Dubai Introduces New Smart Rental Index to Improve Property Standards

A revolution is coming in Dubai’s real estate market as the Dubai Land Department (DLD) now announces the conventional “Smart Rental Index”. The new mechanism links the rental increase to the conditions and classifications of properties, thus achieving a much fairer rental market for both the landlords and the tenants.

The new system obliges owners of older buildings to renovate in order to bring the standards of their buildings on par with the new, more luxurious kinds. By doing this classification and rating of their properties, landlords will be able to justify a higher rental for their homes, meaning that the values of rentals will match the quality of buildings to be associated with that price. The index applies to residential areas in Dubai, be they freehold or not, and is expected to harmonize the interests of tenants, landlords and investors alike.

Majid Al Marri, CEO of DLD’s Real Estate Registration Sector, stated that indeed, the Smart Rental Index aims to raise the quality of life in Dubai, but in a fairer manner of calculating rent. “We want a balanced market such that all benefit, whether tenants or owners or investors,” Al Marri emphasized. More than 60 forms of criteria will be taken into account such as the age, condition, and location of a building in determining the rents, allowing landlords to modify it as appropriate for their properties. For example, Dubai has implemented a star rating system for residential buildings, wherein buildings can earn a rating of one to five stars-and rental prices will then be adjusted along those lines.

The Smart Rental Index intends at the same time to improve the transparency and competitiveness of the market for renting apartments. The state-of-the-art artificial intelligence can be incorporated into offering real-time updates, hence allowing fast adjustments of rental values across all areas in Dubai. Thereby, disputes between landlords and tenants will be minimized and DLD expects a decrease in such yearly incidences.

According to Khalid Al Shaibani, the Director of the Rental Affairs Department at DLD, the online index takes into consideration the average rents for specific areas, conditions of buildings, and length of leases. This factor assures a fairer and more accurate evaluation wherever possible-especially for older buildings in prime locations.

Apart from the new rental index, DLD has also launched a ‘Model Tenant Classification’ for rating tenants’ creditworthiness. This could then make the magic happen in sophistication by integrating the system with Dubai’s smart app and Ejari platform. These would enable the landlords and tenants to easily access their credit reports while ensuring seamless transactions.

The introduction of this index signals a significant step towards making Dubai’s real estate market sustainable and attractive to investors while ensuring that tenants are charged reasonably according to the quality of the property.