The new index comes amid a population boom and surging demand for homes
Dubai will introduce a new rental index using data from live transactions and AI analysis. Experts believe this will make the city’s fast-growing property market more transparent.
The Dubai Land Department announced on Sunday that it will launch the Smart Rental Index in January. While all the details are not yet available, the department said the main goal is to “enhance transparency in the real estate market.”
“This will be done by providing accurate and up-to-date data that helps investors, landlords, and tenants make better decisions through an innovative tool,” the department said on Sunday.
The current rental index is an online portal that gives tenants and landlords an estimate of how much their property is worth each year. The current system’s estimates are mostly based on average prices in the area over the past year or two. Rents have become a struggle between tenants and landlords because of high demand and a growing population.
“This new index will be a big change from the old methods, which used averages to calculate price increases. It will use real-time data, advanced technology, and real estate knowledge,” said Mario Volpi, head of brokerage at Novvi Properties and a property writer for The National.
“This initiative should provide clear information to everyone, helping to build trust and balance in all real estate deals.”
The Real Estate Regulatory Authority’s rental index was last updated on March 1. Many tenants said the changes favoured landlords, who had kept rents low during the coronavirus pandemic.
Rents in Dubai went up for the 15th straight quarter in the third quarter and increased by 18 per cent for the year, according to property consultancy Cushman and Wakefield Core last month.
Apartment rents went up by 19 per cent for the year, while villa rents had a smaller increase of 13 per cent. This shows that villa prices are starting to stabilize as they become more affordable, the research found. There has also been a steady rise in lease renewals, which increased by 16 per cent in the third quarter.
The Dubai Land Department’s Smart Rental Index will improve the current index by using advanced technologies like artificial intelligence and Big Data analytics, according to Jason Hayes, founder and chairman of Luxury Property, a Dubai-based luxury property broker. The new index is expected to give more accurate, real-time information about Dubai’s rental market trends and prices, he said.
“This will allow landlords, tenants, and investors to make informed decisions based on the latest transaction data instead of just listing data on portals, which can give a misleading view of the market because there is often a gap between asking prices and actual transaction prices,” Mr. Hayes said.
“The Rental Index might also include dynamic updates and predictive analysis instead of just historical data released periodically.
“We will understand its specific features and differences more clearly when the Dubai Land Department launches the index, but it is definitely an exciting development that adds more transparency to the rental market. This transparency is very important for the overall real estate sector.”
This move is the latest effort by the city to digitize all services, including the Dubai Digital Strategy and the Dubai Real Estate Sector Strategy 2033. The Real Estate Strategy 2033 aims to help Dubai reach a goal of increasing the value of real estate transactions to Dh1 trillion ($227.2 billion) by 2033 and doubling the sector’s role in economic diversification.
