Dubai is expanding its blockchain-based real estate tokenisation initiative by enabling secondary market trading of fractional property ownership.

Last month, Dubai Land Department (DLD) launched Phase II of the Real Estate Tokenisation Project, allowing investors to resell previously issued real estate tokens through a regulated marketplace starting 20 February.

The move follows the successful pilot phase launched in May 2025, during which several properties were tokenised and sold through the PRYPCO Mint platform, a partnership between DLD and Dubai-based prop-tech firm Prypco.

The region’s first government-backed tokenised real estate investment initiative allows investors to purchase fractional ownership shares in completed residential properties through blockchain-based title deed tokens, with minimum investments starting from AED 2,000 ($545).

Currently, participation remains limited to UAE residents holding valid Emirates IDs, although authorities are studying the expansion of access in future phases.

Phase II enables investors to buy, sell and transfer approximately 7.8 million real estate tokens issued during the pilot stage, which represented more than AED 18.5 million ($5 million) in tokenised property value, within a regulated environment.

The trading system is supported by infrastructure developed by UK-headquartered Ctrl Alt, which had issued the original ownership tokens during the pilot phase.

Robert Farquhar, CEO, MENA at Ctrl Alt told Zawya Projects that controlled secondary market trading tackles a core limitation of real estate as an asset class - liquidity.

“Being able to acquire a property is one thing, but the ability to trade it quickly and securely is what creates efficiency, accessibility, and real flexibility,” he explained.

With secondary market, investors can purchase fractional real estate through primary issuance or secondary market, enter/exit positions when a verified buyer/seller is available using tokens that represent legal ownership recognised by the government

“In Dubai, this capability is now available at scale,” he said. “Investors are no longer locked in after purchase.”

For Phase II, the firm will deploy Asset-Referenced Virtual Asset (ARVA) management tokens designed to facilitate regulated secondary-market transfers.

Both ownership tokens and management tokens will be recorded on-chain, creating a single immutable record of property ownership aligned with Dubai’s official land registry. All transactions will be executed on the XRP Ledger and secured through Ripple Custody.

“What used to take months of coordination now happens in minutes,” said Farquhar. “An investor can sell a title deed token and complete a legal transfer in a single, regulated transaction. That fundamentally changes how people interact with real estate and sets a clear benchmark for what compliant tokenisation can achieve more broadly.”

Investor concerns around liquidity, custody and legal enforceability are being addressed through the government-backed structure of the platform, Farquhar said.

“When a token is purchased, the investor’s ownership is also reflected at the land registry; [legal] enforceability comes from the government framework, not the token itself,” he explained.

Moreover, tokens operate within a closed, regulated ecosystem, which excludes parties outside that environment.

“Only on-boarded investors can buy and sell with one another… this allows custody to be tightly monitored and controlled,” he said. “By establishing clear legal enforceability and robust security around the tokens, investor confidence increases, which in turn, supports sustainable liquidity in real estate investment.”

Dubai authorities estimate that tokenised assets could represent 7 percent of the emirate’s real estate market by 2033, equivalent to around AED 60 billion ($16 billion).

“A more inclusive and accessible real estate ecosystem, where retail and institutional investors can efficiently buy, trade, and hold property with true legal ownership, could reshape global investment flows, allowing investors anywhere to access markets in Dubai or other parts of the world,” said Farquhar.

Excerpts from the interview:

What kind of impact will the introduction of a secondary market have on investor behaviour, pricing transparency, and liquidity in Dubai’s real estate market?

Secondary trading is likely to drive greater diversity in investor participation and portfolio allocation. Fractional ownership and lower minimum entry points make it easier for a wider range of investors to access real estate, which has the potential to increase activity across the market.

Pricing transparency will also improve significantly. By recording transactions on a public block chain, like XRPL, market participants can see pricing in real time, creating a more open and efficient market while supporting liquidity.

On the flip side, won’t the price transparency that a secondary market provides erode some of the premium pricing power wielded by developers?

Currently, we are only working in the ready market where that development risk has been eliminated. Additionally, the majority of properties sold by developers are sold at launch, typically at a material discount to post-handover pricing. From our perspective, increased price transparency strengthens the market rather than undermines it.

What operational or regulatory challenges had to be addressed to enable secondary trading while keeping ownership fully aligned with official land registry systems?

On the operational side, the core challenge was alignment with the official land registry. To achieve legally backed ownership, our tokenisation engine had to integrate directly with the DLD. That required real-time synchronisation between on-chain token transactions and government registry records, so ownership updates are reflected properly.

We also needed to connect with a regulated distribution platform that provides the investor-facing marketplace and user experience. Transaction data flows from that marketplace into our engine, where we manage settlement, administration, ownership changes, and compliance. That end-to-end integration is what makes secondary-market trading possible without breaking the legal chain of title deed ownership.

From a regulatory perspective, we worked closely with VARA under its ARVA framework to ensure asset-backed tokens could be traded compliantly. This resulted in a two-token structure: an issuer token that carries the legal ownership of the property, and a secondary ARVA management token that governs how the asset is managed and traded. Together, these operational and regulatory pieces create a seamless and compliant way for investors to interact with tokenised real estate in Dubai.

Two follow-up questions: a) How can the market avoid importing equity-style volatility into real estate, which has historically been a relatively stable asset class? b) During downturns, liquidity often dries up. What mechanisms are in place to ensure that tokenised units do not become stranded assets with no active buyers?

To address both concerns, there are built-in mechanisms to maintain stability while providing liquidity optionality. First, a 20 percent delta against DLD smart valuations is embedded, which provides a buffer to prevent market prices from fluctuating wildly. On top of this, sellers can list tokens within a 15 percent variance of the valuation, further supporting consistent pricing and reducing volatility.

To mitigate the risk of tokens becoming “trapped” in periods of low demand, holders have voting rights to divest the whole property. This ensures there is always a pathway to liquidity, even if the market for individual tokens softens.

How important has regulatory clarity - particularly VARA licensing and land registry integration - been in attracting investor participation?

Regulatory clarity has been foundational. Working closely with VARA from the early issuance phase through to secondary market trading gave the project a clear and credible framework.

Their approach was both rigorous and forward-looking, which enabled us to secure the first-ever issuer license from VARA, alongside having a broker-dealer license. That regulatory certainty removed ambiguity for both partners and investors.

Land registry integration was equally critical. Native real estate tokenisation is only possible when tokens are directly connected to the official title deed system. Without that integration, you cannot issue or manage tokens that represent true legal ownership, and without regulatory approval, you cannot responsibly scale access to a broad investor base.

This combination is what drives investor participation. Many tokenisation efforts, particularly in real estate, rely on indirect structures such as SPVs or wrappers that sit between the investor and the asset.

Here, investors hold tokens that represent direct, government-recognised ownership. That distinction materially changes trust, usability, and appetite for participation, alongside the ability to trade this ownership 24/7 for more liquidity optionality.

Do you see tokenised real estate evolving into exchange-like trading ecosystems similar to equities or REIT markets?

No, this is intended as a medium to long-term investment. Government and platform fees apply on both entry and exit, which naturally discourages short-term trading. At the same time, the framework retains flexibility, so investors can exit earlier if circumstances or returns make it suitable, providing liquidity optionality.

From a capital markets perspective, how does tokenisation change the way real estate is financed, valued and traded compared to traditional ownership structures?

By linking a token directly to ownership, we integrate the operational benefits of tokenisation into the traditional model. This approach creates opportunities for innovations such as DeFi [Decentralised Finance] lending pools instead of conventional mortgages, AI-driven property valuations, and yield-based metrics as data becomes more accessible. What we have built is a foundation that enables these types of products to be built on.

Could tokenisation reduce funding costs or accelerate capital mobilisation for developers, particularly in large-scale projects?

Tokenisation can change how developers approach raising capital by creating more flexibility and options for investors. It doesn’t automatically unlock capital but opens the door to a wider pool of participants. Fractional ownership, for example, lets retail investors access properties they couldn’t reach before and gives developers additional channels to attract investment.

In the DLD’s Real Estate Tokenisation Project, there are plans to extend this to off-plan properties, allowing investors to participate in developments early while maintaining legally recognised ownership. This approach broadens both investor access and funding opportunities without changing the underlying regulatory or legal framework.

Dubai's strategy is focused on retail investors. How might institutional investors - such as sovereign funds, pension funds and global asset managers - integrate tokenised real estate into their portfolios?

The current phase of Dubai’s project focuses on retail investors, but the roadmap includes developments aimed at institutional participation. Future phases will enable investment in whole tokenised properties and commercial assets. This opens the door for sovereign funds, pension funds, and global asset managers to integrate tokenised real estate into their portfolios while benefiting from faster transactions, operational efficiencies, and access to secondary markets. It essentially gives institutions the same advantages as retail investors, but at scale and across a broader set of property types and ownership percentages.

Dubai has positioned itself as a global hub for virtual assets. How could real estate tokenisation contribute to the development of broader digital capital markets in the emirate?

Real estate is one of the strongest examples of tokenisation in the region. It’s widely recognised and easy for investors to understand, which makes it an ideal entry point for introducing tokenised assets into Dubai’s capital markets. By tokenising something tangible like property, the concept becomes more approachable, even if the underlying technology is complex.

We’re already seeing growing interest across the GCC in applying similar frameworks to other asset classes, including private equity, debt, commodities, and funds. This aligns closely with developments we’ve been involved with in the UK and EU, bridging traditional capital markets with the possibilities of tokenisation.

Do you see secondary trading of tokenised real estate assets opening up pathways for new financial products?

Absolutely. This real estate tokenisation project has already set a benchmark for tokenisation in the region and globally. In discussions with governments and market participants, Dubai’s initiative is frequently cited as an example of practical, regulated innovation, not just for real estate, but for broader capital markets.

Secondary trading of tokenised real estate is a major milestone. One of the key promises of tokenisation is access to liquid secondary markets, and until now, legally owned property couldn’t be traded on-chain in real time. These trades now happen almost instantaneously, with investors receiving legally recognised ownership rights, opening the door for new financial products built on real estate tokens.

(Reporting by Anoop Menon; Editing by SA Kader)

(anoop.menon@lseg.com)

Subscribe to our Projects' PULSE newsletter that brings you trustworthy news, updates and insights on project activities, developments, and partnerships across sectors in the Middle East and Africa.