The UAE’s real estate market has been a global hotspot for investors, and a series of new policies are set to further enhance its appeal. These initiatives, aimed at increasing transparency, expanding investment opportunities, and stabilizing the sector, will reshape how buyers, tenants, and developers navigate the market. In this blog, we’ll explore the key policy updates and their impact on the UAE’s property sector.

Key Policy Changes Shaping the Market

1. Smart Rental Index for Transparent Pricing

In an effort to increase transparency in the rental market, the Dubai Land Department (DLD) has introduced a Smart Rental Index. This initiative classifies residential buildings using a five-star rating system based on more than 60 factors, including location, sustainability, building security, age, and amenities.

This system will provide both tenants and landlords with a clearer understanding of rental values across different areas, reducing discrepancies and ensuring that rental pricing aligns with the quality and services offered by a building. By improving transparency, the initiative aims to foster a more stable and investor-friendly rental market.

2. Freehold Ownership Expansion: A Game Changer

In a landmark move, Dubai has expanded freehold ownership rights to private property owners on Sheikh Zayed Road and Al Jaddaf. Previously, property ownership in these areas was limited to leasehold arrangements, but now 457 plots can be converted to full freehold status:

• 128 plots on Sheikh Zayed Road (from the Trade Centre roundabout to Dubai Canal)
• 329 plots in Al Jaddaf

This policy is expected to significantly boost property values in these areas by attracting more long-term investors. Developers and property owners can now sell, lease, or redevelop properties more freely, leading to potential revitalization of older buildings and the emergence of new high-end developments. Industry experts predict that this move will further solidify Dubai’s reputation as a global real estate investment hub.

3. New Rules on Real Estate Financing

Effective February 1, 2025, the UAE Central Bank has implemented new regulations prohibiting banks from financing Dubai Land Department (DLD) registration fees and real estate broker fees. Previously, many buyers included these costs in their mortgage loans, but moving forward, they must cover these expenses out-of-pocket.

This means that, in addition to the standard 20-30% down payment, buyers will now need to pay the 4% DLD fee and the 2% agent commission upfront. While this move is aimed at reducing financial risks for banks and stabilizing the market, it may create additional challenges for smaller investors who rely on bank financing.

Impact of the New Policies on the UAE Property Market

More Investment Opportunities & Market Growth

The expansion of freehold ownership is set to unlock new investment opportunities in prime areas like Sheikh Zayed Road and Al Jaddaf. This change could revitalize older buildings, attract new luxury developments, and create more sales opportunities for investors and end-users alike.

Additionally, the Smart Rental Index will help investors make more informed decisions, as they will have better access to accurate rental pricing data. By making rental returns more predictable, this policy will encourage greater confidence in Dubai’s rental market.

Potential Challenges for Buyers

While these policies introduce exciting opportunities, the new real estate financing rules could pose challenges for some buyers. Investors and homebuyers will now need larger liquid capital to cover upfront costs, which may deter first-time buyers or those with limited cash reserves.

Experts suggest that this change may slow mortgage approvals temporarily, but it is expected to create a more financially sustainable and resilient real estate sector in the long run.

Sheikh Zayed Road’s Real Estate Transformation

Sheikh Zayed Road, one of Dubai’s most prestigious corridors, is now poised for significant transformation due to the freehold policy. Many buildings along this stretch date back to the 1970s-2000s, and with the new regulations, we can expect redevelopment projects, upgrades, and increased investment activity. This transformation will further enhance Dubai’s skyline, making it even more attractive to global investors.

Dubai’s Real Estate Market Remains Strong

Despite these policy changes, Dubai’s real estate market remains one of the world’s top-performing property sectors.

• In 2024, Dubai recorded AED 761 billion in real estate transactions, a 20% increase from 2023.
• 226,000 real estate transactions were completed last year, a 36% rise from 2023.
• The city processed a record 2.78 million real estate procedures, including property transactions and rental agreements, a 17% jump year-on-year.

These figures highlight continued investor confidence and strong demand for Dubai’s real estate market, despite evolving regulations.

What’s Next?

As the UAE continues to refine its real estate policies, investors, homeowners, and tenants should stay informed about how these changes impact the market.

• For investors: The new freehold policy offers a golden opportunity to invest in premium areas that were previously restricted.
• For tenants: The Smart Rental Index will provide more transparency and fairness in rental pricing.
• For buyers: New financing rules may require more upfront capital, but in the long term, they will help maintain a healthier, more stable property market.

With continued government initiatives, infrastructure growth, and a thriving economy, Dubai remains a top destination for real estate investment in 2025 and beyond.

Final Thoughts

Dubai’s real estate sector is undergoing transformational changes aimed at long-term sustainability, investment growth, and greater market transparency. While some policies introduce new challenges, they also open doors to lucrative opportunities for those who navigate the market strategically. As Dubai continues to evolve, these policies will shape the city’s real estate landscape for years to come, reinforcing its status as a global property hotspot.