Qatar’s Council of Ministers has approved a draft law (“Tokenisation Law”), prepared by the Ministry of Justice (“MoJ”), to regulate real estate tokenisation and the trading of real estate tokens.
If enacted as described, the Tokenisation Law would allow ownership of, or rights in, real estate to be divided into digital tokens, recorded on an electronic registry and traded under a formal framework. This could open fractional property investment to a wider group of investors. The proposed framework is expected to support a more structured and transparent approach to fractional real estate investment, potentially enabling participation by investors for whom conventional property acquisitions require substantial capital.
Real estate tokenisation generally involves using digital tokens to represent specific rights or interests in a property or property-holding structure. A token does not necessarily represent direct legal ownership of land. Depending on the transaction structure, it may instead represent an interest in an entity, an entitlement to income, or other contractual rights.
The legal documentation underpinning a tokenised investment is therefore critical. The MoJ defines “tokenisation” as the conversion of ownership of, or rights to, real estate into programmable digital tokens. These tokens would be created, registered and traded through an electronic registry built on distributed ledger technology (DLT).
The registry is designed to operate in synchronisation with the MoJ’s existing real estate registration system.
Key features of the proposed framework
Based on the MoJ’s published description, the framework rests on four elements:
- Digital tokens: Real estate ownership or rights are converted into programmable tokens.
- Electronic registry: Tokens are created, registered and traded on a registry that uses distributed ledger technology.
- Link to the title register: The registry is designed to run in step with the Ministry of Justice’s real estate registration system, so tokens connect to officially registered property.
- Regulated trading: The draft covers trading of the tokens, not only their issue.
Points to watch
The draft text has not yet been published, so several questions remain open until the final law and its implementing regulations appear:
- Status and timing: When the law is issued, when it takes effect, and whether transitional provisions apply to existing fractional arrangements.
- Who may issue and trade: Which entities may tokenise property, which platforms may trade tokens, and who supervises them.
- Eligible property and investors: Whether any categories of property, location or investor (including non-Qatari investors) are excluded or restricted.
- Nature of the token right: The precise legal rights a token confers, and how they relate to the title deed and to co-ownership rules.
- Investor safeguards: Disclosure duties, custody, dispute resolution and treatment of tokenholders if the underlying asset is sold or encumbered.
- Fees and taxes: Registration fees, transfer charges and tax treatment of token transactions.
The Tokenisation Law is still a draft, and no specific timing for its enactment has been announced. However, the proposed framework signals a potential expansion of the ways investors can participate in Qatar’s real estate market.
