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Dubai Rental Index 2018 - Legal Implications for Landlords and Tenants

01-23-2018 02:40 PM CET | Industry, Real Estate & Construction

Press release from: Property Blog Dubai

In November 2017, the Dubai Land Department (DLD) has updated its rental index for 2018, covering all residential, commercial and industrial properties in Dubai. Also, for the first time, an index for land leased through annually renewable lease contracts is published.

While Dubai`s rental index was initially calculated on a six months basis, it is presently published on a yearly term. With the index data having a legal and real implication especially on rent increases at the yearly contract renewal dates, the approach of deliberately using somewhat delayed market data serves the purpose of smoothing out the peaks and troughs of the rental market.

For each market segment - i.e. studio, 1-bed apartment, 4-bed villa - and locality (Dubai Marina, Downtown) a specific index is calculated based on real data which the government generates through its Ejari-system (Ejari: Arabic for „my Rent“). Ejari is Dubai`s now mandatory attestation of rental contracts without which it is impossible to connect any utilities.

RERA Rental Index Calculator
Dubai`s Real Estate Regulatory Authority (RERA) makes the index data accessible through its rental index calculator providing a range of rental prices for any property type and location within the Emirate of Dubai, immediately informing the user about whether a rent increase as per the pertinent rental laws is possible – or not. Notably, these data are equally provided for other usage types like commercial or industrial properties.

As a general rule, the rental index determines whether a rental increase is allowed as per the law. Depending on the variance of the presently contracted rent from the market average as expressed by the index, a certain rent increase is permissible, subject to three months written notice to the tenant (prior to the renewal date).

However accurate the indices might be due to the comprehensive data foundation – even considering the described and assumed lag – ambiguity is not fully taken out of the game for several reasons. As buildings and the comprised property units can greatly vary in quality, layout and many other parameters, it is of great importance for market participants like investors and tenants to know the differences and their relevance for rent negotiations with the respective contractual partner.

A detailed article describing the relevant property parameters and strategies to enhance one`s negotiation position can be found under the following link:

The author`s blog covers subjects related to Dubai`s property market and its trends and influences from an institutional investor`s perspective.

The author has been actively engaged in the Dubai property market since 2005 and advises institutional investors pertaining to their overall investment strategy, ongoing asset management as well as the initiation and execution of property transactions.
Christian Atzert
Business Center 4, Floor 8
Ras Al Khaimah Free Trade Zone
Tel: 00971-56-7786475

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