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Karina Saakova
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Karina Saakova

Dubai Residents and Homeowners Empowered by Dubai’s New Smart Rental Index

Dubai Residents and Homeowners Empowered by Dubai’s New Smart Rental Index

The Emirate of Dubai proudly unveiled its new Smart Rental Index 2025, a revelation that empowers residents and homeowners alike in improving their journey towards owning a dream house or maximizing the renting experience. The improved Dubai Smart Rental Index was launched by the Dubai Land Department on Thursday, January 2, 2025.

What is the New Smart Rental Index 2025?

The new Dubai Smart Rental Index is the latest tool launched by the DLD to help tenants, investors, and landlords with rental pricing. The tool features a new classification system that will be used to determine whether a unit can justifiably increase its rent based on specific criteria. This tool aims to add greater transparency, build trust, and provide tenants, landlords, and investors with a fair environment.

How Does The New Dubai Smart Rental Index Work?

The tool, powered by artificial intelligence (AI) builds a classification system aimed at providing a fair evaluation. It will cover all residential areas in the Emirate not limited to key districts, free zones, and special development zones. The use of AI ensures that the same evaluation and pricing criteria will be applied across all of Dubai.

Updated Building Classification System

m relying on artificial intelligence (AI), as a new basis for rental increases. This new building classification considers all technical and service-related aspects of properties and rates residential buildings from one star to five stars. The criteria include:

  • Technical and structural characteristics
  • Quality of finishes and maintenance
  • Strategic location
  • Spatial value
  • Services and facilities (such as maintenance, cleanliness, and parking management)

Rental Increase System

When a unit is applicable for a rental increase through the new building classification system, any increase will still continue to apply in accordance with Dubai Land Department Decree Number 43, which clearly states that:

  • If your rent is 10% below the average market rate, no rent increase is permitted.
  • If your rent is between 11% - 20% below the average market rate, a maximum increase of 5% is permitted.
  • If your rent is between 21% and 30% below the average market rate, a maximum increase of 10% is permitted.
  • If your rent is between 31% and 40% below the average market rate, a maximum increase of 15% is permitted.
  • If your rent is over 40% below the average market rate, a maximum increase of 20% is permitted.

This initiative provides an additional neutral and trusted source for all parties in the real estate and housing sector in Dubai. The Dubai Land Department recognized the need to provide a fairer and more accurate rental valuation to tenants, investors, and landlords across the city, thus, introducing the new and improved Dubai Smart Rental Index 2025.

Impact on Tenants

This new Dubai Smart Rental Index will offer a myriad of benefits to tenants in the Emirate.

  • Firstly, it will offer fair pricing by arming tenants with transparency via access to accurate rental data and give them the ability to negotiate.
  • By ensuring that tenants are paying a fair price for their homes.
  • This feature empowers tenants and instills confidence when entering Ejari rental agreements.
  • With reliable data to support tenants, it is easier for them to make informed decisions.

All in all, the newly improved tool delivers an enhanced rental experience to tenants across Dubai.

Impact on Landlords

Similarly, the new Dubai Smart Rental Index 2025 offers a range of positives for landlords as well.

  • For instance, the DLD Smart Rental Index acts as a powerful tool when making rental strategy decisions.
  • By accessing accurate data, landlords can make informed pricing decisions to set enticing rental prices and maximize their ROI.
  • The tool allows room for strategic planning allowing landlords to analyze the state of the market and match rising trends to meet tenancy preferences.

Ultimately, it will help reduce disputes and justify pricing strategies giving both parties space to negotiate and come to an acceptable conclusion.

RERA Calculator Update

As part of the release, the RERA Rent calculator has been updated for the first time since March 2024. Tenants can enter their Ejari number to get a more accurate rental range. Head to the Dubai Land Department website to access the new index and revel in Dubai’s latest act to meet the objectives of the Digital Strategy and the Dubai Real Estate Sector Strategy 2033.

A Pivotal Transformation of the Real Estate Sector in Dubai

Dubai Land Department’s CEO of the Real Estate Registration Sector Majid Al Marri emphasized the launch of the new Dubai Smart Rental index during a recent press conference. He remarked that the Smart Rental Index marks a pivotal transformation in the regulation and development of the real estate sector in Dubai.

Al-Marri highlighted that the initiative enhanced transparency, built trust, and provided stakeholders with a balanced and sustainable environment.

“This index relies on artificial intelligence technologies and a building classification system and provides fair and accurate rental valuations, strengthening Dubai’s position as a global investment destination.”

Furthermore, Al Marri added, “In 2024, the total number of registered rental contracts exceeded 900,000, reflecting an 8 percent growth compared to the previous year. This increase reflects the growing confidence in the Dubai real estate market, enabling all parties in rental agreements to make well-informed decisions, ultimately achieving the aspirations of all parties and enhancing the long-term sustainability of the market.”

Other Recent Initiatives

Earlier in 2024, The Dubai Land Department also launched a series of other initiatives with the goal of enhancing the real estate sector’s efficiency and streamlining procedures. These include:

  1. Interactive rental contracts through the Dubai REST App: This allows landlords and tenants to register, renew, or cancel contacts through the smart app.
  2. Interactive property management contracts via the Dubai REST App: This allows property owners and property management companies to register and modify contracts through the smart app.
  3. The Model Tenant Classification System: A new tool to classify tenants’ credit ratings and obtain credit reports through the Ejari system and the Dubai REST App.

Future Plans

Accordingly, the Dubai Land Department is committed to the Dubai Smart Rental Index’s ongoing development. The DLD also plans to expand its coverage in the future to include additional real estate sectors, such as commercial and industrial indexes, and to bring new services focused on improving user experience and building trust in the market.

Future plans will also include training programs, specialist customer service, and ongoing technical support, in addition to setting up several channels of contact to accommodate various customer needs.

FAQs

1. What is the Dubai Smart Rental Index?

The Dubai Smart Rental Index is an AI-powered tool that collects accurate rental data to provide fair rental rates for properties across the Emirate of Dubai.

2. Who Determines the criteria set by the Smart Rental Index?

The Dubai Land Department sets the criteria and the Index assists landlords to set justifiable rates while assisting tenants to avoid overpaying.

3. What criteria does the Index use to determine rental prices?

The Index takes into account a property’s technical and structural characteristics, the quality of finishes and maintenance, location, spatial value, and services/facilities provided.

4. Will the newly launched Smart Rental Index result in an increased rental price?

The Index determines if a property receives a higher rating, this would mean a rent increase.

5. Can landlords use the new smart DLD rent index to increase rent?

Landlords can request a rent increase based on the new index. However, all changes must be communicated in writing with a 90-day notice period.

6. Can tenants check if a rent increase is justified?

Tenants can refer to RERA’s Rental Increase Calculator to determine the maximum increase limit and confirm if the rent increase is justified.

7. Where can tenants complain about an unfair rent increase?

Tenants can always challenge unjustified increases anytime through the Rental Dispute Settlement Centre (RDC) if their landlord does not comply with RERA regulations regarding rental increases.

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