The “Smart Index” provides accurate and transparent rental evaluations

Real estate developers confirmed to Emirates Today that the new smart rental index, launched by the Dubai Land Department, is an important step towards achieving justice and balance in the real estate market, as it provides accurate and transparent assessments of rental prices, which benefits tenants and owners.

They described the launch of the index as “new reforms” in the market that increase the state of maturity and raise investor confidence in it, which reflects positively on attracting more foreign investments to the emirate.

They explained that the index provides tenants with “fair pricing,” provides accurate and updated data, and ensures attracting suitable tenants and maintaining the sustainability of returns, pointing out that the tenant in a building with lower quality will not have to pay a rental value like the one he pays in a building with high services and a better location. Therefore, everyone welcomes the new rental index.

They emphasized that the index provided an accurate calculation mechanism that takes into account all factors affecting the rental value, including the state of the real estate market. It also gives owners an incentive in terms of maintenance and services, and whoever neglects this aspect will have a lower rating and will not obtain the required rental return.

Fairness and balance

Real estate expert and director of DXR Company, Asma Mowafi, said that the new smart rental index is an important step towards achieving justice and balance in the real estate market, as it aims to provide accurate and transparent evaluations of rental prices, which benefits tenants and owners.

She added that the impact of the index on tenants includes fair pricing, as it contributes to adjusting rental prices to be compatible with market reality, which reduces exaggeration in prices and ensures that tenants receive fair value for what they pay.

Mofaqi pointed out the transparency of the information provided by the index, as it provides accurate and updated data, which helps tenants make informed decisions when choosing real estate.

She continued: “As for the impact of the index on owners, it helps determine appropriate prices for rents, commensurate with the characteristics of the building and location, and ensures attracting suitable tenants and maintaining the sustainability of returns, as well as enhancing confidence by providing transparent evaluations, which enhances confidence between the owner and the tenant.” “It contributes to the stability of the contractual relationship.”

Moaghafi stated that the index depends on the classification of buildings based on their characteristics, such as location, equipment, and lifespan, which ensures fair pricing commensurate with the actual value of the property, indicating that the classification helps prevent arbitrary rent increases by landlords, and enhances justice in real estate transactions.

Increase and quality

For his part, CEO of Malak Real Estate Company, Tariq Ramadan, said that the Dubai Land Department is always working to develop its services and standards, in its quest to become one of the most prestigious real estate markets in the world.

He added: “The rental index previously contributed to controlling rent increases during times of high real estate activity, but if we look at rents in the different areas of Dubai, we find that rents vary in each region, and from one building to another, and this depends on the quality of the building, the services available in it, and maintenance.” Therefore, it has become fair for the indicator to be shifted from the area to the building level, so that the increase in rents is linked to its quality, which achieves fairness for tenants.”

He continued: “In a lower-quality building, the tenant will not have to pay the same rental value as he would pay in a building with high services and a better location. Therefore, everyone welcomes the new rental index, as it is a good step in the right path.”

A state of balance

In the same context, the head of W Capital Real Estate Brokerage, Walid Al-Zarouni, said: “The smart rental index helps to create a state of balance between the interests of the landlord and the tenant in the real estate market. It also reduces rental disputes in the market and enhances transparency and justice.”

Al-Zarouni believed that such new reforms in the market increase the state of maturity and raise investor confidence in it, which reflects positively on attracting more foreign investments to the emirate, pointing out that the index is the product of technological development in the current era, and a maximization of the role of artificial intelligence techniques in measuring data. Within the real estate market, and issuing correct estimates of rents.

Al-Zarouni stated that the index provided an accurate calculation mechanism that takes into account all factors affecting the rental value, including the state of the real estate market, in addition to providing flexibility thanks to the continuous updating of standards to keep pace with changes in the market, and to ensure that the aspirations of owners and tenants are met.

An incentive for owners

In addition, the CEO of Standard Real Estate Management Company, Abdul Karim Al Mulla, confirmed that the new smart rental index serves both sides of the rental relationship, and gives an incentive to owners in terms of maintenance, renewal, and services, pointing out that it is classified as “stars,” and therefore those who neglect This aspect is downgraded and does not receive the required rental return.

As for the CEO of Harbor Properties, Dr. Muhannad Al-Wadiya, he believed that the new smart rental index will have a positive impact on the real estate market in Dubai, and will enhance the confidence of investors, tenants, and all parties to the real estate equation, as well as Dubai’s reputation as a leader in the global real estate sector.

Al-Wadiya added: “The new smart rental index will greatly help in evaluating and valuing properties according to these smart criteria in the rental index, which will contribute to evaluating real estate. This is a good start for the year 2025, which will help advance the real estate sector.”

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Calculating the increase in rents

The increase in rents, according to the rental index, is calculated according to the following:

If the rent is 11-20% less than the market value, the maximum increase may reach 5%, and if the rent is 21-30% less than the market value, the maximum increase may reach 10%, and if the rent is 31-40 less % of the market value, the maximum increase may reach 15%.