Real Estate Tokenization

Real Estate Tokenization in Dubai

One of the projects was realization of real estate tokenization in Dubai. At the time, Real Estate Regulatory Authority forbid more than four investors in one real estate object. We offered our client perfect solution - every object will be owned and managed by Special Purpose Vehicle (SPV). SPV is a legal entity which owns real estate. So every token represents your shares in such a SPV. Then SPV hires special manager to make sure that property managed in the right way to maximize revenues from the property. Using modern and convenient platform every person can be shareholder and make money by receiving dividends.

During the investment period, in the event of a sharp change in market conditions, the manager raises the issue of selling the property. The average investment period is 3-5 years, after which, at the end of the investment period, the property will be sold and the investor's share of the proceeds from the sale (after deducting all relevant transaction costs) will be distributed among all investors in accordance with their ownership of the SPV (number of shares). At this point, the user's investment is considered redeemed (at profit or loss) and the SPV will subsequently be liquidated.

• It is necessary to establish a Dubai company.
• Company must have a license from Dubai Financial Services Authority (DFSA).
• No person can hold more than 33% of one real estate object.
• Users shall surpass strict AML/CFT procedures.
• Investors make decisions regarding the property and receive income depending on the number of tokens they hold.

Real Estate Tokenization in USA

Manimama stands as a long-term and thrusted legal advisor of the fabulous property tokenization platform Binaryx. This is a marketplace where users can buy and sell their property tokens. Tokenization is a process of transferring ownership of real estate to blockchain. Each user can view and buy the objects that are already available for sale and/or put up his own fraction of tokenized property for sale. Data on the Marketplace comes from the blockchain and a system of oracles, providing users with all the necessary and up-to-date information, including ratings, historical performance, and expected returns of each tokenized property.

Any holder of property tokens can easily sell his tokens to other users on the Marketplace. Tokens are member units of a specific legal entity formed as a decentralized autonomous organization (DAO). This is a form of organization in which coordination is carried out without centralized control but using some automated algorithms (such as those implemented in smart contracts). Token holders will become the owners of the property owned by their DAO LLC, which has the property's title deed registered to it. DAO LLC has a separate property ownership and legal structure which protects members and holders of tokens.

Such business may operate in accordance with the SF0038 law, adopted in the state of Wyoming, USA, in 2021. It allows for the creation of companies with multiple co-owners from around the world, with ownership being formalized in a few clicks. For each property, a new legal entity (LLC) in the state of Wyoming, USA may be incorporated. By investing in the property, investors become co-owners of this legal entity.

When the property collects the full amount of investment, it gets transferred to the ownership of the registered legal entity. This way, investors become co-owners of this property. The ownership rights are recorded in a public and secure registry (blockchain). Each company is managed by a specific smart-contract and its address is public and included in the corporate documentation of each Wyoming DAO LLC. Any deals and transfers are done in accordance with US laws.

• It is necessary to establish a DAO company in Wyoming or other jurisdiction which is.
• There is no need to obtain any license.
• Users shall surpass strict AML/CFT procedures.
• Investors make decisions regarding the property and receive income depending on the number of tokens they hold.
• Tokens may be sold on different platforms and exchanges without loss of their value.

Crowdfunding in real estate tokenization

Crowdfunding is a way of raising money to finance projects and businesses. It enables fundraisers to collect money from a large number of people via online platforms. Crowdfunding is most often used by startup companies or growing businesses as a way of accessing alternative funds. Crowdfunding is the licensed business all over the world and we can suggest many comfortable jurisdictions to incorporate a Crowdfunding platform.

Solution 1. Establishing an European company with a crowdfunding license.

According to art. 3 Regulation (EU) 2020/1503 on European crowdfunding service providers crowdfunding services shall only be provided by legal persons that are established in the Union and that have been authorised as crowdfunding service providers. According to art. 12 a legal person who intends to provide crowdfunding services shall apply to the competent authority of the Member State where it is established for authorisation as a crowdfunding service provider So, if you create a company in Europe, it's legally required to have a license in the country where the company is established.

Solution 2. Establishing a new local company with a crowdfunding license in Canada.

We suggest incorporating a new company in Canada in order to avoid falling under the EU regulation. By shifting a focus away from the European market, it makes possible to minimize regulatory requirements and operational risks while still capitalizing on the less strict Canadian regulations. The Canadian regulator allows us to work with clients outside of Canada and we can assist in launching such a company.

Solution 3. We are ready to create a digital platform for partial investment in real estate, which is based in Dubai (hereinafter referred to as the Platform/Stake). Using such a platform, the user can easily invest any amount in the property that is listed on the platform. UAE gives a variety of tools for incorporating an investment. For example, it can be a company registered with the Dubai International Financial Center (DIFC) and regulated by the Dubai Financial Services Authority (DFSA). Such company may obtain a crowdfunding license and support the incorporation of SPV (special purpose vehicle) for each property listed on the platform namaged by the Dubai company.