Dubai New RERA Rental Index - Is Your Rent Fair?

In the last couple of years, there have been massive fluxes in rentals, reporting a 30% to 40% increase in rental yields, and international investors and landlords have been able to jack up the prices whenever they wanted to. This has created an unfair advantage for the landlords and a disadvantage for the tenants.

The Dubai government has implemented a new RERA Rental Index System, an updated system that looks at all the properties across Dubai. This system looks at property in a particular area, its maintenance, quality, build, the overall construction, services, amenities, etc. Also, the rental increase will be proportionate to that area compared to another, which could be in a slightly more degraded format. So, long gone are the days when one can simply jack up the prices.

However, this is a win-win situation for the tenants as well as the landlords. For the landlords, it is a win because now they will have a controlled baseline that they need to abide by every year, leading to a 10% to 20% increase every year. Now, the tenants are already aware that a 10% to 20% hike is coming at the end of the rental year and can get prepared for that. It also means that people coming to Dubai for the first time need to rent. They also know the fair market price when it comes to renting in Dubai.

Another thing is that when rental yields were going through the roof, people were getting pushed out of the city. They began renting out in places about a 40-minute drive from Downtown Dubai, but Dubai needs people to live in Downtown Dubai, the heart of the city. So, this improvement has made a lot of difference.

The RERA Rental Index is a tool designed to determine the rental prices in the market for a property by taking into consideration various factors and parameters. Let’s take a look at the steps to use the RERA Rental Index Calculator.

At the end of 2024, there were almost half a million active residential lease contracts, that is 535,000 active rental contracts, and the city's population was roughly 3.8 million. Let's assume that each household or rental contract has roughly three people living in the apartment. This means that the total people renting was 1.7 million, which makes up roughly 46% of the city’s population that is living in rented accommodations. This is alarming as it is creating a massive opportunity in Dubai. Moreover, in recent years, Dubai has witnessed an influx of expatriates from countries such as India, Canada, and the United States, making Dubai real estate a top destination for Indians, Canadians, and Americans.

Sudden rises in the rental costs would make people rush out of the city. These surprising changes in prices will lead to chaos in the markets as people will get scared will look to source cheaper accommodations. The landlords and the investors who invested in these higher upper-class properties might lose out in the end of the day. So, this index is launched to support everyone across the world.

This is a critical situation because on a year-to-year basis, renting is on the rise by 10% to 20% per year. The first question that all international buyers are interested in is if they buy an apartment in Dubai, then how much money can they collect in terms of rent?

The market is not struggling for renters, as there are plenty of them in Dubai. The main struggle is that certain areas have become so expensive because of the hike in rental prices that people cannot even afford to go into them. But now, the RERA Rental Index is protecting the tenants and also providing a protection mechanism for the landlords. This is done to ensure that the landlords don't spike the prices and everything is conducted in accordance with and within the baseline in that area, that is, proportionate to degraded areas and upper-class and flashy areas.

The Dubai economy has added around 50 billion to 100 billion dirhams worth of sales or rental income to the overall GDP of Dubai. This is how impressive this rental index system is. So, not only is the Dubai government protecting the market, but they are ensuring that tenants don't get a fright, and landlords stay in a controlled manner. So, the market is being controlled to not scare off the supply and the demand.

This is one of the best things that could have happened in the Dubai market. This is not an attempt to reduce profits but an initiative to eliminate the ridiculous hikes in rental prices that cannot be justified in certain areas. Now, they will be as per the RERA Rental Index System, put in place to protect investors who are putting hard-earned money into the city and want to have five to six offers for people wanting to rent out their properties. This is a win for Dubai’s strategic thinking and excellence in providing its tenants and landlords with a protected environment.

This illuminating city of beauty and elegance ventures in its strategic intellectuality and persistence to build a more relaxed and safer environment for the tenants and landlords.

The Future Outlook Of RERA Rental Index

• Sustained Market Growth - With the introduction of this index, Dubai’s real estate market is expected to showcase huge and sustained market growth in the future.
• Stability in Pricing - The index helps to protect the market and the people against sudden and inconsistent hikes in prices and strives to maintain a more stable, relaxed, and predictable market for both the tenants and the landlords.
• Strong Relationship between Tenants and Landlords - This system motivates the landlords to set fair prices in a controlled and comfortable manner, thereby fostering transparency and a sense of trust between the tenants and the landlords.

So, from the above, we can infer that this initiative by the Dubai Government is a turning point in the trajectory of the rental market in Dubai, serving as a premium market offering a nurturing and protected environment for the tenants as well as the landlords.