For investors on a budget, tokenization offers a chance to tap Dubai’s growth
With real estate tokenization going live in Dubai, investors have a chance to get into property assets piecemeal rather than go in for the whole thing.
Are you an investor in Dubai’s property market? And in stocks on Dubai Financial Market? Now, a third option is opening for investors and which promises to bring together the best of both worlds.
This is where the tokenization of property assets will lead up to – and in ways that will create more growth chances for the wider industry. At its heart, the concept of such tokenization is simple – buy a portion of a real estate asset rather than the whole. And have those token put up in a Blockchain and traded as per demand.
And these property assets come backed by property title deeds.
One of the biggest developers in the UAE, MAG, has already signed up for tokenization, putting in a $3 billion worth of its projects with MultiBank Group’s upcoming $MBG platform. MAG will have The Ritz-Carlton Residences, Dubai, Creekside, and Keturah Reserve on the platform.
Other big-league developers are getting into the act. (In Ras Al Khaimah, the emirate’s tourism authority is even ‘exploring’ Blockchain-linked travel rewards for visitors.)
But when it comes to Dubai property market, “Tokenization brings real-time pricing, improved liquidity and transparency on market pricing which positions Dubai as a leader in real estate innovation,” said Zana Jablan Musa, Operations Director at the specialist consultancy Sovereign PPG.
“Tokenization is changing real estate in Dubai by allowing people to own small parts of a property and making the whole system more efficient, transparent, and aligned with regulations.”
Fractional ownership – multiple investors buying into an asset – had been allowed in Dubai property market for some time. But it had never caught on that much – this is where tokenization and Blockchain entries come into play. And targeting a new cohort of investors.
Dubai Land Department sets it rolling
It was as recently as March last that Dubai Land Department announced it was doing a pilot test that would create opportunities for tokenizing real estate assets in Dubai.
“By converting real estate assets into digital tokens recorded on Blockchain technology, tokenisation simplifies and enhances buying, selling, and investment processes,” said Marwan Ahmed Bin Ghalita, Director-General of Dubai Land Department.
Stripped down to its basics, that’s all there is to it – a chance for investors looking to Dubai property market to get in but on more accessible price points.
“This isn’t about complicated structures or costly legal workarounds,” said Scott Thiel, CEO and co-founder of Tokinvest, had said recently.
“It’s about making it simple, secure, and affordable for more people to invest in the kinds of property assets that were once reserved for the ultra-wealthy. Investors around the world should be watching closely—because this is what the future of real estate looks like.”
How will Dubai’s real estate tokenization be regulated?
- The actual tokenization is regulated by VARA, Dubai’s dedicated virtual asset authority. The enforcement aspect and asset registration will be integrated through the DLD ‘which creates clear accountability and compliance requirements, making regulation and integration Dubai’s top priority when it comes to the use of digital assets’, said Musa.
- In DIFC, entities dealing with digital assets, including those facilitating tokenized real estate transactions, are required to obtain Dubai Financial Services Authority (DFSA) authorisation. They must adhere to stringent compliance measures, including anti-money laundering (AML) and counter-terrorism financing (CFT) regulations.
On whether multiple firms can offer such ‘real world assets’, Musa said: “Yes, but only within a regulated framework.
“Tokenization services related to real estate in Dubai can be offered by licensed entities registered under VARA and/or DIFC and recognised by Dubai Land Department. This ensures that only firms with proper compliance and technical standards can participate.
“It’s an open ecosystem that encourages innovation while ensuring investor protection and asset legitimacy.”
The Mantra Ecosystem Fund’s principle mandate is to invest globally – but we believe there will be a natural disproportion of investments focusing on the UAE. With institutional partners such as Damac and MAG, we are focusing early incubations on the real estate sector. With such a concentration of distribution and institutional partnerships in the UAE, I am very convinced that this is where a lot of our funds resourcing will flow.
Source: gulfnews
