Analyzing How Tokenization Can Make a Big Impact in Real Estate

Real estate tokenization is a game-changing trend where properties will be converted into digital tradable tokens, represented on the immutable blockchain network, and offered to potential investors in the market. 

 

It can sort out the liquidity and transparency issues existing for a long time in the traditional Real estate industry. The process involved is asset identification, smart contract development, token creation, token distribution, listing tokens on exchanges in the market, and providing post-listing technical support to the investors. Any kind of property like residential, commercial, industrial, and agricultural can be tokenized effectively. 

 

It offers profitable fractional ownership opportunities to investors, better portfolio diversification, and easy capital raising for property developers. In December 2020, The tokenized real estate market cap was $25.75 million. 

 

How Tokenized Real Estate Will Perform in 2021?

 

  • Due to the coronavirus pandemic, digitization has accelerated and physical meetings have been replaced by online video calls. 

  • Tokenization eliminates a large number of intermediaries like brokers, banks, lawyers, and agents enhancing operational efficiency and cutting down various overhead costs. 

  • Blockchain technology will help in the quick execution of peer to peer transactions and lead to complete automation. 

  • It improves access for small investors as they can gain a lot of flexibility by investing in small shares at an affordable price. 

  • The tokens can be easily traded in the secondary markets and the leading Cryptocurrency exchanges. 

  • It also reduces the high liquidity premiums and payment of the land transfer tax. 

  • Real estate tokenization will lead to a transition from the traditional stock market to a global token economy. 

  • Risks of fraud, scams, and manipulation as a high level of transparency is maintained by the distributed ledger. 

  • It can take care of different aspects like property management, due diligence involved in pre-lease, title management, and cash flow management. 

  • The security token market can overtake the value of cryptocurrencies soon. 

 

The Promising Tokenized Property Projects to Watch Out for This Year 

 

  • Jointer is a commercial real estate and DeFi-based project launched on the Binance Smart Chain (BSC). They conduct auctions daily on the platform where investors contribute funds and purchase the JNTR token. The owners of the property will benefit from regular rental income and appreciation in the value of the real estate. It offers double the returns when compared to a Real Estate Investment Trust (REIT). Smart contracts handle all the business activities. The tokens can be bought only at the auction and there are no secondary markets. There is a dual bonus structure for investors split into a group bonus and an individual bonus. The biggest benefits are minimum capital risks, no chance of market manipulation, and trading is done only with accredited investors. 

  • KlickOwn AG is tokenizing various properties located in Germany on the Stellar blockchain network. The tokens will fetch the investors a good source of rental income. The advantages include real-time tracking of the performance of investments, full flexibility, and a minimum investment amount of only 10 Euros. Access is provided for investors to commercial, industrial, and residential properties.

  • REINNO,  a Fintech company that specializes in property investment, tokenized $105 million of property owned by REI Capital Growth, a real estate investment enterprise. The investors can easily sell the tokens in secondary markets and get returns instantly. Equity tokens offer more growth opportunities and debt tokens ensure a consistent inflow of revenue. 

  • Veritran, a Fintech platform specializing in the maintenance of real estate investment vehicles offers seamless execution of payments through digital banking facilities. It provides both retail and business banking services. The benefits comprise quick integration and adequate flexibility. 

  • Vave offers tokenized real estate investing opportunities for investors. The Vave REIT token offers dividends and cash flow to the buyers. The returns offered amount to 9% Annual Percentage Yield (APY). The advantages are asset swapping facilities, minimum entry costs, participation in the governance of the platform, fractional ownership, and more liquidity. It also offers whitepaper preparation, escrow management, accounting, marketing services, legal auditing, and conducting KYC/AML verification of the investors. 

  • Brickken is a platform that bridges the gap between property owners and interested investors. They offer trading facilities, private wallet management, escrow management, due diligence, and technical support flexibly. 

 

As seen above, Property tokenization will help in transforming the entire industry and benefit all the stakeholders. More progress is needed in passing friendly regulations and upgrading cybersecurity. Awareness among investors is also less. It will sort out the historical problems in the industry leading to better efficiency. Real estate tokenization will lead to a new era in investments as tokens can be bought and sold in a few seconds.

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