15-04-2025
Real estate tokenisation: Dubai predicted to see $16bn market for digital fractional ownership
Dubai's landmark initiative to kick off the tokenised property title deeds is projected to create a massive over $16 billion digital fractional ownership market in the emirate in the next few years, accounting for a sizeable share of property transactions in the emirate, sector experts told Arabian Business.
The move is also expected to further boost overseas investments in the city's real estate sector, especially the residential segment, with tokenised online real estate platforms attracting international investors in large numbers, especially from Europe and Asia, bringing in top-dollar investments, they said.
The Dubai Land Department (DLD) announced the launch of a pilot project to tokenise property title deeds in March this year, becoming the first land registry in the Middle East to implement blockchain-based property tokenisation.
Implementation of tokenisation will enable fractional ownership of real estate assets, entitling holders to a portion of the property's ownership or economic returns such as sale proceeds and rental incomes.
Dubai's revolutionary move in this combines traditional fractional ownership with blockchain technology to create transferable digital assets.
' Real estate tokenisation is currently reaching a pivotal point globally, with significant developments such as Dubai's successful pilot programme attracting increased attention from investors, developers, and regulators,' Sergei Ivanov, Founder & CEO of Alma, a next-generation prop-tech platform, told Arabian Business in an exclusive interview.
'DLD's move marks what was long discussed in theory becoming a practical reality,' he said.
Ivanov, who is also a member of the Dubai PropTech Business Group and TechIsland PropTech WG, said they estimate this groundbreaking initiative could create an AED60 billion ($16.3 billion) tokenised real estate market by 2033, accounting for around 7 per cent of Dubai's property transactions.
He said in the long run, the broader investor reach enabled by the tokenisation move could significantly increase property values in Dubai.
'This will also allow unprecedented diversification, enabling investors to hold small stakes in properties across different countries,' Ivanov said.
Dubai real estate tokenisation
The Alma Founder said in the Middle East, Dubai is setting a strong precedent by actively involving government entities such as the Dubai Land Department and the Virtual Assets Regulatory Authority (VARA) for the real estate tokenisation initiative.
'This proactive approach significantly boosts investor confidence and positions the region as a global hub for tokenised real estate,' he said.
The growing interest among younger, tech-savvy investors further highlights the market's potential for this far-reaching initiative, he added.
Ivanov, who is considered as a new age investment 'guru' in the real estate sector, said the tokenisation initiative will be a major boost for global accessibility for real estate investments in the emirate.
Someone in Europe or Asia, where regulations are either already put in place or being enacted for the digital assets sector, can now easily invest in a tokenised property in Dubai, bringing in cross-border capital.
Citing a recent survey, he said as high as 58 per cent of high-net-worth individuals (HNWIs) investors see lower transaction costs as a key reason to invest in tokenised assets.
'These benefits explain why forward-thinking jurisdictions are embracing tokenisation to spur innovation in the property sector,' the Dubai PropTech Business Group board member said.
He, however, said technological advances coupled with clear and harmonised regulatory frameworks, offering a promising outlook where property investment becomes simpler, more transparent, and accessible to all, are essential for the mainstream adoption of real estate tokenisation.
In this context, he said Europe's evolving landscape, including the EU's Markets in Crypto-Assets (MiCA) framework for qualifying tokens and established MiFID II regulations for security tokens could be looked at by authorities in Dubai for adopting a best-suited model for encouraging broader market participation.
Regulatory considerations highly important
Legal experts, however, said alongside the excitement, it is crucial to address the legal and regulatory considerations that come with this new model of real estate investment.
'Legal considerations for tokenised real estate are a heavily regulated domain, and introducing blockchain tokens does not change that reality,' Michael Pelosi, Senior Legal Counsel at Elias Neocleous & Co LLC, told Arabian Business.
'Issuers and investors in tokenised property must navigate two layers of law – first, traditional securities/real estate regulations, and second, newer rules for digital assets,' he said.
Market players said the tokenisation move means converting ownership or economic rights in a property into digital tokens on a blockchain, with each token representing a fractional share of the property's value or income.
In practice, however, this often involves placing a property into a legal entity such as a special-purpose vehicle (SPV), and issuing tokens that represent shares or bonds of that entity.
Pelosi said the growth of tokenised asset markets can improve liquidity significantly, making tokenised real estate more attractive and accessible to investors.
Pelosi and Ivanov said Dubai's tokenisation move is fast gaining traction as it can potentially solve long-standing problems in real estate investment.
The key benefits include increased liquidity – as owners can trade small shares of a property on digital marketplaces, enabling faster buy-sell transactions like securities, and lower entry barriers – with investors able to participate with a few hundred dollars instead of hundreds of thousands, thus democratising access to real estate and creating a wider pool of investors, they said.
Investors will also benefit from real-time transparency of who owns what share, they said, adding that smart contracts can also automate enforcement of rights like distributing rental income to token holders with high accuracy.
They, however, said Investors evaluating a token offering should always examine what type of instrument the token represents – whether equity, debt, revenue share – and what specific rights and restrictions come with it, as tokenised offerings can fall into different regulations, depending on their instrument types – securities, bonds or private placements.
Enforcement of contracts can also be tricky if token holders are globally dispersed, and questions of applicable jurisdiction can arise in disputes, they said.
'This is an evolving area, underscoring the importance of careful legal structuring and for investors to understand the terms of their token holdings,' Pelosi said.
