Dubai plans to include commercial properties in its real estate rental index by the first quarter of 2025, said Majid Al Marri, CEO of the Real Estate Registration Sector at the Dubai Land Department.
This follows the launch of the “smart rental index,” which currently covers residential properties. The residential index determines rental values using factors like building type, tenancy contracts, and rental trends in specific areas. The commercial rental index is expected to use a similar approach, covering individual buildings and communities.
Commercial property landlords will need to improve their properties to qualify for rent increases. Buildings will be rated from 1 to 5 stars based on their age, condition, and maintenance.
Dubai to Expand Smart Rental Index for Commercial Properties by 2025
Dubai’s office market, especially for high-quality Grade A spaces, is experiencing a shortage due to an increase in businesses and international companies setting up in the city. This has caused rental and sales prices to rise significantly.
A report from Asteco, a real estate consultancy, noted a 5% quarterly and 21% annual increase in office rental prices due to strong economic growth and limited supply of premium office spaces.
In 2024, Dubai added 0.37 million square feet of office space in the first half of the year and 0.35 million square feet in the third quarter. Major developments include the Immersive Tower in DIFC 2.0, offering 630,000 square feet of Grade A office space, and Aldar’s first commercial project in Dubai on Sheikh Zayed Road, which will feature 950,000 square feet of Grade A office space along with a luxury hotel and residences.
Majid Al Marri highlighted the role of market studies in shaping real estate strategies, emphasizing the need for a fair rental index to reduce disputes between tenants and landlords. The AI-powered index aims to provide accurate rental values, reinforcing Dubai as a global investment destination.
Abu Dhabi has also introduced its first residential rental index and plans to extend it to commercial properties to boost the reliability of its real estate sector.
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In 2024, Dubai registered over 900,000 rental contracts, showing an 8% growth compared to the previous year.