The real estate industry in the UAE—and Dubai, in particular—is one of the most regulated business in the UAE. Real estate regulation for developers in the last 15 years has evolved significantly, with Dubai leading the charge in this evolution due to its historical reputation for having an active and vibrant real estate market.

Entry into the UAE real estate market as a developer is not straightforward. It is not as simple as registering a company and then starting to sell or raise money from investors. The developers are required to go through a set of stringent licensing, approval, and funding procedures before they can even begin to sell their developments. This regime of regulation came into existence following the financial crisis, whereby developers were relying entirely on upfront payments from buyers with no possession of land or enough funding to proceed with work—resulting in stalled developments and financial uncertainty.

Applicable Regulations and Key Laws

The legal framework governing property development in Dubai is based on a comprehensive set of laws and resolutions that are designed to ensure financial stability and protect investors. The most important regulations to developers are:

• Law No. (8) of 2007 Concerning Escrow Accounts for Real Estate Development – Governs the use of escrow accounts to protect investor funds and prevent misuse of off-plan sale proceeds.
• Executive Council Resolution No. (6) of 2010 – Requires developers to be the owners or in control of the land and to secure approvals before starting construction or selling off-plan units.
• Law No. (13) of 2008 Regulating the Interim Real Property Register – Prohibits registration of real estate developments and off-plan sales.
• Law No. (19) of 2017 – Dictates the process for addressing non-compliance by purchasers and the rights of developers in the event of violation of contracts.
• Executive Council Resolution No. (30) of 2013 – Sets the fees of property registration, ownership transfer, and other real estate transactions.
• Decree No. (31) of 2016 on the Mortgage of Granted Land – Allows developers to mortgage or dispose of granted land on a freehold basis without limitation.
• UAE Federal Tax Law (VAT and Corporate Tax) – Imposes corporate tax and VAT obligations on real estate developers, including registration with the Federal Tax Authority (FTA) and filing of tax returns.
• UAE Anti-Money Laundering (AML) Laws – Supplies the compliance framework for developers, including customer due diligence (CDD), reporting of suspicious transactions, and record-keeping obligations.

1. Licensing and Approval Requirements

Prior to any developer’s ability to market or sell a real estate development in Dubai, they must secure various levels of authorization from both commercial and real estate regulatory authorities.

A. Commercial License

First of all, the developers have to obtain a commercial license from the Department of Economic Development (DED), which comprises:

• Application under Activity Code: 6499004
• Providing a legally registered company name and business form
• Documentary proof of a valid tenancy agreement for office space
• Title deed for the land upon which the project will be built (or partial ownership confirmation)

B. RERA and DLD Approval

Following the issuance of a commercial license, the developer will acquire the approvals of the Real Estate Regulatory Authority (RERA) and Dubai Land Department (DLD). This entails:

• Registration of the project with the DLD
• Acquisition of an NOC (No Objection Certificate) from the master developer
• The filing of architecture and engineering plans approved by the relevant authorities
• Registration of the underlying purchase and sale agreement for the specific project with RERA
• Opening a RERA-approved escrow account before any advertising or marketing

Developers are not allowed to advertise off-plan sales or participate in real estate exhibitions without RERA and DLD approval.

2. Financial and Operational Requirements

Developers must demonstrate financial stability and operational capability before they can launch a project. This includes:

A. Escrow Account and Construction Guarantees

Under Law No. (8) of 2007 (the Escrow Law), developers are required to establish an escrow account with a local bank and deposit at least 20% of the cost of construction of the project before proceeding with sales. In cases where the developer lacks the ability to raise the amount, the deficiency should be financed through direct payment to the Dubai Land Department. The escrow account ensures that:

• Funds obtained from off-plan sales are only used for the construction of the project.
• 5% of the total value of the escrow account is withheld by the escrow agent until one year after the project is completed to cover potential liabilities (Escrow Law, Article 14).

If, for whatever reason, the project is not completed, the escrow agent will have a reasonable obligation to safeguard the rights of the depositors and to cause either the project to be completed or the depositors to be reimbursed (as per Escrow Law, Article 15).

3. Freehold Ownership by Foreign Developers

One of the largest benefits of property development in Dubai is the ability for developers, both foreign companies, to own property on a freehold basis within designated areas. Foreign developers and investors can purchase and hold property as freehold in designated areas for foreign ownership, some of which are key locations such as:

• Palm Jumeirah
• Downtown Dubai
• Dubai Marina
• Jumeirah Lakes Towers (JLT)
• Business Bay

This is a big attraction for foreign developers, as they can invest in long-term developments and secure finance against the land. Having the ability to own land as freehold places Dubai among the biggest real estate markets in the world to be accessible to foreign investors.

4. UAE Golden Visa for Real Estate Developers

A further big attraction for real estate developers is the possibility of being eligible for the UAE Golden Visa.

• Developers who invest in real estate developments—off-plan or completed—can qualify for a renewable 10-year visa under the UAE Golden Visa program.
• Individual and corporate investors can access the Golden Visa.
• Developers are also able to sponsor the Golden Visa for senior employees and relatives.

This represents a key strategic benefit to developers because the Golden Visa includes long-term residence, capacity to run a business, and better access to the UAE market.

5. Other Forms of Payment (Such as Cryptocurrency)

Accepting payments using other payment options like cryptocurrency is another trending feature of the real estate sector in Dubai.

• Some of the developers in Dubai are beginning to accept Bitcoin, Ethereum, and other types of cryptocurrencies for payments.
• Although the regulatory framework for crypto payments is still developing, the government of Dubai has published guidelines via the Dubai Virtual Asset Regulatory Authority (VARA) to oversee and enable crypto transactions.
• Crypto payments offer more flexibility for international investors and buyers, especially those looking to sidestep currency exchange volatility and global transfer charges.

Developers considering crypto payment options should seek the advice of legal specialists to guide them through VARA compliance and addressing potential issues around volatility, security of payments, and taxation.

6. UAE Anti-Money Laundering (AML) Compliance

The UAE real estate developers are categorized as Designated Non-Financial Businesses and Professions (DNFBPs) within the UAE AML framework. The developers therefore are subject to rigorous anti-money laundering compliance guidelines, including:

• Customer Due Diligence (CDD): Obtaining the identity of customers and ultimate beneficial owners (UBOs).
• Suspicious Transaction Reporting (STR): Reporting suspicious transactions to the UAE Financial Intelligence Unit (FIU).
• Record-Keeping: Maintaining records of transactions and identification of customers for five (5) years.

7. Tax Regulations (VAT and Corporate Tax)

A. VAT (Value-Added Tax)

• The VAT is levied at a standard rate of 5% on sales and leases of real estate.
• Initial sales of residential units within three years of completion are VAT zero-rated.

B. Corporate Tax

• From 1 June 2023, corporate tax is imposed at 9% on profits over AED 375,000.
• Developers are required to:
  • Register with the Federal Tax Authority (FTA)
  • File tax returns annually
  • Maintain proper books of accounts

8. Why Legal Guidance is Crucial

At HPL Yamalova & Plewka, we possess experience in advising real estate developers in licensing, registration, compliance, and strategic market entry. If you are keen on starting a real estate development venture in Dubai, contact us for expert legal consultation that aligns with your business needs.