In a significant move to encourage investment Abu Dhabi’s real estate sector, his Highness Sheikh Mohamed bin Zayed Al Nahyan, Ruler of Abu Dhabi, has issued Law No. (2) of 2025, Amending Law No. (3) of 2015 Regulating the Real Estate Sector in the Emirate of Abu Dhabi.
Effective from 02 August 2025, the new law introduces triple protection -for developers, purchasers, and the financiers – enhancing confidence (among stakeholders) and leading to increased investment in off-plan (map-based) projects, driving further growth in the emirate’s real estate market.
Here are the key amendments under the new Law:
- Expanded Definition of Real Estate Activities:
The new law broadens the scope of real estate activities to include surveying, valuation, registration, property management and operation, brokerage, and other related services. The law mandates the creation of a Real Estate Development Register, requiring all developers to obtain a license from the competent Department prior to their operation.
- Enhanced Protection for Off-Plan Sales:
The new law introduces a new mechanism which allows developers to terminate contracts and remove the purchaser’s name in case of a proven breach, while preserving the purchaser’s right to resort to courts or arbitration, if he deems it necessary. This new mechanism, which constitutes a remedy and protection for the developer’s rights in cases where the purchaser fails to fulfil his obligations, aims to reduce the volume of disputes and prevent delays or suspension in the developer’s rights due to the purchaser’s default.
- Stricter Regulations for Escrow Accounts:
The law introduces an additional layer of protection – to the purchasers’ rights in off-plan sale – set out in the regulation and limitations imposed on the use of funds deposited in the project’s escrow account. Particularly, the law:
- Prohibits the use of escrow account funds to settle land purchases or broker commissions; and
- requires at least a 20% project completion by the developer before any withdrawals from the escrow account are permitted under the law.
- New Framework on Mortgage Matters and Creditors:
The law introduces a clear framework for treating mortgage matters and the rights of secured creditors. The framework aims to create a balance between secured creditors’ rights and purchasers’ rights by stipulating that if a project is sold due to the developer’s debt (to the mortgagee), the new developer – acquiring the project – must honour the existing purchase agreement and complete the project.
- Management of Jointly Owned Properties:
The law updates the provisions related to the management of jointly owned properties, by replacing the term “Owners’ Union” with the “Owners’ Committee”. Additionally, it introduces a clear definition of the Committee’s powers and outlines its operational procedures.
- Service Charges and Penalties for Non-Compliance:
The law introduces a new mechanism for a stricter enforcement of service charges, to ensure their settlement by the owners. The mechanism includes imposing administrative penalties, in the event of non-payment, such as property disposal restrictions added to the property register. Additionally, the law stipulates that financial penalties (up to AED 2,000,000) may be imposed for violations of the law or its implementing regulations, to ensure strict abidance by the law.
Conclusion
It is evident that the newly enacted law is a major incentive for Abu Dhabi’s real estate development sector, aligning with the emirate’s economic growth strategy.
Through the introduced amendments, the law promotes the expansion of residential areas and the increase in urban development projects, supported by arrangements and mechanisms:
- enabling developers to secure financing for real estate development projects;
- protecting the financier’s (mortgagee) rights including the entitlement to sell the mortgaged property; and
- ensuring the smooth and seamless completion of development projects through preventing funds withdrawals from escrow accounts.
Get in Touch
Ready to ensure compliance and maximize opportunities under the new regulations? Schedule a consultation with our Head of Real Estate, Eman Asad, today to discuss your specific situation and strategic next steps.
