The reforms, which came into effect on August 2, introduce more robust protections for developers, purchasers, and financiers.
The changes are enforced through the Abu Dhabi Real Estate Centre (ADREC), which is the central regulator for the emirate’s property sector.
New Abu Dhabi real estate laws enhance investor protections and escrow rules
“The new real estate laws in Abu Dhabi introduce significant protections and opportunities for investors,” Nada Osman Jaouhar, Abu Dhabi Branch Director at Betterhomes said.
“The 2025 amendments provide ‘triple protection’ covering developers, purchasers, and financiers, creating a more secure investment environment. Investors will benefit from stricter escrow account regulations, where developers can only access funds after achieving 20 per cent project completion, reducing the risk of stalled projects. The laws also clarify mortgage frameworks and introduce a centralised Real Estate Development Register, enhancing transparency,” she added.
Among the most significant changes is the ability for developers to cancel off-plan sales agreements without court intervention.
“Yes, developers can now cancel off-plan contracts without court intervention, but this action is strictly regulated,” Jaouhar explained, adding that developers may terminate contracts if purchasers default on payments, but only after obtaining approval from ADREC.
“This change aims to expedite dispute resolution while safeguarding buyers’ rights, as purchasers retain the option to appeal through arbitration or the courts. The requirement for ADREC oversight ensures that cancellations are justified and not abused, maintaining a fair balance between developer flexibility and buyer protections,” she said.
The reforms also target Abu Dhabi’s ambition to attract more institutional capital into the real estate market.
“These reforms introduce stronger legal protections, clearer title frameworks, and enhanced oversight of developers, reducing regulatory friction, increasing transparency and strengthening confidence in asset underwriting, investing, and market liquidity for exits,” Mohamed Ali, Senior Director at GFH Partners Ltd said, adding that the timing of these reforms aligns with significant growth projections for Abu Dhabi’s logistics sector.
“Abu Dhabi’s logistics sector is projected to grow at a CAGR of over 5 per cent through 2028, fueled by accelerating e-commerce demand, supply chain modernisation, and major infrastructure developments such as the expansion of Khalifa Port, KEZAD, and Etihad Rail,” he added.
Aside from this, the new legal framework offers a “more stable and transparent foundation for developing and managing assets in these high-growth segments, particularly build-to-suit logistics facilities, cold-chain storage, and light manufacturing,” Ali said.
Property management restructured through new Owners’ Committees
The new laws also restructure property management by replacing Owners’ Associations with Owners’ Committees. These committees now focus on strategic oversight, while daily operations are outsourced.
“Owners’ Committees, introduced under the new laws, serve as advisory and oversight bodies, focusing on strategic decision-making. Day-to-day management of properties, including maintenance of shared spaces, is outsourced to professional firms,” explained Jaouhar.
“In contrast, the previous Owners’ Associations were responsible for both oversight and operational tasks, often leading to inefficiencies.”
Dispute resolution mechanisms have also been revised. ADREC will now mediate conflicts, including those related to contract terminations.
“The new rules simplify dispute resolution by introducing a more structured and efficient process. ADREC now acts as a mediator, reducing the need for lengthy court proceedings,” Jaouhar said. “The laws provide clear guidelines for contract terminations and other disputes, ensuring both parties have defined avenues for recourse.”
In the leasing segment, new rules introduce a Rental Index and enforce limits on rent increases.
“The introduction of a Rental Index now benchmarks lease rates by asset type and location, while annual rent increases are capped between 5–10 per cent,” Ali explained, adding lease agreements must also be “registered and monitored through Tawtheeq, ensuring equitable leasing practices and enabling more predictable rental escalations.”
New licensing rules and penalties for real estate professionals
Real estate professionals must also adhere to new licensing requirements under ADREC’s unified regulatory framework.
“Real estate professionals must adapt to expanded definitions of regulated activities, including brokerage, valuation, and property management. Licensing requirements are now more stringent, with all professionals required to register with ADREC,” Jaouhar warned. “The laws also impose strict penalties for violations, such as misusing escrow funds or failing to comply with service charge regulations.”
The new enforcement structure includes fines of up to AED2 million. “Property owners who default on service charges may face restrictions on disposing of their assets until payments are settled,” she added.
ADREC is now responsible for a broader range of functions, including developer registration, contract termination approvals, and compliance monitoring.
“ADREC’s role has been expanded to serve as the central regulatory authority for Abu Dhabi’s real estate sector. The agency now oversees developer registrations, approves contract terminations, and mediates disputes between buyers and developers,” Jaouhar said, adding that ADREC also monitors compliance with escrow account regulations and imposes fines for violations.
“The new rules ensure the protection and sustainable management of shared spaces through professional oversight. Owners’ Committees will oversee the allocation of service charges to maintain communal facilities, while professional management firms handle daily operations,” Jaouhar explained, adding that “this structure guarantees that resources are used efficiently and that shared amenities like pools and gyms are properly maintained.”
The reforms also support broader investor accessibility by enhancing transparency and expanding foreign investment avenues.
The introduction of verified property listing platforms, improved land ownership clarity, and increased accessibility for foreign capital positions Abu Dhabi to pursue institutional-grade opportunities aligned with long-term growth strategies, Ali concluded.
