The rental structures of the building apartments in Dubai’s rental index are said to be changed. The new proposed changes are under the discussion, and Dubai’s rental index will be based on the quality of the building rather than the trends in the communities or neighborhoods.
The current system which is rents are calculated on area rather than property type is going to change. The new rating system which was launched in 2015 covers all the buildings and apartments and will be based on the quality of the building such as its structures, amenities provided, and quality of life provided to the tenants.
Dubai Rent Increases To Be Based On Building Quality, Not Neighborhood
As the new rating index will be marked the stars of the building based on its quality, the authority of Dubai has almost completed rating all the residential buildings.
As per analyses the 5-star and 4-star building owners would have more flexible control over the time and size of the rent increases because these buildings will have top-quality amenities and will be considered luxury properties, moreover, the fewer number of buildings will increase the demand. No restrictions will be given to these properties on increasing the rent.
Landlords in three-star and two-star properties will have to find justified reasons to increase the rent as per the new policy, they cannot simply hike just because someone in the neighborhood is doing so.
For now, these new rental changes are for apartments and buildings excluding villas, and these star-rating rental changes will be brought into motion next year as soon as the authorities approve.
Earlier this month, the average price of renting a property soared by more than 27 percent amid a sharp increase in demand for real estate and the annual rent for villas and family homes reached more than around 268,758 dirhams ($73,171) in the previous months.
This surge increase in apartment and building rates is driven by the growing number of workers attracted towards the emirate such as bankers fleeing from Asia due to covid restrictions, Russians escaping their government due to new sanctions after the Russia-Ukraine war
However, data shows the number of new contracts registered this year up to October has fallen by 4.7 percent, whereas renewals of contracts have spiked by 33.6 percent. This means that people are renewing their contracts despite the soaring prices.
The prime locations in Dubai such as palm Jumeirah, Downtown Dubai, and Dubai marina are some of the areas with higher rents due to the popularity of the locations. The rent in Palm Jumeirah can cost up to 29,38,392 ($800,000) per year and the lowest is 62,441($17,000) a year.
The highest rent is a 4 bedroom in Andaz hotel with rent around 30,00,849 ($817,000). These high rates can be brought down to reasonable and affordable with the new rating index.
This new rating system will bring relief to the tenants who are living in the prime locations of Dubai. Up to this date, rents are charged due to the quality of life in the location and not the building. The tenants holding a poor building could charge as much as the rate of a 3 or 4-star apartment. These new rental changes will force tenants with poor-quality buildings to upgrade their properties with quality amenities in order to increase the property value.
Moreover, it will be fair conduct towards customers who are willing to rent a property in the emirate. Besides the quality of the structures will be improved automatically to generate income for the owner of the apartments and buildings. As well the tourist locality will attract more customers due to its affordable and lower prices in the emirate.