Welcome back to Lawgical with Ludmila. I’m Ludmila Yamalova, the Managing Partner of a Dubai-based law firm. In today’s episode, we’ll discuss the regulations governing real estate developers in the Emirate of Dubai—and what it really takes to become a developer.
Over the last 15 years, regulations have evolved significantly. It’s no longer as simple as setting up a company and jumping straight into marketing or collecting funds from investors.
The Reality Check for Developers
Developers must now navigate a series of stringent licensing, approval, and financial requirements before they can begin promoting their projects or accepting payments. These regulations were introduced after the 2008 financial crisis, a time when many developers relied almost entirely on staged payments from investors—without owning land or securing funding—resulting in widespread project failures.
Today’s regulatory framework is designed to prevent history from repeating itself.
Categories of Applicable Laws
There are two categories of laws governing real estate developers in Dubai:
- Real estate-specific regulations
- General business laws (applicable across industries)
Let’s walk through some of the most notable legal requirements.
Real Estate-Specific Laws in Dubai
1. Law No. 8 of 2007 – Escrow Accounts
This law regulates the use of escrow accounts to protect investor funds from misuse. Developers must deposit a minimum of 20% of the project value into an escrow account before starting sales.
Back in the day, developers could start collecting money with zero proof of financial ability. Today, they must prove liquidity and have a project plan and valuation in place.
2. Executive Council Resolution No. 6 of 2010 – Land Ownership or Control
This resolution requires developers to own or control the land before beginning construction or selling off-plan units.
Previously, developers would market and sell projects without even owning the land, causing major legal and financial chaos if they couldn’t complete payment to the master developer.
3. Law No. 13 of 2008 – Interim Property Register (Oqood)
This law established the Interim Real Estate Property Register for off-plan projects. Developers must register every transaction with the Dubai Land Department (DLD), which then issues an Oqood certificate—an interim title deed for under-construction properties.
Failure to issue Oqood after taking payments is a red flag that the developer might not be legally compliant.
4. Law No. 19 of 2017 – Purchaser Non-Compliance
This law outlines what happens if a buyer breaches the contract. For example, if a project is 80% complete and the investor defaults, the developer may keep the full deposit. The law provides a scale of compensation based on the project’s stage of completion.
5. Executive Council Resolution No. 30 of 2013 – DLD Fees
This law sets the property registration fee, currently 4% of the property value. It’s paid to the DLD—not the developer—and is mandatory even if the project hasn’t broken ground.
Previously, this fee was paid upon project completion. Now, it must be paid upfront before receiving the Oqood certificate.
General Laws Affecting Developers
1. Decree No. 31 of 2016 – Mortgage of Granted Land
Allows developers to mortgage or dispose of granted land on a freehold basis without restrictions.
2. UAE Tax Laws
Developers are now subject to:
- 5% VAT on most real estate sales and leases
- 9% corporate tax on profits above AED 375,000
Even if the project hasn’t started, once licensed, a developer must register with the Federal Tax Authority (FTA) and submit annual tax returns.
3. Anti-Money Laundering (AML) Regulations
Developers are considered DNFBPs (Designated Non-Financial Businesses and Professions). They must:
- Conduct customer due diligence (verify identity, source of funds, and UBO)
- Report suspicious transactions
- Maintain transaction and compliance records for 5 years
- Implement internal compliance programs (including staff training and a compliance officer)
- Report any cash transactions over AED 55,000
Failure to comply can result in fines from AED 50,000 up to AED 5 million, business suspension, or even criminal liability.
Becoming a Developer: Step-by-Step
It’s not just about opening a company anymore. Here’s what’s required:
1. Obtain a Commercial License
- From Dubai Economic Department (DED) for mainland projects, or a relevant free zone authority.
- The license must be specifically for real estate development (not just consultancy or generic business).
2. Register the Project with DLD and RERA
Developers must:
- Provide a title deed or proof of control over the land
- Get architectural and engineering plans approved
- Submit a standard SPA (Sales and Purchase Agreement) template in English and Arabic for registration
- Open an escrow account for each project
- Secure a No Objection Certificate (NOC) from the master developer
Only after completing all these steps can a developer legally advertise or accept any funds.
Escrow Accounts: How They Work
Escrow accounts are opened with local banks and monitored by an escrow agent. Developers must:
- Deposit 20% of the project’s construction value before beginning sales
- Allow the agent to control fund disbursement based on construction milestones
- Accept that 5% is held for a year post-completion to cover penalties/liabilities
Incentives for Developers
Dubai is very developer-friendly:
- Freehold ownership is allowed for foreigners
- More areas are being designated as freehold zones
- Golden Visas are available to investors who buy properties worth over AED 2 million—even for off-plan units, if enough payment has been made
This makes Dubai a very attractive market for foreign developers and investors alike.
On Crypto & Cash Payments
Dubai was early to embrace cryptocurrency in real estate. Some developers even allowed direct crypto payments. However, enforcement of AML laws has made this space more regulated. Only well-reputed developers may still accept crypto under strict conditions.
As for cash transactions, they must be documented and reported if exceeding AED 55,000. The trend now is clear: developers are moving away from cash.
Final Thoughts
To summarize, anyone looking to become—or operate as—a real estate developer in Dubai must ensure the following:
- Obtain the proper commercial license
- Secure ownership or control of land
- Design and register the project with DLD/RERA
- Register and approve the SPA
- Open and fund an escrow account
- Comply with all DLD fees, AML, VAT, and corporate tax regulations
The market is booming, but enforcement is rising too. Investors are more informed. Developers who cut corners are risking lawsuits, license revocation, or worse.
So if you’re planning to develop, get your house in order first—literally and legally.
That wraps up another episode of Lawgical with Ludmila. If you’re considering launching a real estate project in Dubai or need tailored legal advice, feel free to reach out to us via our website: www.lylawyers.com.
And don’t forget—you can find me on TikTok, YouTube, Facebook, LinkedIn, and more, where I share regular updates and insights on UAE laws.
Until next time, stay safe and stay informed.