Construction Halted in Dubai? Will You Lose All Your Money? Your Investor Guide from Prime Ever Green
Investing in Dubai’s vibrant real estate market, especially in off-plan properties, offers incredible potential for capital appreciation. However, a common anxiety for any investor is the possibility of a project stalling or being cancelled.
At Prime Ever Green, we believe in total transparency. We want to clearly explain your rights and the robust legal safety nets Dubai has established to safeguard your investment, even if the unexpected happens.
The Short Answer: No, You Are Not Automatically Doomed to Lose Everything.
Dubai’s regulatory bodies, primarily the Dubai Land Department (DLD) and the Real Estate Regulatory Agency (RERA), have created comprehensive laws, most notably the Escrow Account Law, to prevent developer insolvency from directly impacting buyer funds.
However, your recovery depends on the project’s stage and compliance, which is why due diligence is paramount.
Dubai’s Investor Protection Pillars
If construction stops, your protection flows from these key regulations:
1. The Power of the Escrow Account
This is your primary financial shield.
What it is: Every off-plan project must have a dedicated, regulated escrow account opened with an independent bank.
How it protects you: All payments you make (down payments, installments) are deposited into this account. Developers cannot access these funds until they meet specific construction milestones verified by a licensed consultant.
If construction stops: If the project is cancelled or unable to proceed, the funds in this escrow account are used to refund the investors based on the work completed. Your money is not commingled with the developer’s operational funds.
2. Project Registration (Oqood System)
What it is: All off-plan sales must be registered with the DLD via the Oqood system.
How it protects you: This official registration confirms your purchase legally, linking your payment records directly to the project’s official status.
3. The Role of RERA and the Special Tribunal
RERA actively monitors project progress. If a project is officially stalled or cancelled:
Intervention: RERA steps in to evaluate the situation.
Liquidation: In cases of outright cancellation, the matter may be handled by the Special Tribunal for Liquidation of Cancelled Real Estate Projects (under Decree No. 33 of 2020).
Refund Mandate: This tribunal oversees the process, requiring the developer to refund investors from the escrow account, usually within 60 days of the official cancellation notice.
Scenario Analysis: What Happens Based on Construction Progress?
Your level of protection is often tied to how far along the project was when it halted:
| Project Completion Status | Buyer Recourse (General Guideline) | Potential Financial Impact |
| No Work Commenced / Project Cancelled | Right to a full refund from the escrow account. | You should recover your entire investment. |
| Work Less than 60% Complete | Developer can terminate the contract, retaining up to 30% of amounts paid (to cover preliminary costs). | You may lose up to 30% of your payments. |
| Work Between 60% and 80% Complete | Developer can terminate, retaining up to 40% of the unit’s value as compensation. | Significant retention, but a partial refund is due. |
| Work Over 80% Complete | Developer can enforce the contract or terminate, retaining up to 40% of the unit’s value. | Risk of losing a larger percentage, but a refund of the excess is mandated. |
🔍 Prime Ever Green Insight: These percentages are penalties for buyer default in some contexts, but in developer default/cancellation, RERA ensures the process is fair, relying heavily on the verified funds in the escrow account. The primary goal for cancelled projects is a full refund if work never started.
Your Action Plan If Construction Stops
If you face a construction halt, act immediately and systematically:
Review Your SPA: Scrutinize your Sale and Purchase Agreement (SPA) for clauses on delays, compensation (liquidated damages), and termination rights.
Communicate Officially: Send a formal, documented inquiry to the developer requesting an update and a revised completion timeline.
Contact RERA/DLD: If the developer is unresponsive or the delay is significant, file a formal complaint with RERA or the DLD. They will verify the project’s status and the status of the escrow account.
Seek Legal Counsel: For complex cases or if a refund is disputed, consult a real estate lawyer experienced in RERA litigation. They can navigate the Special Tribunal on your behalf.
Partner with Confidence: Choose Prime Ever Green
Dubai’s market is secure, but navigating off-plan investments requires expert guidance. Prime Ever Green specializes in pre-vetted projects, collaborating only with reputable, RERA-compliant developers. We ensure your investment journey is transparent from Day 1, mitigating risks before they become problems.
Don’t let uncertainty cloud your investment decisions. Secure your future in Dubai property with a trusted partner.
Contact Prime Ever Green Today
For expert advice on new launches, ready properties, or to discuss the security of your current investment, reach out to our dedicated team.
Your secure real estate journey starts with Prime Ever Green.
