What Tokenization has to Offer the Commercial Real Estate?

By CIOReview | Monday, August 5, 2019

Tokenization is symbiotically transforming and revolutionizing the real estate industry in a way that is durable and scalable.

FREMONT, CA: The commercial real estate sector is highly relying on blockchain. Experts believe that technology can streamline everything from capital formation to transaction settlement at an unseen level of speed and efficiency. Besides, real estate is being tokenized, through which blockchain platforms can create digital representations of shares and ownership rights in properties simplifying the process of reselling those assets by creating a robust and liquid dual-sided market. Here is what it can offer.

• Liquidity

Conventionally liquidity has meant direct and immediate access to money, a concept almost unheard in the arena of real estate because equity has always secured property investment. Through tokenization and digital assets, liquidity means round the clock access, global trade opportunities, low barriers for investment, and crypto to fiat exchanges.

• Transparency

Tokenized real estate eliminates much of extensive research and comparative market analysis since the blockchain automatically and permanently records every owner’s stake in a tokenized asset. The underlying digital asset’s smart contract is embedded with their ownership and voting and distribution rights, ensuring ultimate transparency.

• Fractionalization

With tokenization in real-estate developers can sell percentages of equity in new or existing projects to fund development or pay down debt. Also, investors can participate in high-yield assets and benefit from the high liquidity of the tokenization paradigm.

• Compliance

For traditional investments, sticking to all applicable security laws and regulations is mandatory. But with digital securities and tokenized assets, compliance, KYC, anti-money laundering are already embedded into code of the smart contract on the blockchain. The result is a much faster settlement, efficient exchange, and high yield returns while remaining entirely in compliance.

Technological developments, including tokenization, will continue to change the way the real estate industry works.