Real Estate Tokenization has become the gateway for the industry to adopt modern technologies. It has created a democratic market where every stakeholder has equal access. Since properties are the largest asset class in the world, tokenization will lead to positive transformation.
More awareness has been witnessed regarding the recognition of security token offerings with regulatory bodies passing progressive guidelines leading to greater benefits for investors.
Some Compelling Reasons Why Tokenized Real Estate Will Skyrocket This Year
- The market has matured a lot now and more interest has been received from institutional investors.
- Real estate offers stable returns in the form of cash flow, rent, interest, and dividends in the long run and fewer risks.
- In the USA, the SEC (Securities and Exchange Commission) has allowed companies and startups to raise up to $5 million in capital enabling easier and hassle-free fundraising for launching a Security token offering (STO).
- Decentralized exchanges are getting a lot of trading volume these days and that has established a robust secondary market for the investors to exchange the security tokens efficiently.
- Liquidity has improved a lot and trades are getting executed in a short time.
- Fractional ownership is offered where a specific share in the property can be acquired by investors. The entry costs have been significantly reduced now.
- Tokenizing real estate will help in digitizing property management, rental collection, property maintenance, investor management, and property search.
The Latest Projects in Tokenizing Real Estate
- SolidBlock is planning to launch a real estate STO in Thailand soon. They are targeting tourists who stay in beach resorts and hotels in partnership with Blue Horizon, a well-known property developer in Phuket.
- Vonovia, a German real estate company came out with a $24 million bond on the Stellar blockchain network that represents property ownership rights. They collaborated with Firstwire, a digital marketplace for issuing the tokens.
- SimbCoin representing an African smart city named SimbCity is an ERC20 token where owners can purchase stakes in apartments and receive a regular source of passive income. The token will be available to buy on the LATOKEN Cryptocurrency exchange.
- Tosei, a Japanese real estate company has teamed up with Tokai Tokyo, a financial services company to digitize securities representing their office buildings in Japan. It can be purchased by prospective investors via the Singapore located iSTOX exchange. They are aiming to tokenize their rental income from around 102 properties.
- BTG Pactual, an investment bank in Brazil launched its token named ReitBZ on the Tezos blockchain network. Small investors and institutional investors can get access to the Brazilian real estate market.
- Securitize, a digital security issuance platform established a real estate tokenization platform for the Japanese market. They partnered with Lifull, a housing information listing company for the project. The benefits include a reduction in operational costs, automated distribution of security tokens, real-time dividend payments, and immediate redemption of tokens. The tokens can be easily traded in the secondary markets by investors through the ds protocol.
- Kasa Korea, a blockchain startup, has teamed up with SK Securities, a financial services company to build a real estate tokenization platform. They have already tokenized a property in Seoul. Digital securities worth $9.1 million will be offered to the interested investors.
- Bauwens, a construction firm in Germany has invested 6.7 billion euros in Fundament Group, which offers real estate tokens to investors putting money in properties located in Germany.
- The real estate market in Mexico is bullish about the future of tokenization. MountX, a real estate company, and Vertalo, a platform for digital asset management will launch tokens for 15 projects in Mexicos soon. They are aiming to attract non-accredited and foreign investors to invest in different properties.
- Tokenized real estate has also emerged in the large Indian market. A 1 million square-foot campus in Cyberwalk, Gurugram will be digitized on the DigiByte blockchain soon.
- Woori, a global bank in Seoul is in the process of launching a blockchain-based real estate fund. Woori will render assistance in financial structuring and manage all the funds raised from investors.
- Emaar, a UAE-based real estate company, is going to tokenize its property with the Swisscom Blockchain. The token can be easily redeemed by investors at hotels, shopping complexes, and e-commerce platforms.
What to Expect from Tokenized Real Estate in 2021?
Real estate tokenization provides a lot of advantages like complete decentralization, creation of a trustless ecosystem, fractional ownership, and liquidity. Proptech will witness more adoption this year. More focus will shift to residential management and facilities management. While the industry has given more preference to enterprise clients and institutional investors so far, they will give importance to retail investors now.
The industry will recover from the onslaught of the coronavirus pandemic as offices and hotels open up. Blockchain technology will be increasingly used as it ensures top-notch cybersecurity and safety while executing transactions. It has witnessed double-digit growth last year when compared to other traditional investment avenues and the trend will continue in 2021.