Tokenization YES, Fractionalization No (Not Yet): Why Dubai’s RWA Approach Is Missing the Point.

The recent announcement that a fractionalized apartment in Dubai sold out in under two minutes has gone viral. To many, this looked like a major breakthrough.
To me, it’s a warning sign.

Everyone is hyped about owning $5 of a property in Dubai. In my opinion it is wrong doing — especially for retail investors who don’t understand what they’re buying.

Because here’s the truth:

Why the Distinction Matters

Tokenization is the foundational shift. It’s what turns real estate from a paper-based, jurisdiction-locked, multi-month ordeal into a digitally native, programmable asset class.

Let’s break down what tokenization actually enables:

• Ownership becomes programmable. Smart contracts can encode rights, constraints, and metadata into each token.

• Transfers become seamless and trustless. Buyers can send stablecoins directly to a contract, which automates ownership transfer, escrow, and verification.

• Assets become composable. They can be plugged into DeFi protocols for lending, collateralization, or yield strategies.

• Records become immutable and transparent. No more back-and-forth between notaries, brokers, and registries.

This isn’t an upgrade. It’s a new operating system for real estate.

And fractionalization, while enabled by tokenization, is just one application of it — and not one that should be rushed into.

The Governance Trap of Fractional Ownership

The common pitch goes like this: "Own part of a property and participate in the upside."

But here’s what often gets ignored: real estate is not a passive asset.

It requires management decisions — maintenance, rental strategy, renovations, marketing, and exit planning. Giving hundreds of micro-investors the right to vote on these decisions may sound democratic, but it creates operational gridlock.

This is why corporations issue non-voting shares. And it’s why tokenized property should follow the same principle. Token holders should receive economic exposure — not operational control.

Early-stage projects that ignore this are setting themselves up for chaos.

The Real Danger: Regulatory and Economic Misalignment

What’s more concerning is the blurring line between fractional ownership and securities.

When you sell tokenized fractions of a revenue-generating property to hundreds of passive investors — without utility, without governance, and with an expectation of profit — you are entering the realm of investment contracts. And that comes with securities law obligations in most jurisdictions.

Dubai’s regulatory clarity is still evolving, and while their enthusiasm for innovation is commendable, using fractionalization as a headline grabber without addressing these deeper implications is short-sighted.

Retail investors rushing into these offerings risk legal ambiguity, illiquidity, and a lack of real understanding about what they own — or what they can actually do with it.

When Fractionalization Does Make Sense

To be clear: I’m not against fractionalization. In fact, it will play a critical role in the future of real estate investing.

But it should be used where it makes structural sense.

Fractional ownership works well in collective investment models — for example:

• Cooperative investments in commercial or multifamily buildings

• Condotel structures, where revenue-sharing is integral and management is centralized

• Timeshare models reimagined through NFTs, where access, scheduling, and profits are coded into tokens

• Community-led acquisitions, where stakeholders want joint control and shared outcomes

In these cases, fractionalization supports collaborative governance and aligned interests.
But applying that same structure to every single apartment or villa — without strategy, without UX maturity, and without regulatory guardrails — is a recipe for confusion and liability.

Fractionalization isn’t democratization if it’s just marketing.

Why We’re Taking a Different Path

At Propex, we believe in building the infrastructure first — not chasing headlines.

We are focused on tokenizing full properties, with clear rights and responsibilities, initiated voluntarily by sellers and buyers who understand what they are exchanging.

From there, once assets are on-chain and legally structured for composability, we can introduce fractionalization as a secondary feature — a way to unlock liquidity, not as the product itself.

That means doing things step by step:

1. Establish clear ownership with clean legal wrappers (clear operating agreements, on-chain metadata).

2. Enable seamless digital transfer via smart contracts — reducing cost, time, and error.

3. Allow secure onboarding of buyers and sellers, supported by custody or self-custody.

4. Introduce fractionalization only when governance frameworks, secondary market liquidity, and compliance tools are in place.

We’re not anti-fractionalization. We’re anti-fragile hype.

The Real Goal: Unlock Dormant Value

The endgame is not to turn every villa into a crypto co-op.
It’s to unlock the trillions in dormant capital trapped in global real estate.

Tokenization makes real estate accessible. It enables instant transfers, real-time collateralization, and seamless integration with global capital flows.

That is the revolution. Not slicing apartments into 1,000 tokens and pretending we’ve reinvented ownership.

Final Thoughts

Tokenization is the foundation.
Fractionalization is a feature.
Governance is not a right — it’s a design choice.

If we confuse these concepts, we’ll end up with bloated platforms, misaligned expectations, and vulnerable investors.

But if we get the foundations right — the rest will follow.

Fractionalization will come.
But let’s not pretend it’s the starting point.