Dubai is introducing a new “building classification” system in addition to its digital rental index.
Only the building’s “star rating” and—more importantly—the amount they can raise for renewal can be used by landlords to set rents.
If the tenant is renting in an older building with a lower rating, they will not be paying the same price for better-maintained structures in the neighborhood.
Whereas the previous rental index was focused on zones or districts, the new one will concentrate on individual buildings. Additionally, this update will occur far more frequently than the previous one, which was only given once a year.
The most recent version of the digital Rental Index is currently accessible as of today, January 2.
How the new Dubai Rental Index will work
A “star rating” is assigned to the building itself, not to any of its individual properties. Individual units might potentially be added to the ranking system.
Before a building owner with a low rating can upgrade their asset and receive a “immediate” rating system rise, they must obtain an appraiser’s approval.
The new rental index will be calculated using local criteria in addition to the average rentals in particular building. This suggests that a poorly maintained old building in a fashionable location cannot get the same rental prices as brand-new construction.
The building’s star rating is currently only known to the building’s owner. The DLD will later consider providing the information to renters or landlords.
In recent years, Dubai’s ambitious “star-based” building rating system was finished. This precise classification will now be applied in the computerized Rental Index.
All areas to be covered
In contrast to the previous index, the new index includes most of the city, whether or not it is freehold. (The index does not currently cover non-residential properties.)
“This is a new phase to enhance transparency and build trust in this vital sector,” said Majid Al Marri, CEO for Real Estate Registration & Services at Dubai Land Department.
Cut rental conflicts by 20%
“This will also help reduce conflicts on rental issues – what Dubai has done with the real-time Rental Index is bring in even more clarity for investors, tenants and all those in Dubai real estate.”
When new rentals go into effect, the modifications will be made “instantly.” The Dubai Land Department anticipates a 20% decrease in disputes pertaining to rent. Khalid Al Shaibani, DLD’s Director of Rental Affairs, stated, “If at all possible, even more.”
8% increase in Dubai home rental contracts
In 2024, more than 900,000 rental contracts were signed in Dubai, compared to 836,000 the year before.
AI will provide almost all of the system’s inputs, and accuracy levels are expected to exceed 90%.
The registration process would be rather easy, according to Dubai Land Department representatives. “Maximum transparency” is the topic.
What can landlords do to raise rent?
The property owner will be able to access their unit’s rating through the DLD app. Based on that information, the landlord can then calculate the rent for a new lease or one that is being renewed.
“We want to encourage all owners to improve the quality of the building and make use of the star classification system,” said a DLD official.
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