NEW: Dubai Smart Rental Index Brings Limitations for Long-Term Landlords

The Dubai Smart Rental Index 2025, launched by the Dubai Land Department, aims to enhance transparency and fairness in the long-term rental market for tenants. This forward-thinking initiative leverages advanced technologies, including artificial intelligence, to provide accurate and up-to-date rental valuations by evaluating properties based on a comprehensive set of criteria, such as technical and structural characteristics, location, and available services.

‍

What is the Dubai Smart Rental Index 2025?

The Dubai Smart Rental Index is an innovative tool designed to offer precise and fair long-term rental valuations for properties across Dubai in favour of tenants. The index incorporates various factors to assess properties, ensuring that the valuations are reflective of the true quality and advantages of each property. Among the criteria considered are:

• Technical and Structural Characteristics: Evaluates the building's construction quality and infrastructure or if there were renovations completed on the property.
• Location: Considers the property's proximity to key amenities, transportation, and business hubs.
• Available Services: Takes into account the range of services and facilities available to tenants, such as maintenance, security, and recreational amenities.

Implications for Long-Term Landlords

While the index promises to bring fairness and transparency, it also introduces limitations for long-term landlords, particularly those with investments in older buildings or properties in less prime locations. Here's what long-term tenancy landlords need to be aware of:

• Restrictions on Rental Increases: Under the new system, landlords with properties that rank low on the Smart Rental Index will face restrictions on their ability to increase rents. Even if the previous rental index permitted a 20% increase, a low ranking on the new index may prevent such increases.
• Requirement for Renovations: To achieve higher rankings and justify rental increases, landlords may need to invest in renovations and improvements to enhance their properties' appeal and structural integrity.

‍Our renovation work focuses on enlacing the overall quality and appeal of properties, which can significantly benefit long-term tenants under the Smart Rental Index. By upgrading key areas such as kitchens, bathrooms and living spaces, we help landlords achieve higher rankings on the index ensuring fair rental evacuations and attracting quality tenants.

Emily Magras,

Head of Interiors,

WhatsApp Emily

‍

Why Short-Term Rentals Are More Attractive

In light of the new limitations introduced by the Dubai Smart Rental Index, short-term rentals have emerged as an even more attractive option for property owners. Here's why:

• Higher Income Potential: Short-term rentals often generate higher returns compared to long-term leases, particularly during peak tourist seasons. Especially now if the long-term rental price increases are capped due to the Smart Rental Index.
• Flexibility in Pricing: Unlike long-term rentals restricted by the Smart Rental Index, short-term rentals allow for dynamic pricing based on market demand, enabling property owners to maximize their income.
• Immediate Returns: With the ability to rent properties on a nightly or weekly basis, owners can see faster returns on their investments.

The introduction of the Dubai Smart Rental Index is a game changer for the real estate market.

While it brings more transparency and fairness for long-term rentals tenants, it also opens up new opportunities for short-term rentals. We're seeing a surge in demand as property owners look for flexible and profitable alternatives.

Louis Bowers,

Head of Business Development & Partnerships,

WhatApp Louis

‍

The Dubai Smart Rental Index 2025 marks a significant step forward in creating a balanced and fair rental market in Dubai for long-term tenants. While long-term landlords may face new challenges, the landscape is now ripe for short-term rental opportunities. By embracing the flexibility and higher income potential of short-term rentals, property owners can navigate the evolving market dynamics and capitalize on the increasing demand for temporary accommodations.

‍

‍