Dubai's new Rental Index is live; 'star' rating to decide what tenants pay
Tenants to get clarity on what sort of hikes they face - and why
Dubai: Dubai is introducing a new 'building classification' system along with its digital rental index.
Only based on the 'star rating' associated with the building, landlords can set rates - and most important, how much they can raise it by for renewal.
If the tenant is in an older building with a lower rating, then, he or she will not be paying rents at the same level for better kept properties in the area.
While the earlier rental index was based on zones or districts, the new one will be honing in on individual buildings. And the updates will be far more frequent than the previous one, which was done once a year.
The new digital Rental Index has gone live as of today (January 2).
How the new Dubai Rental Index will work
The ‘star rating’ applies to the building and not the individual property within it. At a later date, the rating system could extend to individual units as well.
A building owner with a low rating can bring on upgrades to his/her asset – once that meets the appraiser’s approval, the uptick to the rating system can happen ‘immediately’.
The new rental index will be calculated based on the average rents within that building plus factor in the area. What this means is that if an old building with less than proper upkeep in a high-end area cannot demand rents at the same levels as those in new buildings.
The star rating associated with a building is for now only known to the owner of the building. The DLD will consider extending the info to property owners or tenants later on.
In recent years, Dubai has completed an ambitious 'star-based' building classification system. Now, this very classification will take effect with the digital Rental Index.
All areas to be covered
Unlike the previous index, the new one covers most of the city, whether they fall under freehold or non-freehold. (The index does not cover non-residential properties, at least for the moment.)
"This is a new phase to enhance transparency and build trust in this vital sector," said Majid Al Marri, CEO for Real Estate Registration & Services at Dubai Land Department.
Cut rental conflicts by 20%
"This will also help reduce conflicts on rental issues - what Dubai has done with the real-time Rental Index is bring in even more clarity for investors, tenants and all those in Dubai real estate."
The updates when new rentals comes into effect will be done 'instantly'. The Dubai Land Department expects to reduce rent related conflicts by about 20%. "If possible, even more," said Khalid Al Shaibani, Director of Rental Affairs at DLD.
8% increase in Dubai home rental contracts
More than 900,000 rental contracts signed in Dubai over 2024, compared to 836,000 a year ago.
The system will rely almost exclusively on AI inputs, and with levels of accuracy expected to be at more than 90%.
Top Dubai Land Department officials say the process of registering will be quite straight-forward. 'Maximum transparency' is the theme.
What can landlords do to raise rent?
The property owner will know his/her unit’s rating through the DLD app. Based on that, the landlord can set the rent for a lease, whether new or at renewal.
“We want to encourage all owners to improve quality of the building and make use of the star classification system,” said a DLD official.
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