Dubai’s New Real Estate Rental Index: Vigilance or Overkill?

Dubai’s property rent review regulations are to be shaken up. But is it for the better?

Rent reviews are currently linked to a geographically segmented rental price index. Reviews are capped in line with the average for a property’s location. 

The Dubai Lands Department is rolling out a new index, said to factor specific building quality and amenities.

At first glance this looks like great news.

Vigilant. Proactive. Data-driven governance. But on reflection, could this be interventionist overkill?

Data Overload

An index comprised of such granular data becomes a mammoth task to maintain, even with the use of modern technology. Very possible that it falls on its own sword over time.

Example: A building’s owner spends millions today, completely upgrading its lift systems. How long until that Capex is reflected in the index? In real time? A month later? A year? 

(More detail on how the index will be constructed and updated would help).

A Healthier Alternative?

Could we instead rely on market economics to determine rent reviews. At most, the regulator can set a cap and collar in place to protect against tenant and landlord exploitation.

Wouldn’t that be:

Less labour (and tech) intensive? Less subjective? More efficient? 

All Systems Go

At the end of the day, property investment yields are a correlation between price and income. When the former is determined by free market economics, and the latter is controlled, the result is high price volatility. 

The precise opposite of what a stable, healthy real estate economy needs. 

Is this proposed change vigilance, or overkill?

Share your vote below 👇


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