In a move aimed at attracting greater investment into the real estate sector in Abu Dhabi, His Highness Sheikh Mohamed bin Zayed Al Nahyan has issued Law No. (2) of 2025, amending Law No. (3) of 2015 that regulates the emirate’s real estate sector.
Effective from August 2, 2025, the new legislation introduces enhanced protection for developers, purchasers, and financiers. The reforms are designed to strengthen investor confidence, improve safeguards for off-plan developments, and support sustainable growth in Abu Dhabi’s real estate market.
Amendments in Abu Dhabi Real Estate Law 2025
Expanded Definition of Real Estate Activities
The amended law broadens the scope of regulated real estate activities to include:
- Surveying and valuation services
- Property registration and management
- Real estate brokerage
- Project operation and related services
The law also mandates the establishment of a Real Estate Development Register. Developers must obtain official licensing before commencing operations, ensuring higher transparency and accountability.
Increased Protection for Off-Plan Sales
The legislation introduces clear mechanisms for contract termination in cases of buyer default, helping reduce uncertainty for developers.
- A buyer’s name may be removed from the register in cases of confirmed default.
- Buyers retain the right to seek legal remedies through courts or arbitration.
- These measures aim to reduce disputes and prevent project delays caused by non-payment.
Stricter Escrow Account Regulations
To safeguard buyers in off-plan sales, the law introduces stricter controls over escrow accounts:
- Escrow funds cannot be used for land acquisition or brokerage fees.
- Developers may withdraw funds only after completing at least 20% of construction.
These measures ensure project funds are allocated strictly toward construction progress, reducing investor risk.
Mortgage and Creditor Rights Framework
The new law establishes a balanced framework protecting both buyers and secured creditors:
- If a mortgaged project is sold due to developer debt, the purchasing developer must complete existing contracts and finish construction.
- This protects buyers from losing their investments in the event of developer insolvency.
New Rules for Jointly Owned Properties
- The term "Owners’ Union" is replaced with "Owners’ Committee".
- The law clearly defines the committee’s authority and operational structure.
- These changes enhance governance and community decision-making.
Service Charges and Financial Penalties
To ensure timely payment of service charges, the law authorizes:
- Administrative penalties, including restrictions on property disposal for non-payment.
- Financial penalties of up to AED 2 million for violations of the law.
- These measures help maintain community facilities and essential services.
Strategic Impact on Abu Dhabi’s Real Estate Market
The amendments go beyond regulatory fine-tuning, positioning Abu Dhabi as a secure and transparent destination for property investment.
The law benefits:
- Developers through clearer funding and legal protections.
- Financiers with reinforced rights over mortgaged assets.
- Purchasers through stronger safeguards, particularly for off-plan investments.
By enhancing legal certainty and enforcing disciplined project financing, the legislation is expected to encourage sustainable urban development and attract both local and foreign capital.
Bottom Line
Law No. (2) of 2025 reinforces Abu Dhabi’s commitment to a stable and investor-friendly real estate environment. Tighter escrow rules, clearer contractual protections, and stronger creditor frameworks will continue to boost confidence in the emirate’s evolving property market.