Dubai’s real estate market entered a new digital era as the Land Department unveiled its Smart Rental Index 2025 – a data-driven system to determine fair rental values across the emirate – earlier in January.
By combining real estate analytics and technology to standardise rental calculations, the system uses market data and expertise to guide pricing decisions for all property stakeholders.
#DLD launches the Smart Rental Index 2025, which integrates the latest technologies and real estate expertise to provide exceptional services that meet the needs of all stakeholders, solidifying Dubai’s position as a global investment destination.
— دائرة الأراضي والأملاك في دبي (@Land_Department) January 2, 2025
“The new Dubai Smart Rental Index is a game-changer for the market and a real win for both tenants and landlords,” Lewis Allsopp, the Chairman of Allsopp & Allsopp told Arabian Business.
But how does the new Dubai Smart Rental Index 2025 work?
The Dubai Smart Rental Index system evaluates properties based on multiple technical and service-related aspects.
Each building undergoes assessment using specific criteria, including its technical and structural characteristics, the quality of finishes and maintenance, strategic location and spatial value.
The system also considers available services such as maintenance quality, cleanliness standards, and parking management facilities.
At its core, the index employs artificial intelligence technologies to calculate rental values accurately. The calculation mechanism takes into account various factors that influence rental prices, including current market conditions.
To maintain relevance, the system continuously updates its standards to reflect market changes, ensuring it serves both landlords’ and tenants’ expectations effectively.
“With the AI-driven model, things are much more dynamic and accurate. It updates faster and takes into account a broader range of factors, such as filtered search and ensuring the rents being set are fair and in line with the actual property. This kind of transparency gives tenants and landlords more confidence and trust in the market,” Allsopp said.
The index implements a clear structure for rental increases, governed by Decree No. (34) of 2013. This structure determines increase percentages by comparing current rental values against average market rates.
The system allows for no increase when rents are less than 10 per cent below the market average, with potential increases scaling up to 20 per cent for properties where current rents exceed the average by more than 40 per cent. This graduated approach aims to maintain market stability while protecting both landlord and tenant interests.
The geographical scope of the index is comprehensive, covering all residential areas in Dubai, including key areas, special development zones, and free zones. This wide coverage ensures standardized evaluation and pricing criteria across the emirate. Implementation is facilitated through the Dubai REST app, where landlords and tenants can manage their rental contracts – from registration to renewal and cancellation. The system also incorporates a tenant classification feature that provides credit ratings and reports through the Ejari system, adding another layer of transparency to the rental process.
Through this systematic approach, the Smart Rental Index 2025 aims to create a balanced and sustainable real estate environment, providing stakeholders with reliable tools for property valuation while protecting tenants from unjustified rent increases.
“The new rental calculator is an improved structure, taking into account the individual merit of each building/development rather than applying average rents for a geographical area/community. This means rental uplifts should be more aligned to the building quality,” Rachael Kennerley, Head of Property Management at Savills Middle East told Arabian Business.
“Our initial review reveals that this has been good news for most tenants, except perhaps those in the very highest quality assets. It is important to remember that the law behind the rental calculator has not changed and tenants remain protected from significant rental jumps with the maximum uplift possible being 20 per cent. It has also highlighted the aging nature of much of Dubai’s housing stock,” she added.
Echoing the sentiment, Allsopp said while rental values were previously based on area averages, “this didn’t always reflect reality as different sub-communities and properties have different pricing.”
“Take somewhere like the Marina – you’ve got a mix of buildings with vastly different qualities, and an average doesn’t capture that,” he said.
What does the Dubai Smart Rental Index mean for investors?
“For investors, this is great news as it will create a more reliable framework, with AI and advanced algorithms at its core, it would allow investors to access accurate rental yields and market trends, which will help guide their investment choices,” Allsopp said.
“There’s also talk in the market about credit checks for tenants being introduced. If that happens, landlords will have even more peace of mind knowing their tenants’ financial reliability before signing contracts. It’s a system used globally, and bringing it to Dubai would undoubtedly lead to more stability and fairness in rental prices, benefiting both tenants and landlords,” he added.
However, Savills Middle East’s Kennerley said investors have “several key considerations” to watch out for.
“The new system aligns rental values with live market trends rather than outdated historical prices, allowing landlords with high-quality or in-demand properties to implement justified rental increases more efficiently. However, landlords of older, well-maintained buildings may find rent increases slower compared to newer developments, as the system places greater emphasis on factors like age and modernisation.
“While the new index helps align rents with market trends, a significant disparity remains between rents for existing tenants on legacy leases and those for new lettings. This gap is particularly evident for tenants whose rents were renewed during the Covid-19 period and have not yet caught up with current market values,” she said, adding that the new system introduces individual property assessment instead of using area-wide averages, preventing lower-quality buildings from benefiting from premium properties nearby.
This creates incentives for property improvements: individual landlords can upgrade to achieve better ratings and higher rents, while buildings under strata ownership require collective action through owners’ associations. Properties that undergo modernisation can command higher rents, while unmaintained properties may see declining rental values, Kennerley concluded.
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