Dubai Won The Real Estate Tokenization Play

Opinion by: Irina Heaver, crypto lawyer

The crypto markets are undergoing a hard reset. The speculative hype of 2021 is now a thing of the past.

Memecoins and DeFi derivatives no longer move markets like they used to. Investors are no longer chasing vapor; they are looking for substance. They want tangible assets, real returns and real infrastructure. This is precisely where real-world assets (RWAs) come into play.

In a market that’s tired of pumps and dumps and desperate for durability, tokenizing assets like real estate, luxury goods and commodities offers a rare trifecta: tangible value, yield and access. No white paper fiction with mostly fake advisers, no tokenomics that benefit insiders and early VCs — just good old bricks, gold and oil, but onchain.

In the UAE in particular, among all the RWA categories, real estate stands out as the most promising, and it’s not hard to see why.

RWA tokenization in Dubai

For the first time, owning a piece of prime Dubai real estate no longer demands massive upfront capital. Tokenization has opened the gates, allowing anyone with a smartphone and a few hundred dollars to buy fractional shares in a luxury villa, a downtown apartment or a high-yield rental property in JVC.

The promise of democratized investing, an idea that has been circling the industry for years, is no longer just theoretical but a framework grounded in law.  

In May, Dubai’s Virtual Assets Regulatory Authority (VARA) introduced updated rules. The regulator created a new category of virtual assets: Asset-Referenced Virtual Assets (ARVAs), specifically designed to allow the compliant tokenization of real-world assets like real estate.  

Tokenized real estate in Dubai

This new framework enables the issuance and trading of tokenized real estate on regulated exchanges or through regulated brokers. Issuers must obtain a Category 1 VARA license, meet capital requirements, undergo audits, publish white papers and make proper disclosures. It is a regulated, secure framework designed to support a new generation of global capital. And it’s already delivering results.

Last month, the Dubai Land Department, together with VARA and leading developers, oversaw the tokenization and sale of two apartments. The entire offering sold out within minutes. Buyers came from over 35 countries, and remarkably, 70% of them were first-time real estate investors in Dubai. This was not an institutional play; it was global retail, arriving with crypto wallets in hand, ready to purchase property onchain. Tokenization made it possible.

The benefits aren’t limited to investors. Developers finally have an alternative to traditional funding channels. Tokenization enables them to access global capital markets without relinquishing equity, incurring excessive debt with banks, or navigating painstakingly slow fundraising processes.

Investors now can diversify across multiple properties rather than committing all their capital to a single deal. And with Dubai’s rental yields consistently outperforming those of most major global cities, the value proposition speaks for itself.

So why now? What’s driving this surge in interest around RWAs?

UAE’s regulatory clarity around RWA tokenization

In uncertain macroeconomic conditions, capital seeks hard assets. Commodities such as gold, oil and natural gas are beginning to look increasingly attractive. The UAE now offers both regulatory clarity and real market and infrastructure access. 

This was not always the case.

Related: Dubai real estate sales hit $18B in May amid tokenization push

The St. Regis Aspen Resort tokenization project, launched in 2018, raised $18 million and was among the first SEC-compliant real estate offerings onchain. It faced numerous challenges. The tokens were not listed on exchanges until 2020, which caused delays for investors seeking liquidity.

Even after listing, trading volume remained low, and the token price dropped significantly from $1.32 to $0.85 by early 2022. Access to the offering was limited to accredited investors, and the project’s switch from Ethereum to Tezos introduced additional complexity. 

Although many initially viewed the project as a failure, by 2024 the Aspen tokens had recovered and surged over 200%, indicating that the early struggles were more a result of the growing pains of a new model than a flawed concept.

One of the most high-profile early attempts at real estate tokenization — the attempted tokenization of The Plaza Hotel in New York, powered by the same blockchain platform (Harbor) — never made it to market. Despite raising $28 million in venture funding and generating significant buzz, the project was ultimately shelved due to a web of operational, legal, and stakeholder complexities.

These early setbacks revealed an uncomfortable truth: While the vision was sound, the surrounding ecosystem, technological, legal, and financial, simply was not ready.

The US attempted to regulate 21st-century innovations with a legal framework built in the 1930s. It did not work. Founders looked elsewhere. And Dubai finally stepped up.

The UAE didn’t try to bend old rules to accommodate new tech. It built something new and that has made all the difference.

Suppose you’re a founder building a tokenization platform, a VC looking to back infrastructure plays, a family office allocating toward alternative assets, or a builder looking for the next high-impact vertical — if the UAE’s RWA tokenization is not already on your radar, you’re behind.

The rails are built. The market is live. And while they used to say “Habibi, come to Dubai” — now, Dubai is coming to you wherever you are, in the form of tokenized real-world assets. 

Opinion by: Irina Heaver, crypto lawyer

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.