Dubai: Tenants in Dubai will soon get greater clarity on rental changes and less chances of being hot with arbitrary rental hikes once the new digital rental index goes live early 2025.
Currently, the Dubai rental index gets updated every three months. It was in April 2024 that the Dubai Land Department brought out the revised index after a gap of more than 2 years. During this period, rents in Dubai went through steep increases irrespective of location and whether the apartments were in a new or much older building.
“Now is a good time for the real-time Dubai rental index to go live,” said a landlord who’s got multiple rented homes in two of the popular upmarket communities in the city. “Much of the gap in rents charged by older and newer properties has been removed, which is why I say the timing of the new index is perfect.
“Tenants and landlords alike have clarity on what their rental should be. And it’s all official.”
Whatever be the case, property market sources insist that the new index has to be the biggest initiative of 2025 from Dubai’s real estate authorities. It was Sunday (December 30) that the Land Department confirmed there will be an imminent launch for the digital index. (There is an event scheduled for January 2 by the Dubai Land Department to provide more details of the index.)
Removing ‘arbitrary’ from rent negotiations
If rental changes are issued in real time, this will filter through to setting the rental levels within that building and the area in which it is located. What the index could do beyond that is reduce the possibility of landlords setting arbitrary hikes at the time of lease renewals.
Dubai’s smart Rental Index is expected to be the de facto standard, providing real-time updates and access to individual metadata
That definitely is the vibe Rohit Bachani, co-founder of Merlin Real Estate, hopes to see.
“Landlords (with units in older buildings) will no longer be able to set prices arbitrarily in comparison to newer properties,” said Bachani. “Instead, they will be required to offer competitive pricing and undergo multiple verification checks.
“We believe this will be a great respite not just for tenants but also for brokers, by offering greater transparency across. And making way for a more regulated pricing that is much required to sustain the property boom we see today.”
What Dubai’s landlords should follow on rent hikes:
- if the property is 11%-20% below market value, there can be an up to 5% increase.
- 21%-30% below market value: up to a 10% increase.
- 31%-40% below market value: 15% maximum increase.
- 40% or more below market value: 20% maximum increase.
Now, in the last three years, there have been rent hikes that have been higher than the prescribed upper limit, as landlords with units leased before the property boom tried to level up with those in newer properties.
That trend has more or less played out. In 2025, as more homes prepare for handover, Dubai’s new Rental Index should set the benchmarks for what their landlords can charge when leasing.
“Landlord of such properties will have less headway in asking for a 10%-20% higher rent than the average in that area just because the unit is new,” said a property market source.
According to Bachani, “The new Dubai Rental Index offers a more accurate measure compared to traditional area-based indices, particularly in areas with older buildings. That’s thanks to the consistent progress made by DLD’s multiple initiatives such as the ‘Makani’ system, the Ejari, etc. Today, its great to see all those steps open up a new opportunity for data to enable a more trusted real estate ecosystem.”
And for tenants to hope for not getting hit with sudden rent increases on their renewals.
