai’s goal of fostering transparency, trust, and operational excellence in real estate.
Under Decree No. (34) of 2013, DLD employs a clear mechanism for regulating rent hikes. Adjustments are determined by comparing current rental rates with market averages, ranging from no increase to a maximum of 20% for rents exceeding market benchmarks by over 40%.
This structured system promotes fairness, safeguarding the interests of both landlords and tenants while contributing to market stability.
The rental index currently applies to all residential areas in Dubai, including free zones and special development zones. Looking ahead, DLD plans to expand its scope to include commercial and industrial properties, ensuring comprehensive market coverage.
Additional enhancements include training programmes, advanced customer service, and technical support. By fostering transparency and trust, these initiatives will further solidify Dubai’s position as a global real estate leader.
Published On: 2 Jan 2025
Source: https://www.arabianbusiness.com/industries/real-estate/dubai-launches-2025-rental-index-building-ratings-to-rent-increases
