A Brief Analysis of Property Tokenization- the Future of Real Estate!

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property tokenization

Real estate investment is a common goal for at least one in ten people. For any commoner, real estate is one of the most important pillars of wealth building and securing the future of their family. Reports say that the primary real estate, family home building comprises 2/3rd of a family’s wealth. And in the modern era, with technology paving its way through almost everything in our day to day lives, and transforming businesses, how can real estate, one of the most crucial industries, be left behind?

One of the most resourceful technologies that are making a huge impact on the real estate industry is blockchain. Although blockchain is still at a relatively preliminary stage, it is already being widely explored for miscellaneous applications in real estate, out of which, the most crucial one is tokenization. So what is meant by property tokenization? Why is it an emerging trend? Let’s take a look!

Property Tokenization- A fleeting look!

Tokenization allows real estate property owners to convert their property value into digital tokens and distribute them through a blockchain platform. The tokens represent the value of an individual underlying asset or a portfolio of different assets.

Investors can purchase these tokens, and by doing so, they own partial shares of the property. This paves way for them to take part in cash flows and boost their asset value. It is up to the investor to create any number of shares they want for the property, and they can sell them through various online markets.

Why is tokenization of properties gaining traction?

As we discussed earlier, real estate is indeed a lucrative investment, but it comes with its own set of inconvenient drawbacks. The first and foremost issue faced commonly by real estate investors is the illiquidity of assets, followed by, constantly increasing property values and affordability, too much involvement from third parties, long, tedious paper documentations, natural disasters, and climatic conditions, etc. Property tokenization, once and for all, provides a solution and transforms the way real estate operates.

By tokenizing your property, you avail benefits such as enhanced liquidity, instant transactions at reduced costs, improved and efficient global access, direct peer-to-peer transactions without involving third parties, fractional ownership that paves way for more participation, including small-time investors, etc. Author Ryan Serhant mentioned in one of his tweets about the benefits,

“With blockchain tokenization, we can remove the unruly pressure of traditional bank financing, which is much healthier for the project, and all of the stakeholders”

The CEO of Brickblocks said,

“Once a property, real estate fund, or financial instrument is tokenized, the real advantages come into play: subsequent transactions are instant, nearly free of charge, and, if done properly, without counterparty risk, this is an absolute game-changer for the industry.”

There are plenty of other examples and use-cases to prove how tokenization of real estate assets benefit and reshape the industry. If you are still not firmly convinced with tokenizing your property, let’s take a look at some interesting numbers of how tokenization is revolutionizing the industry.

Tokenization- Growth, and Future!

  • Reports say the global real estate investment market expanded from $7.4 trillion in 2016 to $8.5 trillion in 2017.
  • In the year 2018, the first property in Manhattan, which was worth $30 million was tokenized on a blockchain network.
  • Mr. Barry Monies, REINNO’S chief business development officer said,

“ Tokenization is revolutionizing the industry and establishing a new model for owning, financing, and investing in real estate. We are taking the big asset class online. I have been in the real estate industry for 30 years and this might be the most exciting development I have seen so far.”

  • It is expected that by 2023, the real estate market size is set to grow from USD 983 million to USD 2670 million, with an annual growth rate of 22.1%. And by 2025, the global real estate market is expected to hit a revenue of $4,264 billion.

How to tokenize your property?

With tokenization coming into the picture, the real estate investment opportunity is wide-open! And the benefits of it and the brighter future ahead is clearly evident. If you want to be a part of this revolution and get up to speed among the massively spread competitors, the best option is to hire a real estate tokenization company!

Our experts from Blockchain App Factory, are early birds of the property tokenization services business, and they will assure you the most robust, qualified services that will turn huge profits for your real estate business. To tokenize your property to know more information on this fruitful business opportunity, get in touch with us!

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