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Dubai Smart Rental Index 2025. What you need to know?

Writer's picture: Narcis MarianNarcis Marian

Dubai's real estate market is constantly evolving, and the latest innovation, the Smart Rental Index 2025, is set to revolutionize the rental landscape. Launched by the Dubai Land Department (DLD) in January 2025, this cutting-edge system leverages artificial intelligence (AI) and real-time data to determine fair rental values, ensuring a balanced and transparent market for both landlords and tenants. In this article, we will explore what the index is, its potential effects on the market, and how it can assist different stakeholders.


The background of rental index in Dubai


The Rental Increase Calculator is an electronic service that was created by DLD to calculate rent increase percentages in accordance with Decree No. (2) for 2011 Concerning Rent in the Emirate of Dubai also known as Dubai’s ‘Rent Cap Decree’ for 2011 and further amended by Decree No. 43 of 2013

The increase is set at a maximum of 20%, and the increase is divided as follows:

  • if the rent is 10% less than the market value, there is no increase

  • if the rent is 11-20% lower than the market value, the maximum increase is up to 5%

  • if the rent is 21-30% lower than the market value, the maximum increase is up to 10%

  • if the rent is 31-40% lower than the market value, the maximum increase is up to 15%

  • if the rent is lower than 40% or more of the market value, the maximum increase is up to 20%

The rental index has been updated in November 2017 for all residential, commercial and industrial properties in all areas in the Emirate of Dubai.


Dubai Land Department announced in 2020 the project that relies on artificial intelligence in the smart valuation of real estate units. The rental valuation service was made available through Dubai REST app or DLD website, by issuing a valuation certificate for the requested property.

The second phase of the project followed in 2021 to include buildings and villas.


Understanding the Smart Rental Index 2025


The Smart Residential Rent Index is an advanced system that relies on building classifications to determine rental values fairly and transparently based on comprehensive criteria, including the technical and service features of each building, using artificial intelligence (AI). It covers various areas, property types, and building classifications. The DLD's goal is to lead in smart city initiatives and enhance the living experience for residents. The index delivers transparency, ensuring both tenants and landlords have access to clear rental data.


By employing data analytics and algorithms, the Smart Rental Index offers precise rental valuations. Its data is continually updated, capturing real-time market conditions to help streamline transactions for all parties involved.


Key Features of the Index


All parties in the real estate market, including investors, landlords, tenants, and both government and private entities, can benefit.


Accurate Rental Valuation


A standout benefit of the Smart Rental Index is its ability to deliver accurate rental valuations. Rental values are determined based on precise criteria, including location, technical classification, and provided services, while considering the real estate market conditions.

Increase rates are applied based on the difference between the current rental value and the average market rent, ranging from 0% to 20%.

As a result, landlords and tenants receive fair pricing that reflects the most recent market trends.


Real-Time Data


The index is updated annually to reflect changes in the real estate market. The Smart Rental Index 2025 enables users to monitor shifts in rent prices, which often reflect broader supply and demand trends. In a city like Dubai, where rental prices can fluctuate by as much as 15% year-over-year, having this data can shape optimal rental strategies for landlords and assist tenants in finding their ideal lease property.


Building Classification Insights


Buildings are classified based on criteria including construction quality, architectural design, energy efficiency, provided services, and strategic location. The index system includes a specialized mechanism for evaluating luxury and branded projects, taking into account design specifications, service levels, and spatial value.

New buildings are included in the Rent Index after being registered in the Dubai Land Department's system. The database is updated, and the building is accredited based on the classifications and criteria specified for the index.


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Calculator

Implications for the Real Estate Sector


The launch of the Smart Rental Index 2025 carries several important implications for Dubai's real estate sector:


Increased Transparency


The index promotes transparency in the rental market, building trust between landlords and tenants. With reliable pricing benchmarks, all stakeholders can engage in open negotiations, resulting in a healthier and more stable rental environment.


Strategic Investment Decisions


For investors, the Smart Rental Index serves as a fundamental resource. By analyzing rental fluctuations, they can identify promising investment opportunities, ensuring that their capital is directed toward assets likely to appreciate. For example, an area showing consistent rental growth might attract attention for new property developments or acquisitions.


Improved Urban Planning


Dubai aspires to be a smart city, and the Smart Rental Index supports this vision. City planners can utilize index data to evaluate housing needs and manage investment flows effectively. Insights derived from this index can inform decisions on where to develop new housing or enhance existing facilities, ultimately catering to the population's needs.


How to Utilize the Smart Rental Index


Tenants and landlords can verify rental values through the "Rental Index" service on the department's website or the "Dubai REST" application.


“In 2024, the total number of registered rental contracts exceeded 900,000, reflecting an 8% growth compared to the previous year. This increase reflects the growing confidence in the Dubai real estate market, enabling all parties in rental agreements to make well-informed, ultimately achieving the aspirations of all parties and enhancing the long-term sustainability of the market.”

Majid Al Marri, CEO of the Real Estate Registration Sector at Dubai Land Department during a press conference held on Jan 2, 2025


Final Thoughts


The Smart Rental Index 2025 is a significant advancement in Dubai's rental landscape aligning with Dubai’s Digital Strategy and the Dubai Real Estate Sector Strategy 2033 objectives.


Landlords gain essential insights to set competitive pricing, while tenants access accurate market data to secure fair rental terms.


As Dubai progresses as a global leader in smart city developments, the Smart Rental Index will continue to shape urban living in the region, unlocking new potentials for all parties involved in the real estate sector.





Disclaimer: The information presented in this article is for general information purposes only and does not constitute legal advice nor should it be used as a basis for any specific action or decision. For further information please do your own diligence and contact a competent authority.

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