Dubai rental index 2025 explained: Rents will now depend on building quality, not area
January 7, 2025
By Expat Media
Dubai’s rental index 2025 explained: Here’s how rents will now depend on building quality, not area
Dubai has taken a groundbreaking step in regulating its real estate sector with the introduction of the Smart Rental Index 2025, recently launched by the Dubai Land Department (DLD).
Unlike the previous rental index that relied on zonal or district-based assessments, this new system uses a building’s condition as the determining factor for rental prices.
The index employs a sophisticated building classification system that evaluates properties based on technical and service-related attributes. These include structural characteristics, quality of finishes and maintenance, location’s strategic value, and services such as cleanliness, parking, and maintenance management.
Majid Al Marri, CEO of the Real Estate Registration Sector at DLD, highlighted the transformative potential of the index, stating, “This initiative enhances transparency, builds trust, and offers stakeholders a balanced and sustainable environment.” Al Marri said the AI-powered system ensures over 90 percent accuracy in rental valuations, reinforcing Dubai’s global reputation as an investment hub.
Clear criteria for fair rental increases
The index also establishes a transparent framework for rental increases. Properties with rents less than 10 percent below the market average will see no increase, while those exceeding the average by more than 40 percent may face up to a 20 percent hike. This ensures a balanced approach that protects both tenants and landlords.
Under new rules, here are the permissible rental increases:
- If current rent is less than 10 percent below average market rate, no rent increase is permitted.
- If current rent is between 11 percent and 20 percent below average market rate, a maximum increase of five percent is permitted.
- If current rent is between 21 percent and 30 percent below average market rate, a maximum increase of 10 percent is permitted.
- If current rent is between 31 percent and 40 percent below average market rate, a maximum increase of 15 percent is permitted.
- If current rent is more than 40 percent below average market rate, a maximum increase of 20 percent is permitted.
The index encompasses all residential areas, including key zones, free zones, and special development areas. This standardisation provides landlords with a reliable tool for evaluating properties while safeguarding tenants from unwarranted rent hikes.
Building classification and rental caps
Introduced in 2021, the DLD’s Building Classification system underpins the new index. It ranks properties from one to four stars, with an exclusive “4 Plus” category for buildings meeting the highest sustainability standards. Rental increases are contingent on a property’s compliance with these classifications.
The DLD has simplified the process for landlords and property managers, offering seamless registration and updates via the Dubai REST app. Tenants also benefit from the Model Tenant Classification system, which enables credit rating assessments through the Ejari platform. The DLD plans to expand the rental index to include commercial and industrial sectors while introducing enhanced user training and support. ICA/Expat Media
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