In the last few weeks Dubai issued its first ever property token ownership certificate. The second property offered for fractional ownership in this way sold out in less than two minutes and the level of interest in future opportunities looks set to soar. Here's what you need to know.
What is fractional ownership of property?
It's when multiple investors have a stake in a single property.
How is that possible?
This can be done by investing into and owning a share in a special purpose vehicle that holds the property, for example, via a property crowdfunding platform.
But now in Dubai investors can also directly own a part of a property by way of a tokenised share and such ownership can be documented at the Dubai Land Department by way of a property token ownership certificate.
What is tokenisation?
A token is a digital representation of value. In this instance a token represents a share of a property that is stored securely on a blockchain.
How can I invest?
Prypco Mint has partnered with the Dubai Land Department and other stakeholders to offer a platform for investors to buy a tokenised share of individual properties. At the time of writing two residential properties in Dubai have been offered in this way and more will be coming onto the market.
Investors need to register on the platform and can apply to own up to a maximum of 20% of the total tokens issued for a single property. Currently investors need to have an Emirates ID and be 18 or over.
Why would I want to hold property in this way?
This lowers the barrier to entry for property investment. You can invest for as little as AED 2,000.
Blockchain transactions offer traceability and security and regulatory safeguards have been put in place.
Can my tokens be traded on the platform?
Yes, after an initial hold period has passed.
What are my returns?
You might be able to trade your tokens for a profit.
If the majority of investors vote to sell the property you will receive a share of the sale proceeds, in line with the proportion of your investment.
If the property is rented out in the meantime, you will be entitled to a proportionate part of the income.
