Off-plan risks in Dubai: escrow protection, handover delays and what a buyer can do

Information current as of October 2026: buying off-plan property in Dubai is not “risk-free”, but buyer payments must go into a separate escrow account for the specific project under Law No. 8 of 2007. Escrow protection does not guarantee an on-time handover: market estimates for 2025 differ, but they place the share of projects delivered to schedule at around half. Before paying, verify the project registration, the escrow account, the SPA and Oqood registration; if handover is delayed, your main rights depend on the SPA, the contractual grace period and, if needed, a court decision.

Is buying off-plan property in Dubai a huge risk in 2026?

Off-plan remains a large part of Dubai residential activity: it accounted for 68% of registered transactions in the 12 months to October 2026 (DLD data). That does not make every under-construction unit suitable for every buyer. You are paying before you can inspect the completed apartment, test the building’s operation, confirm the final view, or compare actual rental demand in the finished community.

DLD data for the 12 months to October 2026 shows 12.7% fewer transactions and a 7.1% lower median price than a year earlier. A buyer should therefore avoid treating an off-plan booking as a short-term resale strategy or assuming that the price at handover will be higher than the price in the SPA. Market data does not support universal promises about capital growth or rental income.

The most frequent concern is understandable: “If I pay for an apartment at the excavation stage, what protects the money if construction slows down?” Dubai’s system has several layers: project-specific escrow accounts, registration in the interim property register, supervision of project payments and a formal cancellation process. These controls reduce particular risks. They do not remove construction, contractual, market, liquidity or dispute risk.

Estimates of timely delivery vary because analysts use different samples and definitions. One estimate for 2025 placed completed deliveries at about 41% of the planned volume; another placed plan fulfilment closer to 64%. It is fairer to say that market estimates differ, while roughly half of projects are often described as having been delivered on schedule. A promised handover date should therefore be treated as a contractual date to examine, not as a certainty.

How escrow accounts work in Dubai

An escrow account is a bank account opened in the name of one specific real estate development project. Under Law No. 8 of 2007, payments from off-plan buyers and project financiers are deposited into that project account. Each project must have its own separate escrow account; money from one project is not meant to finance another project.

The escrow agent is an approved financial or banking institution. The account is dedicated exclusively to construction of that project. Article 9 of Law No. 8 of 2007 also states that creditors of the developer cannot impose attachment on the payments held in that escrow account for the developer’s debts.

Payments are released against construction progress. Before payment from the account is made for eligible project expenses, the relevant construction stage is checked through the project’s technical control process. The account can be used for construction-related expenses, consultants and marketing, subject to applicable rules; marketing expenditure is limited to 5% of sales proceeds.

For a buyer, the practical rule is simple: do not transfer the property price to a broker’s personal or corporate account. Resolution No. 6 of 2010 (as reported) requires a broker handling an off-plan sale to deposit the sale price into the project escrow account and prohibits deduction of commission before that deposit. Our brokerage does not accept, hold, exchange or transfer client money. Payments should go only to the developer’s designated escrow account or through the relevant trustee office.

Use the payment schedule in the SPA as the working document. Each instalment should be checked against the contract, the project details and the designated account. See how to pay a developer through escrow in Dubai before making the first transfer or paying a subsequent construction-linked instalment.

What the 5% escrow retention means

After the developer receives the completion certificate, the escrow agent must retain 5% of the total value of the escrow account under Article 14 of Law No. 8 of 2007. This retained amount is released to the developer one year after units have been registered in the names of purchasers. The statutory wording refers to one year after registration of the units, not simply one year after physical completion.

This reserve is a protection mechanism connected with the post-completion period. It is not an automatic payment to an individual buyer for every snag, delay or disagreement. Claims about defects, incomplete works or contractual compensation still depend on the facts, the SPA and, where necessary, legal proceedings.

Oqood: why interim registration matters

Oqood is the commonly used name for registration in Dubai’s Interim Real Property Register. It records the off-plan legal disposition before the completed unit is transferred to the final Real Property Register. Under Law No. 13 of 2008, an off-plan disposition is not valid unless it is entered in the Interim Real Property Register.

Do not confuse a reservation form, proof of payment, email confirmation and brochure with Oqood registration. The SPA is the sale contract; Oqood is the interim registration of the transaction. Both matter. The developer usually processes registration, but the buyer should request evidence that the procedure has been initiated and retain all signed documents and payment confirmations. Our detailed guide to Oqood registration for Dubai off-plan property explains the documents and checks in more depth.

If a developer delays or refuses to register the transaction, a purchaser may approach the Real Estate Registration Assurance section of the Dubai Land Department. Resolution No. 6 of 2010 (as reported) also provides that a completed project cannot be withheld from a purchaser who has fulfilled contractual obligations: the developer must hand over and register the unit, including allocated facilities such as parking, and the DLD may register it on the purchaser’s request or on its own initiative if the developer refuses.

A buyer will usually encounter the 4% DLD registration charge in the transaction structure. Responsibility for fees should be checked in the SPA. Administrative fee figures found online are inconsistent, so they should not be assumed without confirming the current transaction documents. You can model the documented purchase costs with the Dubai property fees calculator, including DLD and trustee-related costs where applicable.

Handover delays: what the SPA can and cannot promise

The expected completion date in marketing materials is not enough. Read the handover clause in the SPA, including the definition of completion, the grace period, notice provisions, force-majeure wording, compensation clause and dispute-resolution clause.

Many SPAs contain a grace period of six to 12 months after the scheduled handover date. This is contractual practice rather than a single universal statutory period. If the SPA gives the developer a 12-month grace period, a delay inside that period may not yet amount to contractual breach. The wording of the signed agreement controls the position.

Compensation for delayed handover is not automatically payable simply because the apartment is late. It may be available if the SPA provides for it or if a court awards it after examining the agreement and circumstances. A buyer’s rent, hotel costs or financing costs are not automatically reimbursed. Do not rely on statements that a delay beyond a particular number of days automatically produces a refund plus a fixed annual percentage; we found no confirmation of that proposition.

The DLD may attempt conciliation between a developer and purchaser under Article 14 of Resolution No. 6 of 2010 (as reported). A written settlement approved by the DLD becomes binding on the parties. The DLD does not itself terminate a developer-purchaser SPA. If termination or damages remain disputed, the matter may need to go to the competent court. A UAE-qualified lawyer should review the SPA and evidence before litigation or a formal termination request.

What to do if handover is delayed

• Read the SPA first and calculate whether the stated grace period has expired.
• Collect the SPA, Oqood record, payment receipts, correspondence, revised schedules and any handover notices.
• Request written confirmation of construction status and the revised expected completion date.
• Check whether instalments were contractually linked to construction milestones and whether you have complied with your own payment obligations.
• Ask the DLD to facilitate conciliation if direct correspondence does not resolve the issue.
• Before claiming compensation, termination or damages, obtain advice from a UAE-qualified lawyer. A broker can explain the process and help organise transaction documents, but cannot provide legal conclusions.

If a buyer misses instalments, termination follows a notice procedure involving the DLD, and the amount a developer may retain depends on project completion; see how much a developer can retain on SPA termination.

If a buyer misses instalments, termination follows a notice procedure involving the DLD, and the amount a developer may retain depends on project completion; see how much a developer can retain on SPA termination.

If a buyer misses instalments, termination follows a notice procedure involving the DLD, and the amount a developer may retain depends on project completion; see how much a developer can retain on SPA termination.

If the project is cancelled or construction does not start

A project is not cancelled merely because a buyer sees little activity on site. A formal cancellation requires a reasoned decision by RERA. The legal framework allows cancellation in circumstances including unjustified failure to commence works within six months.

If RERA cancels a project, the financial position of the project is audited and the refund process is handled through the cancellation framework. The Special Tribunal for Liquidation of Cancelled Projects and the Judicial Committee for Unfinished and Cancelled Projects consider purchaser claims in this area; their decisions are binding and enforceable through Dubai Courts.

Law No. 8 of 2007 provides that, where an unfinished project faces an emergency situation, the escrow agent must consult the DLD and take measures to preserve depositors’ rights, either by ensuring completion or refunding payments. For a formal cancellation, buyers should follow the applicable cancellation and tribunal process rather than accept informal verbal assurances.

If money has been held for months and you have received neither an SPA nor details of an escrow account, treat that as a serious warning sign. Stop further payments until the project, account and documents are verified. Keep written proof of all communication and seek independent legal advice promptly if funds have already been transferred.

Area shortfalls, specifications and snagging at handover

A developer cannot freely reduce a unit a unit’s area (for example, from 58 to 54 square metres) without contractual consequences. Article 13 of Resolution No. 6 of 2010 (as reported) uses the net area stated in the sale agreement and plan as the reference. If the actual net area is more than 5% smaller than the contracted net area, the developer must compensate the purchaser based on the unit price stated in the agreement.

The 5% threshold is a compensation rule. It is not an automatic right to reject the unit or terminate the SPA. A significant change to agreed specifications may create a separate dispute, and the appropriate remedy depends on the contract and facts. The Resolution lists material deviation from agreed specifications and serious construction defects that make a unit unfit for use among circumstances in which a purchaser may seek court termination.

At handover, inspect the unit against the SPA, plans, finishes schedule, parking allocation and inventory. Document defects with dated photographs and a written snagging report. Use a structured Dubai apartment handover and snagging checklist rather than relying only on a verbal inspection.

Can you resell an off-plan unit before completion?

Resale before handover is usually possible only if the SPA and the developer’s transfer policy permit it. The buyer commonly needs to reach a minimum payment threshold and obtain a no-objection certificate, or NOC, before the transfer can proceed. A threshold of around 30–40% is common in market practice, but there is no single legal threshold for every project. The exact percentage, fees, documents and restrictions must be read in the SPA.

A buyer considering an off-plan resale should also consider liquidity. When transactions are down, finding a buyer at the desired price may take time or may not be possible. A resale is not a substitute for having enough funds to meet scheduled instalments if the transfer does not complete.

Choosing off-plan or ready property

Ready property and off-plan property solve different problems. A ready unit allows inspection of the actual apartment, building condition, community access, current rent and existing service arrangements. Off-plan offers staged payments and a new unit, but adds construction timing, specification and handover risk.

There is no universal answer to whether a JLT resale apartment or an off-plan two-bedroom unit is “better”. Compare the actual price per square metre, payment obligations, delivery date, comparable completed units, rent evidence and resale restrictions. You can review developer pages with projects and transaction data as one part of due diligence, while avoiding decisions based solely on branding or advertising.

Checklist before the first payment

• Confirm that the project is registered and authorised for off-plan sale.
• Verify the project-specific escrow account and ensure payment instructions name that project account.
• Obtain and read the SPA before signing or transferring funds.
• Check the scheduled completion date and every grace-period provision.
• Confirm the instalment schedule, construction milestones and consequences of late buyer payment.
• Check the unit’s net area, layout, parking, finishes and any stated views or facilities in the SPA and attached plans.
• Check Oqood registration arrangements and retain proof of registration.
• Read resale, NOC and assignment restrictions before assuming you can sell before handover.
• Budget documented purchase costs and future instalments without relying on a resale profit or rental forecast.
• Use an independent lawyer for legal interpretation, tax adviser for tax matters and bank for financing questions.

See also: getting an EOI or deposit back · buying an off-plan resale with only an Oqood · off-plan vs ready: an honest comparison · EOI and pre-launch booking: how the best units are allocated · developer offers and what to check in the SPA.

Frequently asked questions

What is an escrow account in Dubai?

It is a project-specific account for off-plan buyer payments and project financing. Under Law No. 8 of 2007, each development project must have its own escrow account.

Who can hold an escrow account?

An approved escrow agent, meaning an accredited financial or banking institution. The account is opened in the name of the project, not in the broker’s name.

What is Oqood in Dubai?

Oqood is interim registration of an off-plan transaction in Dubai’s Interim Real Property Register. Law No. 13 of 2008 makes this registration essential to validity of the off-plan disposition.

Can I buy Dubai off-plan property with only 25% paid?

The required initial payment and future instalments depend on the SPA and the developer’s payment plan. Paying 25% does not itself create a general right to resell or transfer the unit.

What happens if the developer delays handover beyond one year?

First check the SPA grace period. Compensation may arise under the SPA or through a court decision; it is not automatic solely because one year has passed.

Can a developer reduce the apartment area by more than 5%?

If the actual net area is more than 5% below the net area in the SPA and plan, Article 13 of Resolution No. 6 of 2010 (as reported) requires compensation calculated using the contract price.

Can I get a refund if an off-plan project is cancelled?

Formal RERA cancellation triggers the cancellation and refund process, including audit of the project’s financial position. A buyer claim may be considered by the relevant tribunal or judicial committee.

Discuss a purchase in Dubai

If you are considering a purchase, arrange a free consultation to go through the property, the transaction steps and the documents.