Abu Dhabi Strengthens Real Estate Investment with New Law No. (2) of 2025

In a move aimed at attracting more investment into the real estate sector in Abu Dhabi, 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 that regulates the emirate's real estate sector.

Effective from 2 August 2025, the new legislation introduces triple protection for developers, purchasers, and financiers. This reform aims to increase investor confidence, strengthen regulatory safeguards for off-plan projects, and stimulate sustainable growth in Abu Dhabi’s real estate market.

Amendments in Abu Dhabi Real Estate Law 2025

Expanded Definition of Real Estate Activities

The updated law broadens the scope of regulated real estate activities to cover:

• Surveying and valuation services
• Property registration and management
• Real estate brokerage
• Project operation and related services

It also necessitates the establishment of a Real Estate Development Register. Developers are required to obtain a license from the relevant department before initiating operations, making it more controlled and accountable.

Increased Protection of Off-Plan Sales

The law contemplates an absolute mode of termination of contract in the event of default on the part of a buyer by a developer.

• Name of a buyer can be struck off from the register in the case of admitted default.
• Buyers have a right to approach courts or arbitration for legal remedy.
• Such a system attempts to reduce disputes and preclude delays in development on account of default.

Stricter Escrow Account Regulations

In the safeguarding of buyers in off-plan property sales, the law imposes stricter regulations on the management of funds in escrow accounts:

• Prohibited Use: Funds shall not be utilized to purchase land or brokerage fees.
• Withdrawal Conditions: Developers are allowed to withdraw funds only after 20% of the project has been completed.

These conditions ensure money for the project is used in real progress of construction, reducing risks for investors.

Comprehensive Framework of Mortgage and Creditors' Rights

The new act balances buyers' rights and the rights of secured creditors:

• In case of sale of a mortgaged project due to the indebtedness of the developer, the buyer developer is required to complete all pending purchase agreements and finish the project.
• This provision protects buyers from losing their investment in the event of default by the developer.

New Provisions for Jointly Owned Premises

• "Owners' Union" is substituted by "Owners' Committee".
• Law defines the committee's powers and method of working.
• These changes will improve community management and decision-making.

Service Charge Collection and Fines

To encourage payment of service charges:

• Administrative penalties, e.g., prohibition of disposal of the property, can be ordered for non-payment.
• Monetary fines up to AED 2 million can be ordered for contravention of the law or its regulations.
• This ensures operational costs are met, safeguarding community facilities and maintenance.

Strategic Impact on Abu Dhabi’s Real Estate Market

The amendments to Law No. (3) of 2015 represent more than just regulatory adjustments—they are a strategic push to position Abu Dhabi as a secure and transparent investment destination.

The law supports:

• Developers: Access to funding with unambiguous legal protections.
• Financiers: Guaranteed rights, such as the right to sell mortgaged properties where necessary.
• Purchasers: Greater protection for their investments, especially in off-plan developments.

Through the optimization of legal certainty, the protection of stakeholders' interests, and the imposition of strict project finance controls, this legislation will promote urban expansion and encourage foreign and local investment in Abu Dhabi.

Bottom Line

Law No. (2) of 2025 reinforces Abu Dhabi’s commitment to building a stable, investor-friendly real estate environment. The combination of tighter escrow controls, contractual safeguards, and clear creditor frameworks will not only protect stakeholders but also drive confidence in the emirate’s growing property sector.

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