The Department of Municipalities and Transport (DMT) has issued a suite of four administrative decisions implementing Law No. (3) of 2015 (as amended by Law No. (2) of 2025) on the Regulation of the Real Estate Sector. These measures, Decision Nos. (24), (25), (26), and (165) of 2025 represent a targeted and pragmatic evolution of Abu Dhabi’s real estate framework.
These decisions aim to enhance transparency, improve governance, and create a flexible regulatory framework aligned with international best practices. They address key areas in real estate development and management, responding to the sector’s rapid growth while protecting the interests of all stakeholders.
His Excellency Rashed Al Omaira, Director General of the Abu Dhabi Real Estate Centre (ADREC), described the package as an important step that provides flexible executive tools adaptable to market dynamics. He noted that the decisions enhance sector efficiency, reinforce transparency and governance, support investor confidence, and strengthen Abu Dhabi’s position as a leading real estate destination.
Meanwhile, please refer to our another article on Legal & Regulatory Framework in UAE Real Estate.
Here is a detailed breakdown of each decision:
Decision No. (24) of 2025 – Escrow Account Disbursement Controls
An escrow is a legal and financial arrangement where a neutral third party (usually a bank or licensed escrow agent) holds money, documents, or assets on behalf of two or more parties until specific conditions in a contract are fully satisfied. Once the agreed conditions are met, the third party releases the funds or assets to the rightful party
- Regulates the mechanism and controls for disbursements from real estate project escrow accounts before the project reaches 20% completion.
- Introduces stricter safeguards to protect purchasers’ funds and prevent unregulated use of monies held in escrow.
- Requires submission of bank guarantees and approved cost estimates as preconditions for any withdrawals.
- Aims to ensure that early-stage fund releases are tied to verifiable financial protections.
- Strengthens overall escrow integrity during the critical initial phases of project development.
- Supports greater confidence among buyers and financiers by reducing risks of premature or unjustified drawdowns.
- Aligns with the protective objectives of the parent real estate regulation law.
In property transactions, escrow is widely used to protect both buyers and sellers (or developers). It is especially important in off-plan (under-construction) property purchases.
How Escrow Works in Real Estate
- The buyer pays the deposit or instalments into a special escrow account (a dedicated bank account for that specific project).
- The money stays in the account and is not transferred directly to the developer or seller.
- Funds are released to the developer only in stages, usually when verified construction milestones are achieved (e.g., 20% completion, 40% completion, etc.).
- This ensures the developer uses the money only for the intended project and prevents misuse or diversion of buyer funds.
Key Benefits of Escrow
- Buyer protection: Safeguards your money if the developer faces delays, financial problems, or fails to complete the project.
- Developer accountability: Forces structured and transparent use of funds tied to actual progress.
- Reduces fraud and disputes: The neutral third party only releases money when contractual conditions are proven to be met.
- Builds market confidence: Makes investing in off-plan properties safer and more attractive.
In Abu Dhabi, every off-plan real estate development project must have a dedicated project-specific escrow account regulated by the Department of Municipalities and Transport (DMT) and supervised by the Abu Dhabi Real Estate Centre (ADREC).
Decision No. (25) of 2025 – Framework for Jointly Owned Properties and Common Facilities
- Establishes a comprehensive regulatory framework for the management of real estate assets, common parts, and shared facilities in jointly owned properties.
- Clearly defines the roles and responsibilities of owners, developers, and property management companies.
- Strengthens the supervisory role of the Abu Dhabi Real Estate Centre (ADREC) in overseeing these arrangements.
- Promotes harmonisation of concepts related to common area management across the emirate.
- Enhances operational efficiency, long-term sustainability, and preservation of asset quality in master developments and communities.
- Provides clearer guidelines on maintenance, cost allocation, and facility operations.
- Reduces potential ambiguities that have historically led to disputes over shared facilities and service charges.
- In large residential communities and high-rise buildings, common facilities represent a significant portion of property value and ongoing costs.
- Previously, ambiguity in roles often led to disagreements on who is responsible for what, how service charges are calculated, and how decisions on major repairs are made.
- The new framework is expected to reduce such conflicts, improve transparency in financial management of common areas, and raise the overall standard of living and property maintenance in Abu Dhabi.
- Owners will benefit from more professional and accountable management, while developers gain clearer exit protocols once they hand over common parts.
Decision No. (26) of 2025 – Unified Bylaws for Owners’ Committees
- Adopts standardised internal bylaws for the establishment and operation of Owners’ Committees across Abu Dhabi.
- Regulates the competencies, operating procedures, and external relationships of these committees.
- Sets clear mechanisms for forming committees and defining their powers and duties.
- Improves governance and decision-making within residential communities and large-scale projects.
- Enhances owners’ participation in the sustainability and management of their properties.
- Standardises interactions between Owners’ Committees, authorities, developers, and property management companies.
- Brings consistency to community governance practices in line with international best standards.
- Previously, Owners’ Committees operated under varying internal rules, which sometimes led to governance challenges, deadlocks, or inconsistencies in how communities were managed.
- The new unified bylaw is expected to promote smoother community operations, fairer decision-making, and higher levels of owner engagement.
- It reinforces the sustainability of real estate projects by empowering owners actively participate in preserving the quality and value of shared assets.
Decision No. (165) of 2025 – Compensation and Refund Rules for Off-Plan Cancellations
- Regulates compensation ratios, refund periods, and detailed procedures in cases of contractual breaches involving off-plan unit sales. There are many in this
- Applies specifically in situations where units are cancelled and subsequently resold, as per Article (3/17) of the amended law.
- Introduces compensation percentages calibrated according to the project’s completion level.
- Establishes transparent and time-bound procedures for processing refunds to purchasers after cancellation.
- Aims to ensure fairness and balance between the rights of developers and buyers.
- Provides greater predictability and speed in resolving disputes related to off-plan sales terminations.
- Reduces uncertainty and potential litigation by setting clear statutory guidelines for compensation and refund timelines.
- Off-plan sales cancellations have historically been a major source of disputes due to disagreements over compensation amounts and refund delays.
- The new rules provide a standardised, completion-based approach to compensation, making outcomes more predictable for all parties.
- Purchasers benefit from clearer timelines for receiving refunds after resale, while developers gain defined protection for costs incurred up to the point of cancellation.
Broader Objectives
- The four decisions collectively create a more integrated and robust regulatory ecosystem for Abu Dhabi’s real estate sector.
- They focus on defining clear roles, introducing supervisory controls, and ensuring balanced contractual relationships among developers, investors, owners, and managers.
- Emphasis is placed on protecting purchaser funds, improving community management, and streamlining dispute-related procedures.
- The measures are designed to boost market efficiency, credibility, and competitiveness both regionally and internationally.
- By aligning with international best practices, the framework supports Abu Dhabi’s ambition to become a premier global real estate investment hub.
- Stakeholders can expect reduced disputes, faster processes, and higher levels of transparency across development, ownership, and sales activities.
Practical Implications for Market Participants
- Developers will need to align their escrow management, project handover, sales contracts, and community setup processes with the new requirements.
- Property management companies and Owners’ Committees should prepare for updated operational standards and governance documents.
- Investors and off-plan purchasers will benefit from stronger fund protections and clearer refund mechanisms in case of cancellations.
- All parties are encouraged to review existing contracts and practices against the new decisions once full implementation details and timelines are confirmed by ADREC and DMT.
- The package reflects ongoing efforts to listen to market feedback and adapt regulations to support sustainable sector growth.
These new administrative decisions mark a significant step in maturing Abu Dhabi’s real estate regulatory environment. They reinforce investor protections while providing developers with clearer operational guidelines, ultimately contributing to a more stable and attractive market for all participants.
