Dubai Land Department Launches Real Estate Tokenization Pilot Program

The Dubai Land Department (DLD), a government agency for the real estate industry, said it started a real estate tokenization pilot program

Dubai Land Department (DLD) has launched a pilot program for real estate tokenization, becoming the first property registration authority in the Middle East to use blockchain technology for property title deeds.

The initiative, which was developed with the digital assets watchdog Virtual Assets Regulatory Authority (VARA) and Dubai Future Foundation (DFF), aims to streamline and broaden participation in the emirate’s real estate market.

The department's move comes amid broader efforts by Dubai to strengthen its position as a global technology hub.

DLD projects that tokenized real estate could account for 7% of the city's total property transactions, reaching 60 billion dirhams ($16 billion) by 2033.

"We are proud to launch this pilot phase for real estate tokenization in cooperation with technology firms, which will simplify and enhance buying, selling and investment processes in the local real estate market and render it more attractive to a wider category of investors from within the country and abroad," said Marwan Ahmed Bin Ghalita, director general of DLD.

"We will continue to engage with technology firms and relevant stakeholders to refine this project and scale it up in accordance with the highest standards of governance and transparency."

The move follows a report by McKinsey last year which listed real estate as one of the classes that could face slower growth in tokenization adoption due to operational hurdles.

However, other classes like private credit and structured products could see faster tokenization adoption in the next 24 months as more use cases emerge and drive demand.

Real estate was among the first asset classes to be tokenized as early as 2017, shortly after the emergence of smart contracts technology on the Ethereum blockchain.

Several platforms have since launched to tokenize fractional ownership of property among retail investors.

But despite the potential of tokenization to lower entry barriers and increase market liquidity, it has yet to take off broadly.

The digital token versions of real-world assets (RWA) can be fractionally owned and transferred on the blockchain.

This enables smaller investors to participate in asset classes that were previously accessible only to large institutions.

The tokens can also be traded more easily and frequently than traditional assets, leading to greater price discovery and market liquidity.

Moreover, tokenization facilitates the creation of new investment products and structures, catering to diverse risk appetites and investment horizons.

As a result, tokenized RWAs are emerging as a key theme in the merging of Web3 and traditional finance.