Expensive Real Estate Putting You Off From Investing? Blockchain-Backed Property Tokenization Could Be An Alternative — What You Should Know – BlackRock (NYSE:BLK)

By Pune Media On Oct 21, 2024 23

Property tokenization was gaining traction among cryptocurrency enthusiasts as a novel way to real estate investment, as the broader narrative of putting real-world assets on blockchain rails gathers steam.

What Happened: The high property prices in major cities like London and New York have made direct property investment increasingly unaffordable, paving the way for tokenized real estate as a viable alternative, according to a Financial Times report.

Unlike real estate investment trusts (REITs) that own or finance large clusters of commercial and residential buildings, tokenized real estate allows for small-scale investment in individual properties.

In property tokenization, assets such as houses or hotels are divided into digital tokens that signify ownership. These tokens, which contain details like the asset’s ownership history and regulatory information, are stored on a blockchain, serving as a digital ledger.

When a real estate asset is fractionalized during tokenization, its liquidity increases. So instead of selling the entire property at once, owners of tokenized sections can sell their tokens fast, resulting in a swift change of ownership.

Additionally, due to blockchain technology, the market remains open 24×7 and with comparatively higher levels of transparency.

It’s really the question of convenience because the asset becomes liquid, it becomes tradable 24/7, and a global pool of investors have access to it.” Max Dilendorf, a New York-based digital assets lawyer, told FT.

According to Prophecy Market Insights, the real estate tokenization market was valued at $3.8 billion in 2024 and is expected to reach $26 billion by 2034 with a compound annual growth rate (CAGR) of 2.90%.

Some of the biggest players in the industry as of this writing were Lofty, RealT, and HouseBit.

See Also: Man Who Accidentally Threw Hard Drive Containing 8,000 Bitcoins Worth Half A Billion Dollars In Landfill Sues Local City Council For Not Excavating The Site

Why It Matters: The rise of property tokenization was part of a larger narrative of real-world asset (RWA) tokenization that has emerged as the hottest cryptocurrency trend this year.

The world’s largest asset manager, BlackRock entered the sector with the introduction of its tokenized U.S. Treasury product, BUIDL, built atop Ethereum ETH/USD, earlier this year. The fund boasted of a market valuation of over $550 million as of this writing, according to Rwa.xyz, a platform that tracks the tokenized asset market.

Anthony Moro, CEO of Provenance Blockchain Labs and a known industry expert, predicted tokenization to become a trillion-dollar market by 2030.

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