Tokenising real estate can make property ownership cheaper and more accessible yet lowering the price of entry does not necessarily solve one of the asset class’s biggest weaknesses: investor resale.
That is the central challenge examined in the latest research by PRYPCO, drawing on sixteen months of operating experience in Dubai’s real estate market.
Digitising ownership is only the starting point as investors need buyers, transparent pricing, reliable settlement infrastructure and regulatory safeguards around the asset.
‘Illiquidity Tax‘
PRYPCO describes this broader cost of owning property as the “illiquidity tax”: the combination of transaction fees, forced-sale discounts and price opacity that investors absorb when capital is tied up in real estate.
Drawing on data from the UAE, France, Germany and England, the paper finds that round-trip transaction costs alone can run from 8% to 14% of a property’s value, before accounting for the cost of being unable to choose when to sell.
Dubai’s experiment provides an early test of whether tokenisation can address some of these constraints.
Next Step: Barriers to Exit
Speaking with Finance Middle East, Amira Sajwani and Essa Ibrahim, Founders of PRYPCO, acknowledged the significance of tokenisation while realising that the next steps must prioritise liquidity at the point of exiting the property market.
Amira Sajwani, Founder and CEO of PRYPCO, said: “Seventy per cent of PRYPCO Mint investors are buying Dubai property for the first time. Few of them could have put down a deposit on a whole apartment. Now they can start from AED 1000 and add properties as their savings grow. Tokenisation made that ownership possible. Our next job is a resale market deep enough that they can rebalance when their lives change.”
Resale Versus Deep Liquidity
However, the latest data also points to the distinction between enabling resale and creating deep liquidity.
The paper identifies seven requirements for a stronger secondary market: reliable settlement, real-time valuations, sufficient market depth, market-making, cross-listing, interoperability and composability.
Essa Ibrahim, Co-founder and President, PRYPCO spoke to Finance Middle East about the benefits of a diversified real estate portfolio while being able to exit a functioning resale market: “If all your property money sits in one apartment, one vacancy can stop your entire rental income” said Ibrahim. “Diversification spreads risk without removing it, so transparent pricing and a working resale market matter as much as the token itself.”
For tokenised real estate, the next phase is likely to be defined by the luxury of a guaranteed exit than any entry.
Tokenisation made getting on the property ladder easier for smaller investors. The next test is whether getting off it can be just as easy.
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