Setting Up an Asset Tokenization Company in the UAE: A Deep Dive into Real Estate Tokenization

June 14, 2025

On Democratising Assets

“We soon want to have everyone with AED500 [to be able to] access and buy a token of the Dubai real estate market and benefit from its economic value.” [i]

— Mahmoud Al Burai, Senior Adviser, Dubai Land Department

The statement is provocative, but more than that it points to a technological disruption impacting multiple asset markets, including real estate. Before we go there, however, let’s look at the Dubai real estate market, especially the high-end properties.

In 2024, Dubai alone achieved record-breaking real estate transaction values totalling AED 760.7 billion. [ii] According to the Knight Frank Wealth Report 2025 [iii], Dubai has led the global super-prime real estate market for two years straight. In the 12 months leading up to September 2024, the city recorded 388 sales in this segment—far ahead of New York’s 230. And it isn’t just about the volume; the real estate asset inflation has been staggering as well. A US$1 million luxury home bought in January 2020 would be worth around US$2.7 million by 2025. That’s nearly tripling its value in just five years.

Sources: Source 1, Source 2, Source 3, Source 4, Source 5, Source 6

For investors, this indeed is great news. But there is a natural caveat—a very real barrier to entry that keeps small retail investors on the sidelines. Most people simply do not have the kind of cash flow required to enter this super-expensive segment of the real estate market. So, the important question is:

How can small investors get a piece of the luxury real estate market and tap into this spectacularly performing asset class?

Increasingly, the answer points to something called asset tokenization. In this article, we will understand asset tokenization, focussing primarily on real-estate tokenization and see how it is expected to grow at an incredible rate. We will also explore the regulatory environment in the UAE and discuss what businesses need to keep in mind when they plan to enter this space.

Asset Tokenization: What is it?

Asset tokenization is a relatively new concept that combines technology, finance, and legal frameworks in a way that fundamentally reimagines ownership structures. Simply put, this technological innovation breaks high-value properties, or any other asset for that matter, into digital shares, making it possible to invest with a fraction of the usual capital.

Each share (often called a “token”) represents a small ownership stake. This stake is securely recorded on the blockchain—a decentralised digital ledger—where it can be tracked, traded, and verified with transparency and speed. Instead of needing millions of dollars to buy a whole luxury property outright, investors can own a stake with far less, effectively democratising the real estate market for smaller retail investors. It also infuses real estate with a liquidity that, historically, has been hard to come by.

How Big is the Market for Asset Tokenization?

As mentioned earlier, real estate is just one of the asset classes that can be tokenized. Asset tokenization works for any high-value real-world asset (RWA): art, commodities such as gold, or even equity stakes in private companies. As these tokens are recorded on a blockchain, the entire process becomes transparent. Ownership is indisputable because transactions are time-stamped, approved by a network and cannot be altered. This gives investors the confidence of a secure ledger, removing the need for complicated layers of intermediaries and associated fees.

The RWA market, excluding stablecoins, isn’t that big but the value has already tripled in the last two years. Including stablecoins, the market for RWAs crossed USD 241 billion on 13.03.2024 [iv]:

Category	Value (USD)
Stablecoins	$223,690,492,214
Private Credit	$12,161,439,796
US Treasury Debt	$4,264,601,227
Commodities	$1,199,443,697
Institutional Alternative Funds	$405,258,823
non-US Government Debt	$114,754,481
Corporate Bonds	$15,487,156
Stocks	$14,597,132

Source: RWA.xyz

However, this growth is insignificant compared to estimations made by multiple firms. As per a study published by McKinsey in June 2024, the market capitalisation of RWAs, excluding stablecoins and cryptocurrencies, could reach USD 2 trillion by 2030, with potential to go up to 4 trillion. [v] In fact, BlackRock, the world’s largest asset manager known for launching its Bitcoin ETF, has talked about tokenizing $10 trillion of its assets. [vi] If large scale tokenization is widely adopted, the growth of the sector can potentially be unimaginable given the sheer volume of total world assets.

Asset Tokenization Business Setup in the UAE

The UAE has evolved as a leader in blockchain technologies. From its extensive vision documents to the creation of a strong regulatory framework, it has built an ecosystem that supports the innovation and growth of the businesses in this sector. Not just that—even in terms of public adoption of cryptocurrencies and blockchain, the UAE ranks second in the world. [vii]

For any asset tokenization business that falls under the definition of VASPs (Virtual Asset Service Providers) two of the most important factors contributing to its growth are the level of participation—the people—and regulatory clarity. In both, the UAE leads the world. If you are planning to explore a tokenization business setup in the UAE or want to tokenize your own real estate or other assets, several steps are involved, a few of which have been enumerated below:

Legal Structuring and Compliance: Before any tokens can be sold to the public, the property and the issuing entity must comply with applicable regulations. In the UAE, for instance, that begins with obtaining specific licences from the relevant authorities. Multiple regulatory authorities exist in the UAE that govern the virtual assets sector, including the Securities and Commodities Authority (SCA), Virtual Assets Regulatory Authority (VARA), Financial Services Regulatory Authority (FSRA), and Dubai Financial Services Authority (DFSA), each with different licencing requirements. However, licencing is just one part—taxation, compliance with AML/CFT laws, and other regulatory considerations are also important.

Smart Contracts: The next step involves selecting a particular blockchain network that can host and manage your smart contracts. Creating smart contracts means writing self-executing agreements with the terms coded onto a blockchain. These smart contracts define how tokens behave, who holds them, and what rights or dividends they confer. They also automatically distribute income—like rent from the underlying property—to token holders.
Token Issuance and Distribution: Once the legal structure is in place and the smart contracts are set up, the tokens are issued. Investors can then purchase these tokens using fiat currency or other cryptocurrencies, depending on the platform’s structure. This isn’t very different from buying company shares in a stock market. After purchase, tokens are stored in digital wallets, and ownership details become part of the permanent blockchain record.
Security and Cybersecurity Measures: In the digital world, it is essential to address security concerns thoroughly. Although blockchains themselves are usually secure, the platforms handling user interactions (like exchanges and wallets) can still be vulnerable to cyber-attacks and hacking attempts. Key management is another critical aspect. If private keys are mishandled or stolen, it can lead to the loss of tokens. Therefore, robust cybersecurity protocols, wallet security, regular audits, and reliable infrastructure providers are all important components of a safe tokenized environment. Educating investors on best practices for private key management also helps minimise the risk of theft or fraud.

Secondary Market Trading: Perhaps one of the most exciting aspects of tokenization is secondary market trading. Investors can buy or sell tokens on secondary marketplaces, which essentially transforms a previously illiquid asset like real estate into something far more flexible. However, there can still be challenges with liquidity in the secondary market, which we shall discuss later.
Investor Protection and Dispute Resolution: While tokenization brings greater transparency to ownership, investor protection should also be at the forefront during business setup. Unlike traditional real estate transactions, where buyers and sellers engage in legally binding agreements with well-defined protections, tokenized real estate operates in a relatively new and evolving legal framework. This means companies must establish clear terms of ownership, usage rights, and profit distribution. Additionally, dispute resolution mechanisms should be in place to address any conflicts that may arise, whether related to ownership claims, smart contract execution, or platform security.
Governance and Compliance Reporting: It’s regular compliance reports, including financial disclosures, audits, and transaction records, depending on the nature of the tokenized asset. Some tokenization projects are exploring Decentralised Autonomous Organisations (DAOs), where investors can participate in voting mechanisms for key property-related decisions, such as renovations or lease agreements.

Case Study: Real Estate Tokenized in New York [viii]

The New York Real Estate Fund (NYREF) has introduced a fractional ownership arrangement for a property in Bronx, New York—valued at $18 million. The property is a nine-storey multi-family residential complex, comprising 32 spacious apartments. Under this model, ownership is split into 18,000 digital tokens on the Avalanche blockchain, with a minimum investment of just $1,000 per token.
Out of the total 18,000 tokens, NYREF offers 14,400 for public purchase through its marketplace. Each token confers direct ownership benefits, granting investors the ability to participate in potential appreciation, rental revenue, and a share of any future capital gains.

Investors can expect an annual return of approximately 5.52%, meaning a $10,000 stake could yield around $552 in income each year, with a guaranteed annual growth of at least 3%. Considering that NYC’s rental prices see a larger surge, the strong market performance further increases the potential for continued returns and incremental property value appreciation.

The Liquidity Challenges

Real estate has traditionally been deemed “illiquid.” Even in popular markets, the time span to sell property can range from a few weeks to several months, and that’s after navigating legal complexities, agent commissions, and negotiations. Fractional ownership tokens speed up this entire process by making quick transactions online. However, there is a caveat here. Although theoretically, tokenized assets make it easier to buy or sell real estate shares, in practice, finding secondary buyers in a nascent market can be a challenge.[ix] This would likely come down as more and more people start to participate in the market.

The SCA’s Draft Regulation on Security and Commodity Tokens

The Securities and Commodities Authority (SCA) in January 2025 published a draft regulation on security tokens and commodity tokens, inviting stakeholders, experts, and industry participants to share their insights. [x] This first-of-its-kind framework [xi] in the UAE’s capital markets integrates Distributed Ledger Technology (DLT) to enhance the issuance, trading, and regulation of tokenized securities and commodities. Security tokens represent equities, bonds, or financial instruments, while commodity tokens are linked to gold, oil, metals, and other tangible assets. The regulation sets out rules for issuance, trading, and settlement, requiring transactions to occur on licenced markets or Alternative Trading Systems (ATS), with limited over-the-counter (OTC) exceptions for certain instruments, including settlement of bonds and sukuk tokens.

The framework also prioritises investor protection, market integrity, and technological security, mandating compliance with cybersecurity, data protection, and operational transparency standards. Issuers must ensure secure, immutable ledgers, disclose risks and disaster recovery plans, and uphold regulatory compliance. Although not directly about real estate tokenization, it has laid essential groundwork for other forms of asset tokenization. This means that even property-backed tokens may benefit from clearer guidelines as they evolve, reinforcing the UAE’s position as a forward-looking environment for virtual assets.

An important development in this regard happened in January 2025 with the announcement of Mantra, a blockchain firm focused on tokenizing real-world assets (RWA), signing a $1 billion agreement to tokenize properties owned by the DAMAC Group, one of the UAE’s largest conglomerates. [xii] These tokenized assets will appear on the Mantra chain. Mantra Finance FZE [xiii] also received a licence from VARA in February 2025, to serve DeFi products to investors under DeFi Limited Licence.

Conclusion

When setting up an asset tokenization company in the UAE, there are two major factors to keep in mind:

Technological Infrastructure: A formidable technological infrastructure with smart contracts that facilitate smooth transactions, strong security measures to protect users, and scalable solutions to accommodate growth. Reliable blockchain networks and interoperability between different platforms are also important.
Compliance and Regulatory Adherence: A strong compliance function is essential to navigate the evolving legal landscape, ensuring your VASP adheres to regulatory protocols. Establishing rigorous KYC/AML procedures, maintaining transparency in issuing tokens, and aligning with the UAE’s changing regulatory environment are absolutely essential.

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