Dubai, one of the seven emirates that constitute the United Arab Emirates, is one of the hottest real estate markets in the world right now. Lawmakers in Dubai have shown their willingness to help this trend continue with a recent change to Dubai escrow law.



Many real estate developers are investing their money in Dubai real estate, recognizing the fact that it is one of the more profitable regions for their investment. Other than these brave investors, there have been many fence-sitters who felt that Dubai escrow law didn't offer enough protection to a potential investor. This impediment has been addressed and demolished by Dubai lawmakers.

One of the major areas of additional protection is in 'off-plan' investments. Off-plan is the conventional means of securing financing in major tourist regions. What it means is basically a pre-sale of units that are either in the planning stage or in the construction stage. Many big lenders require developers of condominiums to prove that there will be demand for their development by selling a certain percentage of the units at various stages during construction. The release of further funds to continue with the development process would be based on these pre-sales.

In the past, before the change in Dubai escrow law was made, real estate investors were required to observe the land developer on their own to ensure that their money was being used in the actual development of the property. This had been a major problem for those investors far from Dubai.

Recognizing the gap, Dubai lawmakers made a change to the escrow law that created a body called the Real Estate Regulatory Authority (RERA) to monitor and implement Dubai escrow law. Before the creation of the RERA, investors transferred their money directly to the land developer, relying on the good faith of said developer for a return on their investment. But now, all payments on off-plan projects will be placed in a trust at a Dubai Land Department approved institution. This additional layer of protection provided by Dubai escrow law has resulted in a rush of new investment capital to Dubai.