According to industry leaders, Dubai’s new smart rental index is anticipated to provide equitable pricing for both new and existing buildings, represent more accurate building rentals rather than the city as a whole, and maybe stop landlords from raising prices arbitrarily.
In order to promote confidence, openness, and trust among landlords, tenants, and investors, the Dubai Land Department said Monday that it would introduce a new “smart rental index” in January. In March 2024, the Department updated its rental index calculator.
Tenants have had to deal with inconsistent rent as landlords have changed prices in response to the construction of newer, more contemporary buildings, according to Rohit Bachani, co-founder of Merlin Real Estate.
“This has often led to situations where tenants in older properties were charged similar rents to those in newly developed buildings with better amenities. The introduction of Dubai’s smart rental index marks a significant step forward in addressing these issues, as it ensures rents are more reflective of the specific property rather than the broader area,” he said.
Bachani added that initiatives like the Makani and Ejari system enable the index to incorporate metadata, offering unit and building-level comparisons. “This is a crucial advancement for tenants, as it prevents arbitrary pricing in areas with a mix of both new and older buildings. For instance, in areas like Downtown and Business Bay, where the range of building quality is wide, the new index will shift from an average area price to a more precise and fair pricing model based on the specific building and unit,” said Bachani.
Addressing discrepancies
Although there are still few specifics, Firas Al Msaddi, CEO of fäm Properties, stated that the program seems to be aimed at providing a more realistic rental evaluation.
“Currently, the existing rental index operates with a basic formula that overlooks critical elements such as unit size, views, location, and access to unique amenities like parks or other selling points. For instance, a three-bedroom apartment could vary significantly in size, ranging from 1,400sqft to 3,000sqft, yet the current system doesn’t adequately reflect these differences in rental value.
“The new smart rental index, however, promises to address such discrepancies. By incorporating these diverse parameters, it has the potential to provide a more precise and transparent guide for tenants and landlords alike. This would minimise situations where properties are undervalued or overvalued in comparison to their true market potential,” added Al Msaddi.
He clarified that in order to analyze historical data, improve its technique, and provide rental evaluations that are more accurate, the news index is anticipated to use AI.
“Another positive step forward is the potential for the smart rental index to distinguish between new rental contracts and renewed ones. In a rising market, renewal rents tend to be slightly lower than rents for new contracts, while the opposite is true in a softer market. The current index does not account for this distinction, which could be a game-changer for both tenants and landlords,” said CEO of fäm Properties, adding that it will bring ‘fairness to the rental market’.
Real-time data
Danish Sharif, CEO of Blanco Thornton Properties, said the data “will provide real-time data on rental prices and availability across Dubai.”
He said: “In the future, an AI-powered platform could improve transparency by offering legal checks, risk assessments, and agreement reviews to help landlords and tenants follow rental laws and avoid disputes. Furthermore, if it can track trends and market conditions through social media, news, and forums, it would provide valuable insights to help people make even better decisions.”
Sharif explained that the Dubai smart rental index will provide “a balanced and transparent rental ecosystem, benefiting both tenants and landlords while supporting a sustainable real estate market.”
The Smart Rental Index is expected to greatly help renters by increasing clarity on reasonable rental rates, lowering the danger of overcharging, and giving comparative data to fortify lease discussions, according to Anmoll D. Shroff, founder and chairman of Elton Real Estate Development.
“Tenants will also gain access to detailed insights into rental trends, empowering informed decision-making. For the broader market, the index will stabilise rental prices using a data-driven approach and reduce disputes by establishing a standardised benchmark for rents, fostering a fairer and more transparent ecosystem,” he added.
Transparency and efficiency may be increased by using data-driven technologies like heat maps, rent monitoring algorithms, and real-time market analytics, which can show rental costs visually throughout Dubai, highlighting both pricey and affordable locations, according to Shroff.
