As per the report, the size of the professionally managed global real estate investment market grew from $7.4 trillion in 2016 to $8.5 trillion in 2017 and then it reached $8.9 trillion in 2018.
Real estate tokenization is an emerging trend with huge benefits and it is expected to grow more in the upcoming years.
So now when we got your attention, then let’s talk about what tokenization of real estate or property means, types of Real estate tokenization, how the tokenization process works, STO Process, and how owners and investors can benefit.
In fact, this is the most updated (2020) guide about the tokenization of real estate.
- What is real estate/Property asset tokenization?
- How To Tokenize Real Estate? 3 Simple Steps To Fund Your Real Estate On Blockchain
- STO Process (2020 Updated)
- How investors get benefit from real estate tokenization
- Future of Real Estate Tokenization
- How Can SAGIPL Help You in Tokenization of Your Real Estate Platform?
What is real estate/Property asset tokenization?
Real estate tokenization is the method of representing a fractional ownership interest in an asset with a black chain-based token, here the asset can be a utility asset or security asset.
Tokenization actually helps owners of assets or funds to raise capital more efficiently by issuing tokens through blockchain platforms.
These tokens can be purchased by other investors, these tokens represent a certain amount of shares for some real estate asset.
The investors become partial owners of that asset, which gives investors unique access to private real estate investments, with transparency, and liquidity.
For better understanding, Schedule a free 30-min call with our team of blockchain aficionados! Trust me, you won’t be disappointed 👇
Tokenization of real estate on Blockchain can be divided into four types according to the type of assets.
If it is for a commercial asset or property, then it will be known as Commercial Real Estate Tokenization and if it is for a residential asset it will be known as Residential Real Estate Tokenization.
Here are the types:
Types of Real estate tokenization (2020 Updated)
- Commercial Real Estate Tokenization
- Residential Real Estate Tokenization
- Single Real-Estate Tokenization
- Trophy Real-Estate Tokenization
How To Tokenize Real Estate? 3 Simple Steps To Fund Your Real Estate On Blockchain
There are 3 fundamentals that need to be achieved to Tokenization of Real Estate
Tokenization is one way to securitize real assets or properties.
- To tokenize a property, house or commercial place, you need to find a properly regulated blockchain platform having the rights to store ownership onto their tokens through the proper authorities.
- After that, make sure that the platform also provides the function to the owner to transfer those rights to anyone and transfer the complete ownership to someone else in an authorised way.
- Real estate tokenization exchange way. Just like any other type of security, the owner needs to be able to exchange the token for a specific value so that each asset can get its proper value represented in tokens.
These are the theoretical representation of the steps, the procedure is easy for real estate STO, but it also has a few obstacles for you so make sure to consult with an expert before making any move.
Does the whole process seem confusing to you?
Schedule a free 30-min call with our team of blockchain aficionados! Trust me, you won’t be disappointed.
STO Process (2020 Updated)
Sale at an initial level, of a security token, is known as an STO which is an acronym of the security token offering. STO is also sometimes called tokenized security offering (TSO) or a tokenized asset offering (TAO).
The tokens sold represent ownership in a real asset.
Are you looking to increase the reach and popularity of your security token and convince people to invest in it? We can help in STO marketing of your real estate project.
All the STO investors know the true value of the underlying property or asset they’re buying and benefit from any future price appreciation in the asset.
- List your token on real estate tokenization platform.
- Submit your property
- Divide your property into the form of tokens.
- Start marketing of your listed property
and so on… so on…
Here’s the example of properties listed on Tokenization platform
How investors get benefit from real estate tokenization
- The major benefit of tokenization of property or assets is that it removes the middle man.
- This actually makes the process easier and cheaper for investors to buy/sell real estate as well as for owners to raise capital.
- Investors can trade tokens immediately and for a very low fee.
- Tokenization makes it possible for owners or developers to raise capital without financial intermediaries to underwrite the project.
- Undoubtedly the Real estate has historically delivered attractive returns, but it has high barriers to entry.
- Tokenization can be a solution because tokenized real estate assets get the best of both worlds – the high returns of real estate investments and the liquidity of the stock market.
- Real estate tokens are backed by real assets, so they have less risk than cryptocurrencies or ICOs.
- Stabilization measures can be also included to assure that the value of the security token does not deviate too far below the underlying net asset value (NAV) of the property.
Future of Real Estate Tokenization
As per a research report, the global real estate market has an estimated value of around US$228 trillion.
Before the real estate tokenization, only a few authorised and institutional investors had access to some of the most exciting projects.
But now with real estate tokenization platforms, owners of the asset and developers can market their projects to retail investors and institutions.
Tokenization of real estate assets also brings liquidity and transparency, which was much-needed in this opaque industry.
The ability to trade shares in real assets, in real-time will at one side attract the attention of more investors and on another side, it will open a beneficial gate for more ambitious and unique real estate developments.
It will have an advantage over others that it will have a minimum investment and represent a large portfolio of companies compared to a single property or new development.
Additionally, it is giving investors and owners alike the freedom to raise or invest capital as per their choice.
Tokenization is the recent future will also impact other illiquid asset categories such as private equity and venture capital.
How Can SAGIPL Help You in Tokenization of Your Real Estate Platform?
SAG IPL has years of experience in developing a range of digital media, whether it is a website or marketing strategy or various functions of blockchain on the website.
We are also managing various similar projects so we can combine blockchain technology and real estate to create security tokens representing a fractional interest in real estate assets.