Costs for developers in Dubai to rise

Under a new law effective later this year, bank borrowings used to fund real-estate projects must be deposited into an escrow account, which will be regulated by the newly created Real Estate Regulatory Agency. Developers in Dubai must also deposit money from property sales into the account until agreed-upon project milestones are achieved.

"At the end of the day it's going to cost more to develop because most of that money in escrow won't be released until completion,'' said Nigel Truscott, a Dubai-based partner at Trowers & Hamlins Services Ltd.

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Developers will also be limited to using a maximum 5 per cent of money held in the escrow accounts to advertise their projects, Lisa Dale, a real-estate lawyer at Dubai-based Al Tamimi & Company, said in a telephone interview yesterday.