The way how investments are made in properties has changed forever with the emergence of the phenomenon of Tokenized Real Estate. It provides a lot of benefits like access to fractional ownership, fast processing of transactions, efficient price discovery, sufficient liquidity, and maintenance of a high level of transparency.
For several centuries, access to real estate was reserved for elite investors and the small investors could hardly have a good opportunity to buy a property. With the rise of Real estate tokenization, one can invest small amounts and get a fractional stake in the property. This reduces the chances of discrimination ensuring an equal playing field.
The Key Players When You Decide to Tokenize Your Real Estate
- The sponsor is also known as the general manager and has an interest in tokenizing the property.
- The transfer agent issues and manages the various digital assets efficiently ensuring maximum returns and fewer risks.
- A compliance solution provider that undertakes KYC/AML verification of all the investors to ensure a high level of safety and authentication.
- Alternative trading systems that act as well-organized platforms for the smooth trading of digital assets.
What to Expect from Digitizing Real Estate Assets in 2021?
- Tokenization will witness more adoption if progressive regulations are implemented by authorities as it will provide a lot of clarity.
- More cooperation is needed between property developers, blockchain developers, financial institutions, governments, and regulatory bodies to increase the potential of Tokenized Real Estate.
- Property offers numerous sources of income like rent, interest, dividends, voting rights, and a stake in the equity.
- Any kind of property like commercial, residential, and industrial can be tokenized efficiently. Local investors can invest in real estate located in other countries.
- Split ownership allows small investors to grow their income with fractional investments in property.
- Wealthy investors can effectively diversify their portfolio by putting money on numerous properties around the globe.
- An exclusive investor dashboard to track the inflow of funds on a real-time basis.
- A share cap table that displays the total capital raised so far and the nature of ownership such as equity stake.
- The availability of digital stock certificates that serve as proof of ownership of tokens for the investors.
- Automated trading facilities like rent collection from tenants, payment of interest, and dividends to the property owners.
- An integrated voting system where property developers can take important decisions.
- A renewal option for lost tokens by freezing the investors’ ownership.
- A dedicated investors forum where issues can be discussed.
- Integration with numerous payment gateways or payment service providers for the smooth processing of transactions.
- Automated deposit and withdrawal facilities for the property investors.
- Instant alerts carrying important information are issued round the clock.
- API integration to enhance operational efficiency.
The Best Countries for Doing Real Estate Tokenization
- United Arab Emirates – The Gulf nation is offering lots of properties in Dubai and Abu Dhabi for sale in Bitcoin. The Dubai Land Department has created a secure blockchain network to store all the details of real estate contracts. It also takes care of banking, mortgage, maintenance, and dealing with issues faced by landlords and tenants. Property developers are signing the sale and purchase agreement in the Dirham fiat currency. The regulations issued by the Securities and Commodities Authority are followed for trading in crypto assets.
- Hong Kong – LABS Group that offers a platform for real estate investment powered by blockchain technology has joined hands with Centrifuge, a DeFi company for providing property-backed lending to developers in the form of low-cost capital. Users benefit from governance rights, access to LABS tokens, exciting discounts and incentives on loans, high liquidity, and rewards through staking.
- Singapore – The Monetary Authority of Singapore (MAS) regulates securities and capital market offerings under the Securities and Futures Act. Shareable Asset Pvt Ltd, a real estate platform received the license to start its tokenization platform in the country. Investors can put their money on properties with a minimum investment of 100 Singaporean dollars.
- Germany – BitBond, a digital asset custodian platform has teamed up with Klickown, a decentralized property marketplace to tokenize residential real estate assets on the Stellar blockchain network in the town of Lunenburg. The Federal Financial Supervisory Authority (BAFin) regulates property tokenization and also approves the issue of STO’s in Germany.
- USA – Platforms like RealT offers fractional investment opportunities for property buyers in the US market. 24×7 trading facilities are offered with the immediate settlement and a high level of transparency. Authorities like the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) monitor real estate tokenization in the country. The landlords get periodic rent payments, voting rights, and the platform takes care of the maintenance and repair works.
As seen above, Tokenized Real Estate will upgrade the functioning of the industry and benefit all the stakeholders. It needs progressive regulation to witness more adoption and enter the mainstream economy in the future.