Dubai's New Rental Index: How Star Ratings for Buildings Impact Rental Prices

Dubai’s real estate market is undergoing a major transformation with the introduction of a new rental index based on the star rating system for buildings. Designed to promote transparency and fairness, this system will directly link Dubai rental prices to the quality of residential properties in Dubai.

With rising Dubai rental prices and a growing population, this update aims to provide tenants, landlords, and real estate agents in Dubai with a more accurate and fair way to determine rent values. But what does this mean for the market, and what can we expect in 2025? Let’s break it down.

Understanding Dubai’s New Rental Index

The Dubai Land Department (DLD) has introduced a smart Dubai rental index, which now classifies buildings in Dubai based on a one-to-five-star rating system.

Unlike the previous rental index, which focused on average prices across different zones or districts, the new system evaluates each building individually based on over 60 factors, including:

• Location and accessibility
• Sustainability and energy efficiency
• Building security and maintenance
• Age of the property
• Amenities and overall quality

By factoring in these criteria, the system provides a more accurate representation of rental values, ensuring that properties with better infrastructure and maintenance receive higher ratings. At the same time, older buildings or those lacking proper upkeep may score lower.

Impact on Landlords: A Push for Quality

For landlords, this change means that rental value will now be directly linked to the condition of their building. Those looking to justify higher rent prices will need to invest in renovations and upgrades to improve their building’s star rating.

According to Majid Al Marri, Chief Executive of Real Estate Registration at DLD, the goal is to encourage property owners to enhance building quality and align with government regulations on safety, security, and maintenance.

Landlords can request a re-evaluation of their building’s rating at any time if they make improvements, giving them an incentive to invest in better facilities and upkeep.

What This Means for Tenants

For tenants, the Dubai rental index update brings much-needed transparency and fairness to the rental market. Instead of paying based solely on location, tenants can now expect rental prices to reflect the quality of their building.

This means that if you live in an older building with fewer amenities, you will not be expected to pay the same rent as someone living in a brand-new, well-maintained high-rise in the same area. The index should reduce rent disputes between landlords and tenants by more than twenty per cent, according to DLD estimates.

This shift could also lead to more competitive rental pricing, as landlords of lower-rated buildings may have to adjust their rents to remain attractive.

How the New System is Different

One of the biggest differences with this updated Dubai residential property price index is that it is no longer updated just once a year. The old system relied on historical data and annual updates, while the new one can be updated at any time based on new evaluations and AI-powered data collection.

Additionally, the new index covers all areas of Dubai, including both freehold and non-freehold zones, ensuring that it applies to all tenants and landlords across the city.

In the future, the star rating system will not only apply to residential properties in Dubai but also for commercial, retail, and industrial buildings.

Market Trends: What to Expect in 2025

With Dubai rental prices having increased for 15 consecutive quarters, the introduction of this Dubai rental index is expected to have a significant impact in 2025.

Here’s what to expect:

• Increased focus on property upgrades: Many landlords will invest in renovations to boost their property’s rating and attract higher rents.
• A more competitive rental market: Older buildings may have to lower rents or improve amenities to stay competitive.
• Reduced rental disputes: The clear classification system will provide stronger justification for rent increases or decreases.
• A more balanced market: The system aims to create stability in the Dubai real estate market, ensuring that rents reflect property quality rather than just location demand.

Additionally, with over 900,000 rental contracts registered in 2024 (an 8% increase from the previous year), demand for properties for rent in Dubai continues to grow. This index will help both landlords and tenants navigate this evolving landscape with greater clarity and fairness.

Your Next Step

Dubai’s new rental index is a game-changer for the Dubai real estate market. By tying rental prices to building quality, it encourages landlords to invest in better living conditions and ensures that tenants pay a fair price for the quality they receive.

For real estate agents in Dubai, this update provides a more transparent pricing model, making it easier to guide clients toward the best rental options.

As 2025 approaches, both tenants and landlords should stay informed about their building’s classification and how it affects rental values. The index marks a significant shift towards a more structured and fair rental market, benefiting all stakeholders in the long run.

Whether you're a tenant or landlord, it’s essential to understand how the new Dubai rental index impacts you. Contact Dacha Real Estate for expert guidance on properties for rent in Dubai and make informed decisions.

Alessia Sheglova

CEO

Alessia has been with Dacha for over 13 years, joining the family business back… More

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