Early Access to Escrow Funds: Abu Dhabi’s Decision 24/2025 Explained

Introduction

The Emirate of Abu Dhabi has recently taken a further step to strengthen the regulatory framework governing its real estate sector with the issuance of a significant administrative decision by the Chairman of the Department of Municipalities and Transport (“DMT“). Administrative Decision No. 24/2025, issued on 21 November 2025, addresses the mechanism and controls for disbursement from project escrow accounts prior to completion of 20% of a project’s construction works (“Decision 24“). Decision 24 came into force and effect on 28 February 2026.

Decision 24 is issued pursuant to Abu Dhabi Law No. 3/2015 on the Regulation of the Real Estate Sector in the Emirate of Abu Dhabi (as amended) (the “Law“), which serves as the principal legislative framework for the sector. This article examines the key provisions of Decision 24 and considers their practical implications for developers, unit owners, and other stakeholders in Abu Dhabi’s real estate market.

Administrative Decision No. 24/2025 — Escrow Account Disbursement Controls

Background and Purpose

Under Article 19(3) of the Law, no amounts deposited in a project escrow account may be disbursed unless the developer has completed at least 20% of the construction works of the relevant real estate development project. However, the Law also empowers the Chairman of the DMT to issue a decision specifying the mechanism and controls for the disbursement of funds held on project escrow accounts prior to reaching the 20 % threshold. Administrative Decision 24 is the implementing regulation which provides clarity and the mechanism on how the above process is to be carried out.

Acceptance of Bank Guarantees

Decision 24 provides the Abu Dhabi Real Estate Centre (“ADREC” or the “Centre”) the discretion to approve the disbursement of funds to the relevant developer from the project escrow account prior to the completion of  20% of the construction works, on the provision that the developer puts up security of  alternative bank guarantees in an amount determined by the Centre, provided that such amount is not less than 20% of the value of the project’s construction works and on condition that certain requirements are met.

Eligibility Conditions for Developers

A developer seeking to submit such an alternative bank guarantee must satisfy several conditions, which are set out below (Note the Centre retains discretion): –

1. The developer must have been registered as a developer in the Emirate for a period of no less than four years from the date of submission of the application, and its licence must be valid at the time of application.
2. The developer must have completed and delivered, whether by itself or through its affiliates, not less than three real estate development projects in the Emirate within or prior to their scheduled timelines(Unless the delay in one or more projects was due to reasons beyond their control).
3. No violations or administrative penalties imposed against the developer under the Law for a period of no less than twelve months preceding the date of submission. The Centre may also impose any other conditions it deems appropriate, and any developer may be exempted from these conditions by the Chairman of the DMT.

Application Process

In order to potentially qualify, the developer (having satisfied the above prerequisites) must submit an application to the Centre requesting the replacement of the prescribed 20% completion percentage with a bank guarantee. The application must be accompanied by the following supporting documents including: –

1. Details of the completion status of projects executed by the developer in Abu Dhabi and other Emirates (if applicable);
2. The payment plan stipulated in the off-plan sale contracts of the project;
3. A detailed reconciliation statement of amounts deposited in the project escrow account against payments made under registered off-plan sale contracts; and
4. A technical report from an approved engineering consultancy specifying the estimated value of the project’s construction works.

Bank Guarantee Requirements

Decision 24 sets out the following requirements for the form and substance of the bank guarantee: –

1. The guarantee must be issued by a locally licensed bank or financial institution in the UAE that is approved by the Centre.
2. Its value must not be less than 20% of the total cost of the project’s construction works, as determined by an engineering report issued within thirty calendar days prior to the date of submission of the application.
3. Critically, the guarantee must be payable, in whole or in part, upon first written demand by the DMT or the Centre, without the need to refer to the developer, the issuing bank, or any third party.
4. It must be unconditional, irrevocable, free from deductions, fees, or taxes payable by the DMT and/or the Centre and shall remain valid for the entire period required for the purpose for which it was issued.
5. Must be in the prescribed form as set out in Decision 24.
6. Any other conditions as determined by the Centre.

Where the bank guarantee is issued on the basis of an estimated cost and the final cost is subsequently found to be materially higher, the developer is required to submit an additional bank guarantee covering the difference. Similarly, any partial drawdown or reduction in the value of the guarantee triggers an obligation on the developer to top up the guarantee. The original bank guarantee must be retained by the escrow account trustee throughout its period of validity, and the trustee is prohibited from disposing of or returning it without written instruction from the Centre.

Return of Bank Guarantees

The Centre may approve the return of the bank guarantee upon full completion of the project (100% completion) and upon the developer obtaining the project completion certificate. Alternatively, the developer may request an early return provided two cumulative conditions are met:

1. Actual construction progress of not less than 60% of the project works, evidenced by an approved technical report; and
2. The amount available in the main escrow account being sufficient to cover the full cost of the remaining construction works required to achieve 100% completion.

Practical Implications

Decision 24 represents a significant development in Abu Dhabi’s real estate regulatory landscape. It offers a meaningful practical benefit to established developers by allowing early access to escrow funds through the bank guarantee mechanism, thereby potentially improving project cash flows and accelerating development timelines. At the same time, the rigorous eligibility conditions and the unconditional, irrevocable nature of the required bank guarantees ensure that purchasers’ funds remain adequately protected.

Conclusion

Decision 24 demonstrates Abu Dhabi’s continued commitment to maturing and professionalising its real estate sector. Developers and other market participants should carefully review the decision and assess their compliance obligations in light of the new requirements. In particular, developers seeking to utilise the bank guarantee mechanism under Decision 24 should ensure they satisfy the eligibility criteria and engage with the Centre at an early stage.