Trump Organization wants to crowdfund new luxury Maldives resort built with Saudi partner using digital tokens. Here's what investors should know

The resort, which is set to open by the end of 2028, will have approximately 80 ultra-luxury beach and overwater villas and be located 25 minutes by speedboat from the capital Malé.

Dar Global, a Saudi luxury real estate developer headquartered in Dubai and listed in London, has partnered with the Trump Organization in this venture.

“This pioneering collaboration not only brings the Trump brand to one of the world's most exclusive destinations but also introduces an unprecedented financial innovation, tokenizing the development of a luxury hospitality project for the first time,” says the press release.

Ziad El Chaar, CEO of Dar Global, says the project will “transform how the world invests in hospitality.”

For some, the ability to jump into a luxury hotel development investment might seem appealing.

But the question remains: Is this a great opportunity or a big mistake for everyday investors?

How would this deal work for investors?

According to The Wall Street Journal, the Trump Organization says investors’ shares will be logged on a digital blockchain, which is a kind of ledger that tracks cryptocurrency transactions (1).

As of now there is no clarity on whether investing in this project grants you a part of the profits once the hotel opens.

It’s unusual for everyday investors to have the option of investing in this type of high-stakes real estate deal, especially before construction is complete. Usually only high-net-worth investors with the right connections could even dream of claiming a stake in this type of project.

However, the idea of tokenizing real estate investments isn’t unique to this project. The market of tokenized real estate could reach $4 trillion by 2035 from the current size of under $300 billion, according to a Deloitte Center for Financial Services report covered by CoinDesk (2).

But it’s critical to note that this type of investing is very new and fraught with plenty of risks. With security vulnerabilities and regulatory grey areas, it’s easy to see how jumping into this type of investment could easily go sideways.

What to know before jumping in

It’s easy to get caught up in the glamour of investing in a Maldives mega-luxury resort associated with the sitting president’s family. But every potential investor should carefully weigh the risks and rewards before buying into the deal.

For starters, like all cryptocurrency investments, there is some level of security and operational risk baked in. Theft of crypto assets is a significant risk, according to the Financial Industry Regulatory Authority (FINRA). While storing your private crypto keys in reputable hardware wallets and enabling two-factor authentication can help to protect your investment, risk of loss remains.

Beyond losing your digital investment to a bad actor, regulatory uncertainty surrounding this deal and real estate tokenization as a whole is a looming issue.

You may also be unable to sell your token on the secondary market if you need to. Like most crypto investments, extreme volatility may come into play. Crypto valuations are known to swing up and down in swift fashion, which might hurt your investment portfolio at a moment when you least expect it.