Dubai Launches Star-Rated Rental Index to Bring Transparency to Tenants and Landlords

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Dubai has introduced a groundbreaking ‘building classification’ system as part of its revamped digital rental index, transforming the way rental rates are determined and fostering transparency in the real estate market. This innovative approach allows landlords to set rents based on a star rating assigned to their buildings, which could potentially curb rental conflicts and provide clarity to tenants.

A New Way to Assess Rentals

The new Rental Index, live as of January 2, can be accessed by this link   https://dubailand.gov.ae/en/eservices/rental-index/rental-index/#/ employs a building-specific star rating system instead of the traditional zone-based rental index. This star rating evaluates the quality of a building, enabling landlords to justify rental rates and increments more transparently. For tenants, this means they will pay rates aligned with the actual condition and upkeep of the building rather than the broader district averages.

How the Star Rating Works

The star rating is assigned to entire buildings rather than individual units. While the Dubai Land Department (DLD) currently shares these ratings only with building owners, plans are underway to extend this information to tenants and individual property owners. Landlords of lower-rated buildings can improve their ratings by upgrading facilities, with changes approved and reflected instantly in the system.

The rental index calculates rates by considering average rents within the building and its surrounding area. Consequently, older or poorly maintained buildings in upscale areas cannot command rents equivalent to newer, well-maintained properties.

Covering All Corners of Dubai

Unlike its predecessor, the new index spans both freehold and non-freehold areas, excluding only non-residential properties for now. The updated system integrates real-time AI-driven data, achieving over 90% accuracy in rental assessments and ensuring maximum transparency for all stakeholders in Dubai’s real estate sector.

A Win-Win for Landlords and Tenants

The star-based classification encourages landlords to invest in maintaining their buildings, fostering a culture of quality improvement. For tenants, the system provides assurance that rental hikes are justified and tied to the building’s rating. This is expected to reduce rental conflicts by at least 20%, according to the DLD.

In 2024 alone, Dubai recorded over 900,000 rental contracts, marking an 8% increase from the previous year. With this new system, both tenants and landlords can expect greater clarity and smoother rental processes.

The Road Ahead

This move represents a significant step forward in aligning Dubai’s real estate market with global best practices. By incentivizing property owners to enhance their buildings and offering tenants a clear understanding of rental rates, Dubai continues to solidify its reputation as a leading destination for real estate investment.

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