Real Estate Tokenization
With Commercial Real Estate prices skyrocketing, it has become increasingly difficult for the common man to acquire any sort of property and to some may look like an investment reserved for the elites. This is what motivated the blockchain experts to come up with Tokenization Platforms that allow a property to be fragmented into shares, making it possible to acquire it piece by piece. This concept is the basis of Real Estate Tokenization as we know it.
In the current era of blockchain trends, real estate digitalization has brought unprecedented freedom to acquire property. It retrieves the power of purchase from only the rich and decentralizes real estate accumulation with the help of blockchain hence paving a path for smaller investors & planners. Now with commercial real estate tokenization, entering into the real-estate business is easier than ever.
How Tokenized Real Estate Works
Imagine not having the required amount to have a property you desire due to its value being out of your reach, let’s say $100,000. All your savings and investment combined cannot afford such a deal. But once tokenized, the same property will be split into equal shares of $1000, with the middleman being a ‘Tokenization Platform’ which seals your ownership of whatever percentage of the property you can afford with help of a “smart contract”.
A Smart Contract is automated to allot your investment (in the form of a blockchain) into the property registry if you have fulfilled the pre-requisite conditions. In turn, you are given a ‘security token’ which represents your share in the property.
So, for the above scenario, let’s assume you invested $5000 in the property shares with Ethereum (ETH) blockchain triggering the smart contract. You are then granted your security token which represents 5% of the $100,000 tokenized real estate.
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How does Real Estate Tokenization Impact the Global Market?
As the world comes to terms with blockchain offering more transparency and security in transactions of all kinds, the doorway to tokenized real estate assets is wide-open. It has the potential to essentially revolutionize how people acquire property. By allowing piece-by-piece acquisition, it democratizes real-estate investment which was previously reserved for only the richest of the rich – without any regulations or overwatch to monitor them. Let us briefly consider the impact of real estate tokenization:
Properties For Everyone, Everywhere
Unlike traditional methods of acquiring property, Tokenized Real Estate offers the chance to own fractions of real estate and gradually acquire or resale the entire share. All this based on blockchains makes acquiring property worldwide easy & the number of investors countless.
A person residing in another part of the world will also have the same access as someone living next to the property. Now the rich elite would have to compete with small investors for a share of any single property due to the fragmentation of the asset. This levels the playing field and allows for fair play.
Upheaval Of Industry Norms
Currently, the real estate operators have no firm regulating them which allows them a complete monopoly on this trade. With Tokenized Assets entering the market and the level of transparency that comes with it, the industry will face major changes in regulations, availability of property & liquidity of the assets.
Fully Tokenized Real Estate
No more false information about assets, full & transparent access to the entire real estate market, and assets tokenized under blockchain’s immutable power – all these ideas might take the world some time to get used to. But as people start to experience smooth transactions, easy access and less hassle, they will surely appreciate the benefits offered by tokenization, which will make way for globally tokenized real estate to replace or challenge the traditional real-estate business.
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Benefits of Real Estate Tokenization
1: Easy Flow
Centralized financial systems are over-regulated and often biased, adversely affecting the free flow of markets. Blockchain-based tokenization will introduce the real estate sector to a bias-free and decentralized financial system.
In the current system, some degree of control rests with each stakeholder and they collectively make decisions. Hence, removing irrational obstacles will lead to a streamlined market that provides equal growth opportunities for all participants.
2: Space for Small-Scale Investments
With tokenized real estate opening doors for the entry of small investors, the market will burgeon –flourishing off of investments from the new entrants.
This switches the entire scale of the market by making assets accessible to small investors. Large assets are reduced to tiny fractions through tokenization, making them affordable and available to individuals who are interested.
3: Counter-Offer Security
The chain of transactions is kept short and free from errors - thanks to minimal human interaction. As a result, there is a formidable reduction in risk, associated with third-party involvement. And since your offer is not processed by people, there is no chance of this information being leaked, which guarantees protection against counter-offers.
4: Secure Ownership
The blockchain ledger is available to anyone to view but no individual or firm controls or manipulates it. Distributed ledger technology (DLT) uses advanced cryptography techniques to provide top-tier security. Every user has private access to their holdings. The access key is a randomized chain of characters and symbols that is extremely difficult to figure out for anyone.
5: Time & Cost Preservation
One of the major benefits of tokenized real estate is the freedom from excessive paperwork and long queues. When assets can be acquired anytime and anywhere without any complexities, property accumulation becomes easier for everyone. With no fixed service timings like the usual 8-5 and 24x7, 365 days availability, tokenization platforms are a major step forward – considering the hurdles and unnecessary formalities in traditional asset-acquisition practices.
6: Absolute Clarity
In Tokenized Real Estate, every token purchased is on record and can be viewed by other investors as shares over the blockchain ledger. This transparency adds to the benefits of real estate tokenization and also provides awareness to all parties involved. This transparency encourages users to make moves that they were otherwise too afraid to commit.
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Popular Real Estate Tokenization Projects
We are seeing many businesses and startups from all over the world get engaged in the creation and sale of real estate-backed tokens. This is due to the fact that tokenization in real estate has picked up speed and become increasingly popular.
This has encouraged developers to create platforms aimed at facilitating real-estate investment through tokenization. Here, we give a quick rundown of a few popular real estate tokenization solutions below.
Bitbond is a leading software-as-a-service provider of bank-level tokenization and digital asset technology. After implementing Europe's first security token offering in 2019 and being approved by German financial regulator BaFin, banks, financial intermediaries, and large issuers started using asset tokenization technology and expertise.
Originating in 2019, RealT is a team of expert individuals and adept advisors who have, since their initiation, catered to the requirements of hundreds of clients by offering tokenized assets and creating new ones. Each property on RealT is signified by a unique RealToken that is used for the acquisition & sale of the asset.
HoneyBricks is another popular real estate tokenization platform that connects investors with real estate investment opportunities by offering security tokens underlying real estate assets. Their partnership with a leading US real estate firm enables tokenized ownership of real estate investments using the Ethereum Blockchain and smart contracts.
Tokeny was found in 2017 and has since amassed funding of over 10 million pounds. Based in Luxembourg, this fintech company is currently the market leader in providing platforms for secure management of tokenized estates. The Tokeny team has a global reach expanding to major cities like Barcelona, Luxembourg, Paris, Turkey, Greece, and Brazil.
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Ready to Tokenize Your Real Estate Projects with Cubix?
Cubix, a global provider of cutting-edge digital products that assist customers in achieving their objectives, has its corporate headquarters in Florida, USA. Through the use of cutting-edge technology, we revolutionize organizations digitally. Since 2008, we have aided in the development of numerous mobile games, enterprise-level applications, mobile apps, web apps, and websites for companies operating in a variety of sectors. We want to keep developing ground-breaking ideas so we may add another triumph to our resume.
Talking about our resume, it’s worth mentioning that we have a proven track record in Blockchain development. Hence, if you are considering venturing into tokenized real-estate business, Cubix is a reliable option.