Dubai plans new rental index for commercial properties
Dubai would include commercial real estate in the index of rental property, a senior official said. The index is likely to be launched in the first quarter of 2025, Majid Al Marri, CEO of Real Estate Registration Sector at Dubai Land Department added.
Al Marri was referring to the publication of the ‘smart rental index’, which monitors a residential segment of the sector in the city. This new index is calculated on each building classification, historical & new building tenancy contract, area rents, etc.
Commercial property rental index is essentially going to be the same for every building and community, according to industry executives.
Commercial property owners will also be encouraged, just like residential ones, to update their assets in order to seek a rent increase. Depending on age, state, maintenance and other things, properties in Dubai get 1-5 stars.
Dubai office space especially the A-grade market is running out of new supply as there has been a huge business and foreign corporate movement to the emirate driving up rentals and prices.
"Dubai sales prices kept growing with no slowdown especially in the office market. The office market grew at an average rate of 5 per cent and 21 per cent for quarters and one year respectively. This increase can be mainly attributed to the positive economic and business scenario and very little supply especially of Grade A and Grade B+ real estate properties,’ said the real estate consultancy and brokerage Asteco in its latest quarterly report.
0.37 million sqft office supply was delivered in the first half of 2024 in Dubai and 0.35 million sqft in third quarter of 2024, it continued.
"There was no new office completions but there were more project launches such as Grade A developments of large scale like Immersive Tower in DIFC 2.0 (around 630,000 sqft of office space). Aldar also launched its first commercial project in Dubai, a high-rise on Sheikh Zayed Road that will bring around 950,000 sqft of Grade A office space, a luxury boutique hotel and branded apartments," added Asteco.
They are regular researches of the market, Majid Al Marri said.
"We released Real Estate Strategy 2033 last October. Since we use this all the time (especially on rent) so it was finally time to have something more precise from the rent fight case. With a precise market index, we were trying to reduce rental disputes in the long term. That was important according to tenant and owner feedback. The owner wants to grow, the tenant wants to go down, so we got to a stage where we think you have a better index with artificial intelligence (AI)," he said.
In August 2024, Abu Dhabi Real Estate Centre (Adrec) introduced the first rental index for the capital with a residential market segment. The index, it said, would be widened to include the commercial sector and service fees in order to boost the strength and stability of Abu Dhabi’s property market.
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