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Exclusive: GCC’s first real estate tokenization model to create more liquidity and trading ability

Late this May, Arms & McGregor International Realty announced it was taking the GCC property sector to new highs with the launch of the region's first real estate tokenization platform. We needed more clarity, so we asked...

The project is meant to revolutionize real estate so that anyone can purchase any property or any part of it, at any time DeFi allows liquidity and funding for giant mega-projects like NEOM The value of the token will be dependent on the property valuation

Late this May, Arms & McGregor International Realty, the Dubai-based real estate company behind Real Estate 6.0 (the new asset class in Real estate), announced it was taking the GCC property sector to new highs with the launch of the region’s first real estate tokenization platform directly connected to a DeFi liquidity pool. 

Powered with innovative technology developed by Blocksquare, the new platform was designed to open the way for trading, owning, and liquidating property assets through trading digital tokens.

The Realty is eyeing over $5 billion in liquidity to the property market in GCC by 2024, aiming to make the liquidation of the asset class possible and transparent, while automating the transaction process. 

In an exclusive interview with Makram H. Hani, Founder & CEO Arms &McGregor International Realty®, he revealed a few key details to further our understanding of the business rationale behind the move.

AMEinfo asked…

1-What is real estate 6.0? 

Real estate 6.0 is the new asset class in real estate. The project is meant to revolutionize real estate asset class chrematistics (study of wealth), so that anyone can purchase any property or any part of it, at any time, online, in a fully automated process, where ever they are and have more transparency on the value and market depth while doing so. Tokenization sits at the core of Real estate 6.0 as it is one of the tools of liquifying the asset and reducing the entry point.

2- Why launch this now and why with real estate?

The region has embraced blockchain and is driving legislators and the private sector towards digitization at full thrust. We have young regulatory systems which avail great opportunities. There should always be someone who pioneers, takes the risk, and introduces a process that the market will build on. Here, we are doing so, and the benefits are for all of us to reap. Globally, real estate has been, historically, the least evolving industry. It is a $300 trillion industry that has always been thirsty for additional liquidity, which is one of the reasons that makes it a perfect fit to tokenize. 

3- How does the DeFi liquidity pool work? 

The DeFi liquidity pool solves two problems, in one of the most liquid property markets in the world.

It will allow us to have internal market-making in an under legislated side of the industry. Today offering real estate tokens in the retail market is complicated and not feasible, yet liquidating the tokens through a DeFi liquidity pool helps the process be efficient and feasible.

Secondly, where traditional funding is expected to fall short, DeFi allows liquidity and funding for giant mega-projects like NEOM at a later point when the market matures further.

4- How will landowners and real estate traders post their properties on the blockchain? 

It is a pretty simple process for property owners to go digital. Although there is plenty of logistical and legislative challenges which will ease with time, we are working with multiple parties to make it as simple and as straightforward as it could be.

Property owners don’t need to understand the tech behind the system to use it. Consumers sold items on Souq prior to its acquisition, and currently, mostly do so on classified websites. The listing process is no more complicated than that. We understand that for Real estate 6.0 to succeed, it should go mainstream, and to do so elements in it should be as easy to use as an Apple product, as secure as using a bank account. The current listing process is simpler than opening a crypto wallet or transferring a digital coin from one wallet to another. The paperwork is heavier though as you need to fill KYCs and be AML compliant, yet this should deter no one as anyone legit should be encouraged by it.

Read: Allsopp & Allsopp real estate Q1 report 2021

Read: Bahrain real estate sector deals valued at $1.9 billion in 2020

5- What is the token called? How is it being launched? What’s its initial price? Every token representing tokenized property or portfolio will be named with a unique suffix. The value of the token will be dependent on the property valuation. We will not have any tokens launched for retail investors.

6- What partnerships, if any, are you making with large property owners like Emaar, Damac, and others?

Our target is to get every player either on our platform or help them use their own white-label platform. We are currently in discussion with several stakeholders, developers, and landlords with sizable portfolios to get them to take on tokenization and utilize the amazing technology we (BlockSquare and Arms &McGregor International) availed to them.

7- What is this project’s revenue model? 

We stand as tech providers as well as facilitators. Our revenues are generated from getting more platforms launched and more properties tokenized. 

8- What are the top 3 property buying and selling dynamics that this tokenization model will change in the UAE real estate investing landscape?

Tokenization itself may not have a major impact on the real estate investing landscape in the short or medium term, although it will change how people buy and sell property as well as who can do so. Yet with more elements of Real Estate 6.0 getting together, the way people view real estate, and trade it will be revolutionized.

9- What are the types of properties that will thrive with this tokenization model?  

How we fund, build, acquire, sell real estate will be impacted. The whole asset class will be changed forever. The change will touch all real estate categories, be it commercial, residential, or industrial. It will also have an impact on built-to-fit facilities which will have a great share of growth as eCommerce and logistics develop.