Staff Report
Dubai, UAE
Dubai Land Department, the property and land registration and regulatory arm of the Government of Dubai, said, it has launched Smart Rental Index, the world’s first one-of-a-kind AI powered rental regulatory system. With over 90,000 civil structures listed in the index, the system will analyse data real-time, thereby maximising accuracy and transparency between tenants and landlords, as told to Gulf Property.
The number of tenants in the residential sector increased around 8 percent last year to more than 900,000, based on the rent registration – or Ejari, compared to 825,000 in 2023, a top official said at a press conference organised at the Dubai Land Department (DLD) on Thursday. All tenants in Dubai must register their rental agreements through the DLD’s rent registration portal Ejari, at a cost of Dh200 fee plus 5 percent VAT totalling Dh220. At this rate, DLD’s income from 900,000 Ejari could exceed Dh180 million in 2024, excluding income from VAT.
Tenants in Dubai pay an additional 5 percent of the rental value as Rent Fee, in addition to the Ejari fee and VAT.
The Smart Rental Index is a significant upgrade from the previous system, which was manually driven and would produce results at an area level at most, instead of building level analysis that the new system does. Data update took place annually in the older version, whereas the AI-backed one produces results instantaneously.
The index covers all residential areas in Dubai, including key districts, special development zones, and free zones, with commercial and retail spaces to be integrated in similar indexes later this year.
The Smart Rental Index is built upon a unique benchmark that is the first of its kind in the world. It classifies a building with a comprehensive 60-criterion rating system that rates between one and five stars, ensuring accurate determination of rental values. Each building is valuated based on technical and structural characteristics, the quality of finishes and maintenance, the building’s strategic location and its spatial value, as well as the level of services and facilities available, such as maintenance, cleanliness, and parking management, among others.
Majid Al Marri, CEO of the Real Estate Registration Sector at Dubai Land Department, said, “This index relies on artificial intelligence technologies and a building classification system and provides fair and accurate rental valuations, strengthening Dubai’s position as a global investment destination.”
He added that the total number of registered rental will further increase this year bolstered by the advanced rental index.
The index is based on unified and clear criteria to ensure transparency in the property valuation process. A precise calculation mechanism was developed that considers all factors influencing rental value, including the real estate market condition. It is characterised by its flexibility due to the continuous updating of standards to keep pace with market changes, ensuring that the expectations of both landlords and tenants are met.
The index provides landlords with a reliable tool to valuate properties and determine rent increases transparently while offering tenants protection from unjustified increases, thereby enhancing their confidence in the real estate market. This will eventually reduce rental disputes by 20 percent, according to DLD. Moreover, transparency will also enhance quality of life while marinating a balanced and sustainable environment for all parties involved.
DLD applies a clear system for rental increases through the index, in accordance with Decree No. (34) of 2013. The increase percentages are determined based on the difference between the current rental value and the average market rent. Rental increases start at 0 percent for rents that are less than 10 percent below the average market rent and can reach up to 20 percent for rents that exceed the average by more than 40 percent. This system aims to ensure a fair balance, protecting the rights of both landlords and tenants while contributing to the market’s stability.
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Also read: DLD to launch new smart rental index in January 2025
