Dubai’s New Rental Index: A Game-Changer for Tenants, Landlords & Investors

'Star' ratings to shape rent levels and ensure a more equitable real estate market

Dubai has introduced an innovative all-digital Rental Index featuring a pioneering ‘star rating’ system designed to ensure a more equitable rental market. This system evaluates real estate based on its quality, offering tenants greater transparency on rent adjustments while motivating landlords to upgrade their properties to remain competitive. Under the new framework, landlords of older buildings will need to invest in renovations to match the standards of luxury properties and enhance their ratings to justify rent increases. The Dubai Land Department (DLD) unveiled this smart rental index on Thursday, emphasizing its role in delivering “fair value to rental valuations” and fostering trust among landlords, tenants, and investors alike. 

“We have investors, landlords, and tenants, and our goal is to balance the lease prices in a way that benefits everyone. We want this index to serve the interests of tenants, property owners, and the market as a whole. It's important to ensure that investors receive returns, as without them, there would be no investment. At the same time, we want people to live in Dubai, and many may even become property owners. Our aim is to create a fair balance between all three parties."

Majid Al Marri, CEO of Real Estate Registration Sector at Dubai Land Department

Majid Al Marri, CEO of the Real Estate Registration Sector at Dubai Land Department, said, “We have investors, landlords, and tenants, and our goal is to balance the lease prices in a way that benefits everyone. We want this index to serve the interests of tenants, property owners, and the market as a whole. It's important to ensure that investors receive returns, as without them, there would be no investment. At the same time, we want people to live in Dubai, and many may even become property owners. Our aim is to create a fair balance between all three parties."

What Is the New Rental Index?
The updated Rental Index is more precise, focusing on individual buildings rather than broad zones or districts. It provides real-time updates, ensuring a fairer reflection of market conditions. Here’s how it works:
●    Star Ratings: Each building is assigned a star rating based on its quality and upkeep.
●    Rent Adjustments: Landlords can only set or raise rents based on their building’s star rating. Older buildings with lower ratings cannot demand rents comparable to newer, better-maintained properties, even within the same area.

Key Features of the New System

• Dynamic Updates: The index updates as soon as rental changes occur, offering real-time accuracy
• Encouraging Upgrades: Building owners can improve their star rating by upgrading their properties. Once approved, the new rating takes effect immediately
• Comprehensive Coverage: The system includes both freehold and non-freehold areas, though it currently excludes non-residential properties

A Transparent Future for Tenants and Landlords
The Dubai Land Department (DLD) expects the new Rental Index to cut rent-related conflicts by at least 20%, if not more. By leveraging AI technology, the system ensures over 90% accuracy in assessing rent levels. “Maximum transparency is our goal,” said Majid Al Marri. “This is a new phase to build trust and enhance the real estate sector.”

What Does This Mean for Tenants?
Tenants will benefit from clearer insights into rent hikes and the reasons behind them, and a fairer system that aligns rent with property quality. For now, tenants won’t have direct access to their building’s star rating, but the DLD may extend this information to property owners and tenants in the future.

Landlords: Raising Rents, Raising Standards
Landlords can view their building’s star rating through the DLD app and set rents accordingly. To raise rents, property owners must improve their building’s quality to achieve a higher star rating. “We encourage all owners to improve their building quality to maximize the benefits of this system,” said a DLD official.

A Snapshot of Dubai’s Rental Market
●    Over 900,000 rental contracts were signed in 2024, an 8% increase from the previous year.
●    The new system supports both tenants and investors, ensuring Dubai remains a top destination for real estate.

The new Rental Index is a significant step forward in enhancing transparency and trust in Dubai’s real estate sector. It’s a win-win for tenants seeking fair rent adjustments and landlords committed to improving property standards.

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