Tokenised real estate gains ground in the GCC

Marie Chowdhry and Jessica White of Pinsent Masons were commenting following recent steps by all three countries to tokenise real estate ownership.

Tokenisation of real estate involves representing rights in physical real estate assets by way of some form of virtual asset, primarily in the form of digital tokens. The sector is increasingly exploring ways for rights in a single property to be represented by multiple digital tokens. For real estate developers and others operating in this sector, this tokenised model of fractional ownership can help them attract investment more easily and to reach a broader based clientele.

A real estate tokenisation project was launched in Dubai in March through a collaboration between the Dubai Land Department and the Dubai Virtual Assets Regulatory Authority. This set a regional precedent for regulatory backed tokenisation frameworks, as it was the first time a real estate registration authority in the Middle East had implemented tokenisation on property title deeds. The first property launched in May and achieved full subscription in under 24 hours.

In June, the KSA launched its own real estate tokenisation pilot under the Real Estate General Authority. The scheme aligns with the KSA’s Vision 2030 goals to modernise the property sector and attract global investment. The KSA’s RAFAL Real Estate Co. has partnered with droppRWA, a subsidiary of Web3 infrastructure provider droppGroup, to execute the country’s first tokenised real estate transaction. As part of the pilot, droppRWA will conduct a full feasibility study for property tokenisation across RAFAL’s portfolio in collaboration with leading consultancies.

The Qatar Financial Centre (QFC) is also actively piloting a real estate tokenisation through its Digital Assets Lab, with PropTech LLC leading efforts to fractionalise property ownership and enable secondary trading on compliant exchanges

These initiatives aim to lower entry barriers for real estate investments; improve liquidity in traditionally illiquid markets; enhance transparency and investor protection via blockchain and position countries in the Gulf Cooperation Council (GCC) as a global hub for digital asset innovation. 

Marie Chowdhry of Pinsent Masons said such initiatives were a welcome step for the region’s real estate market: “The development of real estate tokenisation in Qatar, KSA and the UAE show that the local regulators are looking to introduce legally recognised structures for fractional ownership of real estate, enhanced investor protections and regulatory certainty for stakeholders.”

Chowdhry said these initiatives present significant opportunities in the GCC for investors seeking diversified exposure to real estate; high-net worth individuals and family offices looking for fractional ownership opportunities; real estate developers aiming to unlock liquidity from large-scale assets, and fintech and blockchain companies interested in building tokenisation platforms.

In light of these developments, businesses are being advised to explore partnerships with tokenisation platforms or regulatory sandboxes in Qatar, KSA and the UAE and assess their portfolio exposure to GCC real estate and evaluate tokenised alternatives.

White said it was also critical for businesses to engage with legal and compliance teams to understand the evolving regulatory frameworks across the region and ensure they educate themselves on the benefits and risks of tokenised real estate: “We are advising clients to assess legal implications of tokenised asset structures early to ensure readiness to enter to market and access capital more efficiently while maintaining compliance with the evolving digital asset regulations,” she said.