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Tribe Digital Feature Article The Rise of Real Estate Tokenization
In recent years, real estate tokenization has emerged as a new investment vehicle with advantages for both issuers and investors. This Tribe Digital Feature article looks at the Rise and benefits of Real Estate Tokenization.
Real estate tokenization converts the value of real estate into a token stored on a blockchain, enabling digital ownership to transfer. These divisible tokens each present a fractional share of ownership stake in that real estate. This article explores the emerging trend of real estate tokenization, as well as its primary benefits and the potential for it to revolutionize the real estate investment market.
How does real estate tokenization work?
Real estate tokenization is the process of fractionalizing real property into tokens stored on a decentralized database. This database stores information like a digital ledger and is commonly referred to as blockchain. The distributed ledgers on which real estate tokens are captured are validated by the blockchain network, synchronized and shared with all network participants almost instantaneously, permanently recording an accurate ledger of transactions generally accessible to the public.
Real estate tokens are like non-fungible tokens (NFTs), which are non-interchangeable units of data stored on a blockchain that can be sold and traded, with the exception that real estate tokens are generally tied to the value of a physical asset.
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A real estate token can represent, among other things:
- Ownership of part of a real property
- Ownership of the entire real property
- An equity interest in an entity that controls real property
- An interest in a debt secured by real property, or
- A right to share in the profits generated by real property
Real estate tokens can also be differentiated from real estate investment trusts since they allow for a specific investment linked to a particular real property, whereas REITs typically facilitate investment into pools of various real estate assets.
The digital tokens are created and issued on a blockchain during a security token offering (STO), also referred to as a tokenized security offering or a tokenized asset offering. Each fraction of ownership is converted into a token and then encrypted to grant ownership. Ownership can then be transferred directly from investor to investor, if approved, on digital platforms such as the EOS500, when released later this year.
Benefits of real estate tokenization
Lower barrier to entry
By facilitating investment in fractional portions of real property, real estate tokenization enables small-scale investor participation and lowers barriers to entry for retail investors. Lower minimums and smaller investment amounts can thus be leveraged to benefit from the potential high returns available to traditional real estate investments – which typically require significantly more upfront capital.
Ability to create liquidity
Real estate tokens are easily and securely transferable by way of blockchain technology, allowing investors to diversify their portfolios, minimize risk and create liquidity in the real estate market. Conversely, issuers are provided access to a wider pool of investors.
Lower transactional costs
Through automated processes and a permanent unchangeable digital ledger, blockchain technology has the potential to streamline investment transactions and lower transaction costs. As a result, investment transactions are generally completed faster and at a lower cost to the parties involved, facilitating higher returns for the investor. Tokenization also provides a host of other benefits, such as real time capitalization table tracking, improved accessibility and greater transparency for potential investors.
The future of real estate tokenization
Tokenization provides a convenient and economical method of investing in real estate assets and has the potential to transform real estate investment by increasing liquidity in a largely illiquid asset class, lowering barriers to entry for retail investors and reducing transaction costs.
Investors and real property owners interested in capitalizing on the trend of real estate tokenization can speak to the team at Tribe Digital Ventures to find out more (www.tribedigitalventures.com.au).
For more information you can download our full guide on Real Estate Tokenization here.
The Tribe Digital Podcast Listen to the Latest Episodes from The Tribe Podcast
Ep1. Caroline Macdonald Tokenization of Real Estate Assets with Caroline Macdonald, CEO of Black Tie Digital.
EP2. AUSBIZ.COM.AU Tribe Digital Ventures, CEO Chris Evans, Live Interview with Ausbiz.com.au
EP3. QUESTION AND ANSWER SERIES Tribe Digital Ventures, CEO Chris Evans - What is Real Estate Tokenization?
In this episode of the Tribe Digital Podcast, we discuss real estate tokenization, opportunities within Australia for tokenization of investments and how tokenized assets opens up investments for crypto currency holders to purchase real estate assets with Caroline Macdonald, Chairwoman of Progressive Investment Management Group (PIM).
In this episode of the Tribe Digital Podcast we had a live interview with www.ausbiz.com.au to discuss how Tokenization is changing how the world can access Investments. During the Interview with Ausbiz.com.au and Fintech Australia, Christopher Evans discusses what Tokenization is, how it works and how you can get involved.
Tokenization is changing how the world can access Investments and in this question and answer series, Christopher Evans answers the most common questions we receive at Tribe Digital Ventures.
In this episode we discuss exactly what is Real Estate Tokenization.
QUESTION AND ANSWER SERIES Tribe Digital Ventures, CEO Chris Evans - How do Asset Holders Benefit from Real Estate Tokenization?
QUESTION AND ANSWER SERIES Tribe Digital Ventures, CEO Chris Evans - Can you use Cryptocurrency to purchase Real estate Investments?
QUESTION AND ANSWER SERIES Tribe Digital Ventures, CEO Chris Evans - How do Investors Benefit from Tokenization?
In this episode we look at the benefits to Asset Holders and why Tokenization is an option opposed to standard debt raising.
More Information: Download the Real Estate Tokenization Guide at – www.tribedigitalventures.com/tokenization-guide.
In this short Q&A episode we look at the benefits to Investors in Real Estate Tokenization and Christopher Evans answers the question; Can you use Crypto Currency to purchase Real Estate Assets.
Download the Real Estate Tokenization Guide at – www.tribedigitalventures.com/tokenization-guide.
Tokenization is changing how the world can access Investments and in this question and answer series, Christopher Evans answers the most common questions we receive at Tribe Digital Ventures.
In this episode we look at the benefits to Investors in Tokenization offerings.
Why Tribe Digital? The power of blockchain & a fresh approach to investments.
SMART CONTRACTS
USER EXPERIENCE
TRANSPARENCY
OUR SERVICES Raise capital or buy shares through secure, cutting-edge technology.
Business Grow your business with security token offerings.
Technology Harness blockchain technology for a successful STO launch.
Customer service Our team us here to support
Legal We take care of compliance, licenses and legal documents.
Marketing Reach the right investors with a streamlined marketing strategy.
Consultancy Expert advice on security token offering, whenever you need it.
OUR PROCESS Asset tokenisation made simple.
Tribe Digital Ventures takes care of the technical implementation process, creating new digital assets and tokens that disrupt the way you trade on financial markets.
Analyse
We analyse your company and capital objectives to begin structuring your security token offering.
Generate
Information is stored in a smart contract and security tokens are generated.
Launch
Your campaign is launched and security tokens are distributed to your investors.
Download Our free Real Estate Tokenization Guide The traditional world of real estate is a thing of the past thanks to tokenization. Now more people worldwide can access what was once off-limits to all but the wealthiest and most experienced investors. Find out more with our "Real Estate Tokenization Guide"
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The Tribe Digital Ventures Platform brings together a network of partners, businesses and investors who are developing and capitalising on security token offering structures.
