Tokenization of real estate is a contemporary extension of conventional fractional real estate ownership. It can be thought of as a crowd-funding tactic, which breaks up the value of a real estate investment into smaller chunks to overcome most of the investment barriers. Every fraction of the asset is converted into a token.
Each of these tokens is encrypted
with all the pertinent details that grant ownership to the investor based on their share percentage in the property. For instance, real estate worth $100 million can be broken down into as many as 100 tokens, each worth a million
. The tokens can then be procured at their ascertained value and can even be displayed on a secondary exchange.
Real estate happens to be one of the world’s largest asset classes considering the level of investments. However, the number of real estate investors does not correspond to the staggering $280 billion worth of assets worldwide. This is because the capital needed isn’t affordable for small-scale investors. Secondly, real estate calls for inefficient paperwork. There are rising concerns about transparency in dealing with assets. An attempt was made in the early 1960s to attract investors and change the illiquid asset status of real estate with the establishment of the REITs (Real Estate Investment Trusts). A single property was split into multiple parts; each being owned by the multiple investors who pooled in the capital, an act that can be considered a precedent for tokenization in real estate.
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The pandemic has affected the economies worldwide. Protection against inflation is the main goal for both institutional and retail investors. The foolproof way to stay afloat in the present economy is to invest more in scarce assets, real estate being the most lucrative of them all. The capital needed for real estate investment is well out of reach for most retail investors.
Tokenization is an advancement of REIT and is aimed at eliminating most of the problems encountered with this model by utilizing blockchain technology. Currently, only tokenization seems to be the most feasible option for most investors. Some of the obvious reasons supporting tokenization of the real estate are:
Tokenization Enhances Liquidity
One way to enhance the value of any asset is to overcome its lack of liquidity
. Real estate liquidity can be enhanced by tokenization as it can eliminate middlemen
and the heavy transactions otherwise encountered.
Tokenization Improves Transparency
The bankability of real estate improves considerably with blockchain technology overseeing the market sentiment, financial fronts, social environment, and operations. Future trend prediction is more reliable using the multifaceted technology employed in the process. The need for prior due diligence by the investor is nearly eliminated, which would otherwise be time-consuming and costly.
Tokenization Paves Paths for New Channels of Capital
Investor access, especially for small-scale investors, is increased with tokenization. Smaller fractions of large properties are more affordable and open up new possession avenues for the retail investor. Besides, tokenization over blockchain frees investors from territorial barriers.
Tokenization Decreases Counterparty Risk
The longer the chain, the weaker it may be. Smart contracts
used in tokenized real estate investments eliminate the middle-man, allowing only peer-to-peer transactions to proceed. This significantly lowers counter-party risk and boosts the confidence of small-scale investors.
Tokenization Enhances Efficiency
Digitalization of the process, greater automation, smart contracts, and lack of third-party involvement reduce the strain on the investor. No paperwork is involved and the transaction times aren’t more than three days. Crypto exchanges are functional around the clock, so there are no breaks during the process.
Here are eight of the top tokenized real estate projects of 2021:
is an automated real estate platform
where the main aim is to enhance convenience while maintaining their client’s peace of mind as they process tokenized land that best suits their customer’s needs.
form the basis for the efficient and transparent dealings of the project. The clientele catered to by the project includes both retail and institutional investors
Propy uses PRO as its native token that has been built on the Ethereum platform. The project believes in the inevitable tokenization of real estate and offers the Crypto Real Estate Agent certification to train new investors. Specific courses pertinent to smart contracts and blockchain can be availed. At the end of each certification, an exam is conducted for knowledge assessment.
The LABS group is one of the leading names in real estate tokenization. These utility tokens are based on the G.A.I.N.S. model:
A-Access to projects
N- Nomination of rights
S- Staking for rewards
The LABS group aims to make realty investment feasible for all kinds of investors. Possession can be acquired for as little as 100 USDT,
Users can become owners of a small island in Indonesia with LAB tokens. Kunang Kunang Glamping Resort in the heart of Indonesia is the latest project the LABS group is currently working on. The soft opening for this private, luxury resort is expected at the end of 2021.
The introduction of end-to-end crowd-funded projects by the LABS groups makes the organization an attraction for crypto users. Using smart contracts, concerns about transparency and communication between the investors have been addressed. The application of blockchain technology means every aspect of real estate investment with the LABS Group is efficient and backed with expert research. Investors are issued NFTs
for every real estate investment with the LABS group.
IHT Real Estate Protocol
IHT Real Estate Protocol
emerged as a tokenized real estate investment platform to enhance the liquidity
of the asset. The project’s motto is to increase and diversify the capital sources for reliable real estate investments worldwide. Its token is listed on three exchanges: HitBTC, Gate.io, and CoinW.
IHT is the union of blockchain and global real-estate in the pursuit of a “digital credit society”. Tokenization can disrupt the asset and reduce the discrepancy between the owner and the user.
An Asset Tokenize Offer (ATO) is issued by the asset party generating the split of the real estate. IHT notes the split in its kernel ledger. IHT requires the developer to disclose complete details of the asset including the area, ownership, and other relevant information. Investors can use the products of the split displayed on the IHT platform and subscribe to the ATO shares based on suitability. Instant liquidity can be expected because of the secure and quick transactions.
IHT aims at tokenizing $50 billion in assets and including tokenized lands from other parts of the world such as China, Europe, and Australia. With the digitization of real estate ownership, investors can expect 100 % transparency and a shortening of the listing cycle.
is one of the latest tokenized real estate platforms powered by blockchain. They developed a secure and regulated digital securities exchange forum, Uvas.com. This may help the project understand risks and the investment barriers better than most.
With the introduction of the digital asset exchange platform, Redot, ATLANT is fulfilling the pre-requisites for the envisioned future of the market.
allows owners to upload pictures, documents, and important details of their real estate and issues a unique NFT for it. These NFTS have real-world estate data. This allows the digitalization of property that is then tokenized and put up for acquisition by the users of the platform. Eliminating the intermediary increases liquidity of the asset and enhances investor confidence in their choices.
ELAND is its native token which is being traded on Uniswap, Pancakeswap, and Bilaxy. A designated mobile application is used to build a property profile and a unique Land ID.
One of the distinct attractions in Etherland is the diverse data associated with issued NFTs. Users can choose to simply opt for images as the information of the asset which makes the exchange secure and safe from undue regulation. The NFTs issued using the ELAND coins are linked to the IPFS
(InterPlanetary File System
With Etherland tokens, investors can tap into the distinct real estate wiki called Etherland Estatepedia. This database contains all the required information about the assets registered with their assigned LAND IDs. Many of the world’s most famous monuments are also listed on the Etherland Estatepedia for ownership, such as the Eiffel Tower and the Tower of Pisa.
The project claims to be one of the pioneers of the change in the real estate ecosystem. Imbrex is based on the Ethereum blockchain and the motivation behind it was to give owners complete control over proprietary details and the resultant leads. Elimination of the intermediary was possible by decentralization of the marketplace through blockchain. InterPlanetary File System (IPFS) based information exchange makes transactions, data, and ownership more secure than ever.
Imbrex asserts to be a great choice if an investor wishes to save money as the platform doesn’t charge its users for the services. The only additional cost incurred is Ethereum’s transaction fee. Locally, Imbrex has more than 2,200 project listings and is working its way up to expand to include global assets.
The ‘U’ in United stands for utility. Envisioning the future, the project is all set to launch the world’s first crypto city. UTED
tokens could be used for anything, from buying groceries to investing in tokenized real estate.
United just launched the U-Cube platform that aims at removing investment barriers and increasing crypto asset classes for UTED users. Crowdfunding on U-Cube increases the liquidity and is more inclusive for retail investors.
Recently, the project listed more than 300 apartments on www.u-land.com
ready for possession. UTED tokens can be used to own and invest in these properties without a hassle. Currently, United platforms only accept transactions in UTED and BTC tokens. Diversity in the future can tap into the full potential of the immutable
(SYBC) is a new project in the digitized ecosystem. The platform strives to specialize in rejuvenating unwanted land into commercial and residential buildings. SYBC tokens can then be used to either invest in tokenized projects or to acquire complete ownership.
Bitcoin, USDT, and Ethereum can be swapped with native tokens on the SYB forum. Complete portfolios
of the available projects are uploaded on the website where potential investors can rent, lease or purchase assets. Middlemen
are eliminated and smart contracts are used to enhance transparency and efficiency.
As Nasdaq forecasts a boom in tokenized real estate in the future, investing now would be wise. Start researching now to learn about the aforementioned projects and many more. This will help you invest in the project that suits you the best.
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