Dubai is set to expand its real estate rental index to include commercial properties, with implementation expected in the first quarter of 2025, according to Majid Al Marri, CEO of the Real Estate Registration Sector at the Dubai Land Department.
This development follows the launch of the “smart rental index,” which focuses on residential properties. The residential index uses various factors to determine rent values, such as the classification of buildings, tenancy contracts, and rental trends in specific areas. The upcoming commercial property rental index is anticipated to follow a similar framework, encompassing individual buildings and communities.
Much like residential property owners, commercial property landlords will be encouraged to enhance their assets to qualify for rent increases. Properties are evaluated and rated from 1 to 5 stars based on factors such as age, condition, and maintenance.
Dubai’s office market, particularly for Grade A spaces, is experiencing a supply shortage due to an influx of businesses and international companies establishing a presence in the emirate. This has driven rental prices and sales growth significantly higher.
A report from real estate consultancy Asteco highlighted a continued rise in Dubai’s office market. The sector saw average quarterly and annual increases of 5% and 21%, respectively, attributed to strong economic conditions and limited supply of Grade A and B+ offices.
In 2024, Dubai added 0.37 million square feet of office space during the first half of the year and 0.35 million square feet in the third quarter. Notable developments include Immersive Tower in DIFC 2.0, offering approximately 630,000 square feet of Grade A office space, and Aldar’s first commercial project in Dubai on Sheikh Zayed Road, which will deliver 950,000 square feet of Grade A office space alongside a luxury boutique hotel and branded residences.
Majid Al Marri emphasized the importance of market studies in shaping real estate strategies. “In October, we launched the Real Estate Strategy 2033. Based on our studies, particularly in the rental market, we realized the need for a more precise rental index to reduce disputes. Tenants aim to lower rents, while owners seek increases, so we designed an AI-powered index to balance these expectations,” he explained.
Elsewhere, Abu Dhabi Real Estate Centre (Adrec) introduced its first rental index for the residential market in August 2024. Plans are underway to extend the index to commercial properties and service charges to strengthen the reliability of Abu Dhabi’s real estate sector.
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