Dubai’s Smart Rent Index: A Game-Changer for Market Stability in 2025

• The Dubai Land Department (DLD) has introduced the Smart Rent Index to regulate rental prices and stabilise inflation in 2025.

• The index is AI-driven and determines rental value adjustments based on factors such as contract values, average area rental prices, and building classification.

• Landlords must provide tenants with a 90-day notice before increasing rent, as per the new guidelines.

• If a rent increase is eligible under the index but the landlord fails to notify the tenant in time, the increase cannot be applied.

• Over 900,000 lease contracts were registered in Dubai in 2024, marking an 8% increase from 2023.

• Rental adjustments are calculated based on the gap between the current rent and market value, with increases capped between 5% and 20%.

• The new system covers all residential areas, including freehold and non-freehold zones.

• Transparency and fairness are key goals, reducing disputes between landlords and tenants by an expected 20%.

• Rent increases follow a structured percentage scale based on the difference between current rent and market value.

• The initiative aligns with Dubai’s digital transformation strategy, enhancing data-driven decision-making in real estate.

Dubai’s Smart Rent Index: What It Means for Investors and Tenants

Dubai’s rental market has seen remarkable growth, with an 8% rise in lease contracts in 2024. However, rapid market expansion has also led to concerns over rent fluctuations and inflationary pressures. In response, the Dubai Land Department (DLD) has introduced the Smart Rent Index, an AI-powered system designed to regulate rent increases fairly and transparently.

This initiative is a game-changer, ensuring landlords and tenants benefit from data-driven rental assessments while maintaining market stability. For investors, this offers clarity on rental yields, while tenants gain confidence in a regulated rental market. Here’s everything you need to know about this new system and how it impacts Dubai’s real estate landscape.

How the Smart Rent Index Works

The Smart Rent Index calculates rental price adjustments based on key factors, including:

• Building classification

• Rental contract values within the building

• Average rental values within the area

Unlike previous models, this index provides real-time, AI-generated assessments, ensuring that rental prices reflect actual market conditions. Covering freehold and non-freehold areas, the index creates a uniform standard for all rental properties in Dubai.

Rent Increase Eligibility and Rules

A 90-day notice from landlords remains mandatory under the new system. However, rent increases will only be applied if the Smart Rent Index deems them eligible. Key rules include:

• Landlords must notify tenants at least 90 days before contract renewal.

• If a landlord fails to notify a tenant, even if the index permits an increase, the rent remains unchanged.

• If a landlord provided the required notice under the previous index, but the new index does not support an increase, the contract renewal date determines which index applies.

  • Contracts renewed before 2025 follow the previous index.

  • Contracts renewed during 2025 adhere to the new index.

How Rent Increases Are Calculated

The permissible increase depends on the difference between the property’s current rental value and the market rate:

• Less than 10% below market value – No increase allowed

• 11% - 20% below market value – Maximum 5% increase

• 21% - 30% below market value – Maximum 10% increase

• 31% - 40% below market value – Maximum 15% increase

• 41% or more below market value – Maximum 20% increase

Why This Matters for Investors

Dubai’s property market has long been a hub for international investors, and the introduction of the Smart Rent Index enhances market stability. Key benefits include:

• Stronger tenant retention – Transparent rental pricing reduces disputes and encourages long-term leasing.

• Data-backed investment decisions – AI-driven assessments give investors clearer insights into rental yield potential.

• Balanced market growth – Controlling inflation helps sustain long-term real estate appreciation, making Dubai a more predictable and lucrative investment environment.

Future Market Impact and Adaptability

The Dubai Land Department has committed to regular updates to the index to reflect evolving rental market conditions. This adaptability ensures fairness for both landlords and tenants while strengthening investor confidence in the city’s booming property sector.

Why Invest in Dubai Now?

For those looking to invest in Dubai’s real estate market, the Smart Rent Index adds another layer of security and predictability. Dubai remains one of the most attractive property markets globally, offering benefits such as:

• High rental yields compared to major global cities

• A favourable tax environment with no income or capital gains tax

• Residency visa incentives for property investors

• Continued infrastructure growth driven by projects like Expo City and Dubai 2040 Urban Master Plan

With rental market stabilisation and predictable investment returns, there has never been a better time to invest in Dubai’s thriving property sector. Whether you are an investor seeking high returns or a landlord looking for tenant stability, the Smart Rent Index is set to shape a fairer and more transparent market.

Get in touch today to explore the best investment opportunities in Dubai’s real estate market!