REAL ESTATE
TOKENISATION

Real estate tokenisation is the process of creating digital tokens on a blockchain that represent ownership or beneficial interest in a physical property or property portfolio. The property is typically held by a legal entity such as a unit trust or special purpose vehicle, and tokens are issued representing proportional interests in that entity. This enables fractional ownership, automated compliance through smart contracts, secondary trading on digital asset exchanges, and access to global investor pools. Each token carries embedded rights and obligations defined by the underlying legal documentation, including voting rights, distribution entitlements, and transfer restrictions. Tokenisation transforms traditionally illiquid real estate assets into programmable, divisible, and transferable digital instruments, opening property investment to a substantially broader investor base while maintaining the legal protections of traditional property ownership structures.

Yes, tokenised property is entirely legal in Australia provided it complies with the Corporations Act 2001 (Cth). ASIC has issued guidance (INFO 225 and INFO 230) clarifying that digital tokens constituting financial products require compliance with Australia's financial services regulatory framework. Token issuers must determine whether their tokens fall within the definition of a managed investment scheme (s 9), security (s 92), or other financial product category. Depending on the classification, issuers may require an Australian Financial Services Licence (AFSL) and must comply with prospectus disclosure requirements for retail offers (s 710) or fall within an exemption for wholesale investors (s 708). Additionally, AUSTRAC registration may be required under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) where the token platform facilitates the exchange of digital currency. The legal framework is well-established and our firm has successfully navigated these requirements across dozens of tokenised property transactions.

For real estate tokenisation activities in Dubai, you will typically require a VARA Virtual Asset Service Provider (VASP) Category 3 licence. VARA categorises VASPs into four categories based on the nature of activities conducted. Category 3 applies to virtual asset brokers, exchanges, and trading platforms, as well as virtual asset management and investment services. Within Category 3, the specific activity of "Arranging and Advising in Relation to Virtual Assets" is most commonly required for token issuance platforms, while "Virtual Asset Custody" may be needed if the platform holds client assets. The application process involves submitting a comprehensive business plan, compliance framework, risk management policies, financial projections, and detailed information regarding beneficial owners and senior management. VARA also requires the appointment of a locally resident compliance officer, maintenance of minimum capital requirements, and ongoing reporting obligations including quarterly compliance reports and annual audited financial statements. Our firm assists clients through every stage of VARA licence acquisition, from preliminary scoping to full licence grant.

The tokenisation process typically takes between 3 to 6 months from initial engagement to token issuance, depending on jurisdiction, asset complexity, and regulatory pathway. In Australia, ASIC review of a prospectus takes approximately 28 days under the standard lodgement process, with up to 14 days for supplementary review if deficiencies are identified. AFSL applications typically require 4 to 6 months from submission to determination. In Dubai, VARA VASP Category 3 licence applications are generally processed within 3 to 4 months, assuming all documentation is complete and the applicant meets fit and proper requirements. The legal structuring phase — including SPV formation, trust documentation, smart contract development, and investor agreements — typically runs in parallel with the regulatory process and takes 6 to 10 weeks. Post-launch compliance setup adds a further 2 to 4 weeks. Our parallel-track methodology compresses these timelines by running workstreams simultaneously where possible, and our established relationships with ASIC and VARA enable us to pre-empt common review points, reducing the incidence of supplementary information requests that typically extend timelines.

A Security Token Offering (STO) is a fundraising mechanism where security tokens are issued to investors in exchange for capital, similar to an Initial Public Offering but conducted on blockchain infrastructure. STOs are typically used for new property acquisitions or development projects and involve extensive regulatory compliance including prospectus preparation, ASIC filings, and investor onboarding procedures. Fractional ownership, by contrast, refers to the ongoing structure that allows multiple investors to hold proportional interests in an existing property asset. Fractional ownership structures — typically unit trusts or corporate vehicles — may have been established through an STO at inception, but the term more commonly describes the holding structure rather than the fundraising event itself. Fractional ownership arrangements focus on governance frameworks, distribution mechanisms, exit protocols, and ongoing investor relations, whereas STOs centre on the capital raising process and regulatory approval for the initial issuance. In practice, many of our engagements involve both elements: we structure and execute the STO to raise capital for property acquisition, then maintain the fractional ownership framework for ongoing asset management and investor engagement.

Ongoing compliance obligations depend on the jurisdictions in which the tokenisation platform operates. In Australia, ongoing obligations include: annual AFSL compliance reviews and audit; continuous disclosure of materially relevant information to tokenholders; AUSTRAC suspicious matter reporting and threshold transaction reporting; compliance with anti-hawking provisions (s 992A); maintenance of adequate dispute resolution mechanisms; and regular compliance committee meetings with documented minutes. In Dubai, VARA imposes: periodic compliance reporting (quarterly and annual); maintenance of adequate systems and controls for virtual asset custody; ongoing fit and proper assessments for senior management; notification of significant operational incidents within prescribed timeframes; and adherence to VARA's marketing and disclosure guidelines for virtual asset promotions. Cross-border platforms must maintain parallel compliance programmes in each jurisdiction, which our ongoing compliance service manages through integrated reporting dashboards and dedicated regulatory liaison. Our retained compliance clients benefit from proactive regulatory change alerts, automated reporting workflows, and priority access to our legal team for compliance queries.