Saudi developer to sell utility NFTs on its $1.6bn Oman project

daralarkan.com/press

Saudi Arabia’s largest listed real estate developer plans to drop a limited number of utility non-fungible tokens (NFTs) for its $1.6 billion project in Oman next month.

Unlike the art and collectibles digital asset, utility non-fungible tokens (NFTs) are built to give their holders certain perks, such as exclusive access to events and items or the opportunity to earn passive income.

“We are dropping 500 NFTs in the middle of October, which are utility tokens for our project AIDA in Oman,” Ziad El Chaar, vice chairman of Dar Al Arkan Real Estate Development, told AGBI.

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“If you are a holder of that NFT, you have a priority in booking in any launch of the project. This has a lot of value.

“People who booked in our Dar Al Arkan Pagani project in December, for example, made 25 percent already [since the prices went up].”

The NFT will also give holders other advantages in the development, such as priority booking at hotels or at the golf club, El Chaar added. 

NFTs are unique cryptographic tokens that exist on a blockchain, cannot be replicated, and can represent real-world items like artwork and real estate.

AIDA, one of the largest premium, mixed-use urban developments in Oman, is a partnership between Dar Al Arkan and the Oman Tourism Development Company (OMRAN Group) to drive the development of the Gulf state’s property market and support the growth of Oman’s real estate sector as part of Oman Vision 2040.

Located in the Yiti area of Muscat, overlooking the Sea of Oman, the project will feature 3,500 residential units of medium-sized villas, townhouses and low-rise apartments, two hotels, a plaza filled with cafes and restaurants, and a gated promenade with luxury retail and other amenities.

The project will be developed in three stages, on an area of 3.5 million square metres, and marks Dar Al Arkan’s first entry into Oman.

Ownership of NFTs is concentrated to just 0.1 percent of crypto owners – a few hundred thousand people – according to 2021 data from blockchain analysis platform Chainalysis.

Critics argue that finding a genuine real-world use case for them is still a challenge for brands.

Experts told AGBI earlier this year that as more Gulf brands venture into the space, customers need to be careful not to fall for fear-of-missing-out (FOMO) syndrome and jump on the bandwagon without fully understanding what they are buying into.

Echoing the warnings, El Chaar stressed that while tokens continue to attract hype and sell for large sums, they must have utility.

“Most NFTs [are like] ‘I’m Snoop Dogg [and] I’m launching an NFT’, [or] you have some fashion brands that launched NFTs,” El Chaar, the former managing director of Dubai real estate developer Damac Properties, said.

“But what does it do? It doesn’t do anything. It’s a collectible. I paid $10,000 for it. I don’t know what to do with it. Even if I try to sell it, I cannot sell it.

“Our NFT has a utility and it can be redeemed. And at any time if you say I don’t want this token anymore, you can put it as a down payment on an apartment or a villa. We will redeem it for you for a purchase.”

Irina Heaver, a blockchain and crypto business lawyer, said that potential buyers must recognise that crypto assets are highly volatile.

“The second there’s negative news, these assets drop in price immediately because they’re so volatile,” she said, citing the example of Twitter founder Jack Dorsey’s NFT of his first-ever Twitter post that sold for a whopping $2.9 million but drew bids of only a few hundred dollars at an auction a few months later – a 99 percent plunge in value.

“People have to be very careful about how much of their net worth they are allocating to crypto assets,” she added.

According to blockchain data platform Chainalysis, NFT spending continues to soar in 2022, with $37 billion already sent to NFT marketplaces so far this year, putting them on pace to beat the total of $40 billion sent in 2021.

Dar Al Arkan saw its profit spike by 675 percent during the first quarter of 2022.

The firm’s profits hit $59 million, compared to $7.7 million during the same period last year, attributing its performance mainly to higher property sales and reduced operating expenses and finance costs.