Setting Up an Escrow Account in Dubai: A Guide for Developers

Real estate developers selling off-plan property in Dubai are legally required to hold buyer payments in a dedicated escrow account regulated by the Dubai Land Department, rather than accessing sale proceeds directly, as a core protection built into the emirate's off-plan property framework following reforms introduced after earlier market downturns exposed buyers to project abandonment risk.

Before launching a project for sale, a developer must register the project with RERA (the Real Estate Regulatory Agency) and open a project-specific escrow account with a Dubai Land Department-approved bank or financial institution, appointing an escrow agent who oversees fund release. Each project generally requires its own dedicated escrow account rather than pooling funds across multiple developments, which keeps buyer funds tied specifically to the project they paid into.

Funds are released to the developer in stages tied to verified construction progress, meaning the developer submits progress claims that the escrow agent, often working alongside an independent engineering consultant appointed to verify physical completion percentages, checks before authorizing each disbursement. This staged release structure is specifically designed to prevent developers from receiving the full sale value upfront and then facing cash flow issues partway through construction.

Developers also need to maintain a separate guarantee, sometimes structured as a bank guarantee or additional retained percentage, that RERA can call on to protect buyers if a project is delayed or cancelled, on top of the standard escrow mechanics. Because escrow account setup, minimum retained percentages, and reporting requirements are specific to RERA's current regulations and can be updated, developers should confirm current requirements directly with RERA or an experienced real estate legal advisor before registering a new project for sale.