An escrow account is a project-specific bank account, registered with the relevant regulator (RERA in Dubai, the Housing Development Act trust mechanism in Malaysia), into which all buyer payments must be deposited. The developer can only withdraw funds in stages tied to verified construction progress — not on demand. This is the single most important buyer protection in regulated off-plan markets.
Why It Matters
- —Escrow prevents a developer from using one project's sales proceeds to fund a different, struggling project — a major cause of stalled developments historically.
- —Only buy off-plan from developers and projects registered with an escrow account in markets that mandate it — this is non-negotiable in Dubai and Abu Dhabi.
- —Markets without mandatory escrow (some Cyprus and Spain developments) carry materially higher payment risk — review the developer's financial standing more carefully.