Contact Us

+350 20079000 info@hassans.gi

This data will only be used by Hassans for processing your query and for no other purpose. View our privacy policy
| 2 minutes read

Tokenisation of Property - an Untapped Treasure Trove?

With the massive growth in metaverse developments and investment experienced recently, one question comes to mind; how might we apply distributed ledger technology and tokenisation to the traditional property market?

The answer is yet to be fully explored. However, there is an increasing demand for exploration and, in a virtually untapped market, a blank canvas of routes to consider.

How would tokenisation work? 

Could we create a puzzle of NFTs representing identifiable portions of an office or commercial space? Imagine how this might be applied to a shared office development with each NFT representing a desk space.

Alternatively, an entire property could be divided into tokens with equal rights.

It is easy to imagine a large number of people owning one property. However, how this would work in practical terms is key. For example, to prevent utter chaos, tokens would need to be issued with prescriptive rights in relation to the relevant property. Those rights might include:

  • governance - giving token holders a say over certain elements of a property is important, but relinquishing all decision making to the crowd may be fatal. In many cases it might be necessary to appoint a person or entity to be responsible for the management of the property.
  • economic/interactive rights - where a property is to be let out, distributing economic returns to token holders would be relatively simple. However, in the example of a shared office space made above, or in the case of a holiday property, things get more complicated. For example, we would need to consider how use would be monitored and how ongoing expenses would be paid. Perhaps the return of a time share style model would help.

Practical implications 

Given the ancient ways of recording and transferring title over property, the first hurdle to overcome in order to achieve true tokenisation is finding a way to adapt and work with traditional record keeping and property registers.

Other points to consider include effecting stamp duty obligations and the ability to meet KYC obligations in relation to proceeds of crime regulations.

Once overcome, distributed ledger technology might provide a golden solution to what has historically been the Achilles’ heel of property - proving title and ease of transfer.

For the public, tokenisation would mean:

  • easy access to what is otherwise an inaccessible investment class for many.
  • passive income from tangible property.
  • liquidity - even for blue chip investors, the ability to step in and out of property investments at the push of a button would be monumental.

In our very own Blockchain Rock (Gibraltar), although limited in space, there are several new mixed use developments in the pipeline. It would be interesting to see how these developments apply smart technology to their buildings, or even use that technology to manage tokenisation.

If you are interested in exploring tokenisation in Gibraltar feel free to reach out. 

“An individual could own a piece of the Empire State Building for several dollars.” cointelegraph.com/...

Top-ranked in all practice areas in Legal 500 EMEA 2024

Hassans is pleased to announce that it has once again achieved top tier rankings in all areas covered by Legal 500 EMEA for Gibraltar....

Posted on
Read more

Latest Insights

Upcoming compulsory pensions deadlines for Medium, Small and Micro companies

As many employers will be aware, following the enactment of the Private Sector Pensions Act 2019 (“the Act”), which came into force in...

Posted on
Read more

Ethical Gambling Forum 2024

The Ethical Gambling Forum 2024 was held at the Sunborn Hotel, Gibraltar, last week attended by gambling operators and service providers...

Posted on
Read more

Insurance and Reinsurance Comparative Guide

Hassans' Head of Insurance Yvonne Chu has contributed to Lexology's most recent Panoramic Guide relating to Insurance and Reinsurance. ...

Posted on
Read more