Dubai wants to ensure transparent transactions in the real estate market at a time when this type of investment is constantly growing. For this reason, the Dubai Land Department launched the ‘Smart Rental Index’ which will come into effect this new year to regulate the sector.
Rental prices in Dubai increased considerably during 2024 thanks to the growth of new residents and investors, which totaled 100,000 people last year. Therefore, this system is considered necessary to implement an effective and transparent mechanism within the territory, which guarantees the safety of residents and businesses.
How will this innovative system work in Dubai?
The Dubai Land Department assured that this innovative smart system will ensure transparency and conflict resolution between tenants and landlords. Through this mechanism, updated data will be provided in which the parties involved can evaluate and calculate values in their city of residence and compare them with the rest of the territory.
Rental values in Dubai and throughout the country indicated an 18% year-on-year increase in the third quarter of 2024, as reported by consultancy Cushman Wakefield and Core. This report highlights that villas recorded a moderate price increase trend, which remained at 13%, while apartments saw a 19% increase during this period.
Increasing demand: properties on the rise in Dubai
The real estate market is one of the most attractive in the world, where foreign investors are targeting this sector that offers an annual return of 8 to 9 percent. The demand for properties is on the rise, leading to a gradual increase in rents. According to various media outlets in Dubai, in the last months of 2024, 9,157 residential units were sold, raising the total for the year to 22,900, including apartments and villas.
In this context, the ‘smart rental index’ will come into effect in 2025 after Abu Dhabi did the same with the Abu Dhabi Real Estate Center (ADREC) in August 2024. Like Dubai’s, this method is designed to increase transparency and support the stability of the growing rental market in the capital.
Rental prices and exodus: a phenomenon of 2024 in Dubai.
The battle for rental prices and the constant demand for properties in Dubai has generated an exodus of residents to locations where values are lower and other working conditions are offered. Sharjah, Ajman, and UAQ have become the preferred sites where, according to specialists, residents can save up to 77,000 dirhams. The differences are stark, and some inhabitants have managed to negotiate remote or hybrid work, favoring this move to the Northern Emirates due to the increase in quality property offerings, as well as more attractive job offers and good benefits.
According to recent studies, renting a studio in Dubai costs between 30,000 and 70,000 dirhams annually, and a one-bedroom apartment costs between 50,000 and 130,000 dirhams. In contrast, in places like Ajman, Umm Al Quwain, Fujairah, and Ras Al Khaimah, the differences are notable, with prices for a studio and a one-bedroom apartment ranging from 12,000 to 34,000 dirhams per year, and from 15,000 to 50,000 per year for a one-bedroom apartment. According to investment and real estate specialists in these areas, rent, children’s education, and food are more affordable and convenient.
