Smart Rental Index is being used by Dubai tenants to reduce rents

Tenants in Dubai who entered into a lease agreement during the period of multiple rental increases would have an easier time renegotiating the lease agreement with reduced rents.

According to real estate executives, the Smart Rental Index from Dubai has been instrumental in assisting tenants in negotiating their rentals at lower prices following the weakening of the market.

The Smart Rental Index has also assisted tenants when rental increases have been above the average market rate and above the index rate.

The Smart Rental Index was established by the Dubai Land Department in January 2025 and relies upon a highly advanced system of classification of buildings, which takes into account the technical features of construction of each specific building, the quality of finishing works and maintenance, the geographical location of the building, and the availability of various types of services.

“Through the Index, there is much more transparency about how the rent has been calculated. The renter has access to the very same benchmark information that the landlord uses and can see immediately whether the proposed increase fits within the prevailing rules and market conditions. For renters who entered into agreements at a time when the rental market was growing faster, they have an objective benchmark to discuss lease renewals with their landlord,” said Rohit Bachani, Co-founder, Merlin Real Estate.

“The Index has become an accepted benchmark for rental discussion,” he added.

“Discussions of renewals have become easier than before and, in a way, less confrontational. In the long run, this could lead to more stable residential conditions.”

According to Alois Kugendran, Chief Executive Officer of Amaya & Co., rents are declining in some places for the very first time since the launch of the Smart Rental Index, due to the fact that these neighbourhoods saw substantial peaks.

“Now landlords will have a direct motivation to upgrade and take care of their buildings, since it affects how much rent they can demand. Before, a landlord could ride on the increasing average price of the area without having to worry about the condition of their property. That is no longer the case. In the long term, that could only be good for rental properties in general,” he concluded.

New supply

According to Bachani, apartment rents have slightly dropped from their Q1 high point, whereas villa rents are still up year-over-year since the market has started its search for a new route to resilience after a number of years of robust growth.

“Moderation in the rental rates will be mainly fuelled by the increase in supply as well as a natural moderation in the demand side. Nonetheless, the Index has altered the perception of the assessment and discussion of the rental changes. Negotiations, which used to be predominantly dominated by negotiation, have now been largely influenced by the benchmark offered by the Dubai Land Department,” he observed.

In this way, the Index is helping to build an even more organised and mature rental market by making decisions more data-driven rather than perception-based.

“However, the availability of other properties in different areas of Dubai is another reason for such trends, which has improved competition between landlords while giving tenants many choices,” said Humaira Vaqqas, property consultant at Range International Property Investments.

“This will put tenants in a better bargaining position during rent renewal and lease negotiations. The Smart Rental Index will help tenants know if a particular increase in rent is valid,” she said.