The Emirate’s real estate regulator has announced that a new ‘Smart Rental Index’ will be launched in Dubai in January 2025.
The new index will regulate and develop Dubai’s real estate sector, “particularly in rental valuation”.
Purpose and Benefits
According to the Dubai Land Department, the index will foster “trust, transparency, and confidence among landlords, tenants, and investors.”
The regulator said the new index would provide accurate and up-to-date data for all stakeholders, including investors, landlords, and tenants.
Tenants, landlords, and property brokerage firms in the Emirate use the index as a standard to evaluate and determine new leases and renewals throughout the Emirate. In disagreements between landlords and tenants, these rates are also quite important.
Current Market Conditions
Rates were raised to match market rates in March, marking the most recent change to the rental index.
Due to an influx of new investors and inhabitants into the Emirate, whose population increased by over 100,000 this year alone, Dubai’s rents have been rising over the last four years.
Market Performance Statistics
As the city’s rental market gets increasingly expensive for tenants, city-wide rentals rose 18% year-over-year in the third quarter of 2024, according to Cushman Wakefield and Core. This is the 15th straight quarter of considerable increases.
Villa rents have shown some stabilization, with a 13 % year-on-year increase, while apartment rents have seen a sharper rise of 19 % over the same period.
Supply and Demand
Demand for new homes is outpacing supply in the Emirate, resulting in a spike in rents across all city segments.
In the third quarter of 2024, approximately 9,157 residential units were delivered across Dubai, bringing the 2024 number to 22,900 units, including apartments and villas.
Technology Integration
The Dubai Land Department said the smart rental index is a “comprehensive system that combines cutting-edge technologies with accumulated real estate expertise, ensuring exceptional service that meets the needs of all stakeholders in the market.“
Also Read: Dubai’s RERA Calculator Revision Could Mean Up to 20% Rent Increase for Residents
Regional Context
The first residential Rental Index for the capital was introduced in August 2024 by the Abu Dhabi Real Estate Centre (ADREC), which oversees the real estate industry in Abu Dhabi. The platform serves landlords and tenants and was created to promote stability in the capital’s expanding rental market, boost transparency, and offer indicative rental pricing.
