Dubai Land Department (DLD) launched its new smart rental index, which brings "fair value to rental valuations" and boosts confidence among landlords, tenants, and investors.
The new index links classification and ratings of the buildings when it comes to increasing rentals in the city. It covers all Dubai's residential areas– freehold and non-freehold areas.
“We linked the index to the building classification system and also encouraged owners to keep their buildings updated as this will improve the quality of life and rental value for owners,” said Majid Al Marri, CEO of the Real Estate Registration Sector at Dubai Land Department.
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“We are expecting that some owners who want to increase their rents will resort to us for evaluation. Landlords can invest in buildings and this can be a good investment because in return they can increase rentals,” said Al Marri.
“The classification has more than 60 criteria, and one of the criteria used in the index is a classification of buildings. If someone wants to increase rents they have to increase classification and rating,” he added.
The smart index will cover the residential segment in the first phase , and then the commercial segment will be added later.
Dubai residential buildings are ranked from one to five-star ratings, and rental values are adjusted accordingly.
Fair rental
Al Marri said the smart rental index will give“a fair price and rental and make it affordable.”
Under the new index, he added that landlords can adjust the rentals in line with Dubai regulations around rentals.“We have investors, landlords and tenants. We are trying to balance the lease price. We want everybody to benefit from this index, whether tenants, owners, or the market, as we try to balance the situation. We want everybody to be happy. If investors don't get a return, they will not invest. We want people to live in Dubai as well. A lot of people will turn owners also. So we're trying to create a balance between three parties,” he said.
Several criteria
Khalid Al Shaibani, director of the Rental Affairs Department at DLD, said the index depends on several criteria.
“It takes average rent in areas, building itself and old and new contracts in addition to classification. All of this will have weighting. It takes a fair approach,” he said at the launch of the index.
He added the earlier the index considered average rental contacts registered throughout the full area.
“If the area is fancy and the building is old, however, the new index considers the average rental of that building, either old or new, plus the area as a whole. This will be fairer for tenants as it takes into account each building also,” he added.
Al Shaibani added that the main challenge was random increase and that this index would have a fairer and more accurate rental since this was decided on the building itself.
“We are not encouraging increments, but we are focusing on upgrading the quality of life and standards of living in Dubai, where people, landlords, and owners are happy,” he added.
Attract more investment
Al Marri added that the previous index was updated once every year, and the new index can be updated in minutes across all areas of Dubai.
He added that the index's new features will reduce conflicts between landlords and tenants by more than 20 per cent.
Majid Al Marri said the Index will enhance transparency, build trust, promote balance, and create a sustainable system that serves everyone in the sector, in line with Dubai's Digital Strategy.
“Dubai is a global symbol of leadership and innovation, putting people at the forefront. The launch of the smart rental index is a quantum leap in regulating Dubai's real estate sector by providing an integrated ecosystem using artificial intelligence technology. This will position Dubai as a global investment destination,” said Al Marri.
In 2024, the number of registered lease contracts reached more than 900,000, up 8 per cent from 836,000 in 2023.