Tokenising Real Estate

Real estate tokenisation helps property owners raise capital more efficiently, and gives investors unprecedented access to private real estate investments, transparency, and liquidity.

The concept of tokenisation of real estate assets involves creating a virtual token that represents ownership of a particular type of asset. Similar to the recent digital craze with non-fungible tokens (NFTs), but with a physical asset tying the token to its value instead.

Tokens can represent real estate related ownership in several ways due to their enhanced flexibility in use. A token becomes a record that has legal meaning and hence an economic value. In addition to representing ownership of an asset, tokens can also represent an equity interest in a legal entity that controls the asset, an interest in a debt secured by the asset, a right to share in the revenue or profits generated by the asset, or any other variation as determined by the issuer of the tokens.

Tokenisation requires initial interaction with the local land authorities, but once the title to the asset is recorded on the blockchain, no registration is necessary each time a transaction is processed as the blockchain provides a secure database. All transactions will be transparent to the public since each will be processed and approved by other users in the marketplace.

The tokenisation process is, however, complicated by a multitude of legal and practical issues, each of which could decide whether it succeeds or fails.