Dubai property broker launches tokenisation platform

Arms & McGregor looks to connect local property market to decentralised capital pools

Dubai-based Boksha has raised $1m in funding from family offices and the Sandooq al Watan initiative to fund expansion. Bloomberg

Dubai-based property broker Arms & McGregor is setting up a tokenisation platform allowing people to own and trade property assets through digital tokens.

Arms & McGregor partnered with Slovenian blockchain company Blocksquare to create the platform, which it said would connect to a decentralised finance, or DeFi, liquidity pool. These are pools of cryptocurrency tokens where users can pledge one token in return for the right to lend or swap another, which they can then monetise.

"With the launch of the new property tokenisation platform, we aim to revolutionise the way property developers fund and sell projects," Makram Hani, founder of Arms & McGregor, said.

Tokenising properties will allow developers to sell portions of a property to raise funds to complete a project, he added. It will also give tenants the opportunity to buy part of a property and reduce their rental burden without overextending by taking on a full mortgage, according to Mr Hani.

The company is not the first to offer tokenisation of property in Dubai. Smart Crowd, which was founded by Siddiq Farid, was set up in 2017 and Stake, founded by former Damac Properties sales executive Rami Tabbarra and ex-Falcon Group managing director Manar Mahmassani, launched in December. Real Share, a platform created by Lootah Development, is also offering fractional property ownership through a partnership with Smart Crowd.

Mr Hani, who founded Arms & McGregor in 2013, said he is also encouraging "other stakeholders in the market to launch their own platform" to tokenise properties.

"Real estate is the biggest asset class in the world. At the same time, it's one of the most illiquid investments one can make," he said.

The partnership will allow property owners in the GCC to “extract liquidity from DeFi markets simply by uploading their real estate property to the blockchain”, said Blocksquare co-founder and chief executive Denis Petrovcic.

"It also opens up a new liquidity generator to fund ambitious megaprojects as traditional funding may fall short and not be as feasible."

DeFi is a rapidly growing area of finance but is one that is not without challenges.

A CipherTrace report last week found that more than half of all cryptocurrency fraud committed in the first four months of this year occurred through DeFi-related incidents, as opposed to cryptocurrency wallets being hacked or stolen. More than $240m was lost through DeFi-related scams, CipherTrace found.