Rents could drop in some old buildings with outdated facilities following Dubai's introduction of the new smart rental index. Also, new buildings with top-tier facilities could see rent hikes of up to 15 per cent as landlords are expected to adjust rates and bring them at par with market prices.
The Dubai Land Department recently unveiled the smart rental index, which takes into account many new aspects including the classification of the buildings, old and new rentals of the building, and area, among others.
It covers all the residential areas in Dubai, including key districts, special development zones, and free zones. The index requires old building owners to renovate and upgrade their assets before raising the rents, while new building owners will be able to push the rates higher to be in line with market prices.
Historically, landlords had sometimes requested rent increases that weren’t “fair” or valid, said Alec Smith, head of sales and leasing at Savills Middle East. He added that in other cases, tenants have refused or challenged legitimate requests, assuming the landlord was being unreasonable.
“This new smart system provides both parties with a clear and straightforward way to determine what constitutes a ‘fair’ rent and whether an increase is applicable,” he said.
New, high-specification buildings with top-tier amenities, on the other hand, could see a 5- to 15-per-cent increase as their true market value is reflected in the index
There are over 200 residential towers in Dubai Marina developed by more than 180 developers, with some buildings nearly 20 years old and others brand new. The new rental system will allow owners of higher-quality or more sought-after properties to see faster rental price increases compared to owners of older, less-maintained properties with lower demand.
