Proposed changes to Dubai’s rental index will be based on the quality of individual buildings rather than the neighbourhood they are in, according to media reports.
Although not yet approved, it is believed the changes to the Rental Index will govern how much landlords and building owners will be able to hike prices for tenants and bring transparency to the city real estate market.
The mulled updates come as rents in Dubai have surged 27 per cent this year.
Dubai rent index changes
The significant change being considered is that the amount landlords can increase rent by will be governed by a building’s star rating and prices will be independent of the neighbourhood they are in.
A district such as Dubai Marina, for example, with multiple residential towers will not have a blanket coverage in the updated Rental Index.
Landlords will need to justify rent increases in each building and not just increase prices as neighbours are doing so.
The age, quality and facilities of the building will need to be taken into account.
A rating system for properties in Dubai was launched in 2015 and covers apartment buildings in the city. To be categorised as a five-star building properties have to meet sustainability targets and have “green” credentials.
In the new system, four-star buildings, regardless of neighbourhood, will have more control over the timing and size of rent increases.
These buildings are classed as luxury properties and therefore more able to increase rents.
Landlords in three-star properties and below will have to justify rent increases on an individual building basis and not simply hike prices because other in the same neighbourhood are doing so.
The proposed changes apply only to apartment buildings and not villas. According to media reports the Dubai Rental Index could be updated as early as next year if approved by authorities.
The price of renting a property in Dubai has surged this year, with the average price of renting an aa villa or family home in the emirate reaching AED268,758 ($73,171) as of September, according to real estate adviser CBRE Group Inc.
Average apartment rents, meanwhile, soared 27% to 89,986 dirhams.
The surge in rental prices is being driven by a growing number of expatriate workers moving to the city, according to CBRE’s head of research Taimur Khan.
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