Dubai to Unveil Smart Rental Index in January 2025

In fact, by the introduction of the “Smart Rental Index” in January 2025, Dubai is going to make a marvelous leap toward controlling and increasing the transparency of the real estate market. This step will bring a sea change, especially in the domain of “rental valuation.” Regarding developments and regulations within the Dubai real estate sector, the Department of Land and Property has declared the initiation of a Smart Rental Index that allows investors, landlords, and tenants access to the most recent accurate data in “rental valuation.”.

Objectives and Benefits of the Smart Rental Index

• Increased Transparency and Trust: According to the Dubai Land Department (DLD), the primary goal of this index is to enhance “trust, transparency, and confidence among landlords, tenants, and investors.”
• Access to Accurate and Updated Data: The index will provide investors, landlords, and tenants with access to accurate and up-to-date market data.
• A Standard for Rent Determination: Tenants, landlords, and real estate intermediaries can use this index as a standard benchmark for assessing and determining new rental agreements and renewals across Dubai. This is particularly crucial in cases of disputes between contract parties.
• Alignment with Market Rates: The latest update of the rental index occurred in March, aligning rental prices with real market rates.

Reasons for Increase in Dubai Rentals

Population growth and the arrival of new investors and residents are some of the major reasons for the continuous increase in rental prices in Dubai’s real estate market over the last couple of years.

More than 100,000 people have been added to Dubai’s population this year alone.
As various reports by realty consultancy firms like Cushman & Wakefield and Core cited that residential rents in Dubai achieved 18% YoY growth in Q3 2024, and this marked the 15th successive quarter of double-digit rental growth.

During that quarter:

• Apartment rents rose by over 19%
• Villa rents jumped by 13%

Supply and Demand Dynamics in Dubai’s Real Estate Market

It means demand for new residential units in Dubai has outstripped supply and accelerated the rate of rent price increases across the city.

• Some 157,900 residential units were delivered during Q3 2024 in Dubai.
• In total, the units delivered in 2024 reached 229,000 units.

This supply-demand imbalance has played a critical role in the rise of rental prices citywide.

Advanced technologies applied to the Smart Rental Index

The Dubai Land Department has emphasized that the Smart Rental Index is a “comprehensive system integrating state-of-the-art technologies with rich real estate experience to provide outstanding services that meet the needs of all market stakeholders.”

Learning from Abu Dhabi’s Experience

In August 2024, ADREC introduced for the first time the Abu Dhabi Residential Rental Index. This platform will seek to:

• Increase market stability
• Improve transparency
• Provide reference rental prices for landlords and tenants

Dubai’s Smart Rental Index is expected to follow a similar trajectory, ensuring clarity and reliability in rental agreements.

Conclusion

The Dubai Smart Rental Index will be a modern tool, through which state-of-the-art technologies and accurate data will drive the rental market toward fairness and transparency. This would work as an effective tool in establishing fair and updated rental values in lease contracts.

This would also prove very contributory to the attractiveness of Dubai in terms of attracting investment into it and to facilitate informed decision-making in its buoyant real estate market. This transparency and accuracy is very important, especially for investing in Dubai and making informed decisions in this market.

Source: https://www.propertynews.ae