“Tokenization is paving the way for a new forefront in real estate development,” — Ryan Serhant, a listing broker who happens to also be a bestselling author of Sell It Like Serhant and star of Bravo’s Million Dollar Listing New York.
eal estate is one of the oldest forms of investing, a conservative and slow-moving industry with a wealth that has been generated over generations; all of a sudden cryptocurrency and blockchain show up revolutionizing this old school industry, shocking the most traditional and attracting the more contemporary generations.
The future of real estate looks fresh and promising to form new businesses standards to combine potential buyers and sellers by tokenizing, liquefying and negotiating properties of all kinds effectively like stocks on exchanges.
“The real estate sector is being tokenized, it is decentralizing property ownership, and it is becoming the hottest topic lately in the security token industry.”
Tokenization is the process of fractioning a property into tokens that run on top of a blockchain, in other words, the tokens represent digitally, the ownership of a real-world asset.
When a property is tokenized and represented digitally by tokens on the blockchain, ownership can be segmented, and investors get to micro-invest and own a piece of property which many would have never been able to invest if it wasn’t for the opportunities provided by tokenization. This industry has been a division for the rich-only, but tokenization on a distributed ledger has decentralized the industry and made it more inclusive for regular people around the world to access real estate investments that can fit their budget.
Brokers have been turning to tokenization as a new method of financing because it serves as an optimized alternative for their projects as well as for the investors eliminating many of the middlemen; this system allows investors all around to world to invest internationally with as much or as little as they desire.
In Manhattan, a luxury condo development appraised at 30M is currently available on the Ethereum blockchain. It is located at 436 & 442 E 13th St in the East Village; this is the first tokenized piece of real estate asset on the Ethereum platform in the area.
In places like New York, where it can take some time to sell a property for the right price, the tokenization of assets, the decentralization of property ownership can transform the market; blockchain tokenization removes the bureaucracy of traditional methods of investments and even of bank-financing, which is a win-win for buyers and sellers.
Plus, the blockchain technology a fast, transparent and trustless ecosystem can solve issues within the industry like the market´s liquidity and even a large cut in costs. Real estate contracts can take anywhere from 3 months to a year (or longer) to conclude which can be very costly for investors, and on the blockchain everything is instant, the system can facilitate the process drastically.
The real estate industry has been a local market for centuries, it was the last industry to pave a path upon e-commerce, but it is at full throttle now on the global market.
Decentralization has given investors more freedom to act since they no longer need to be in a particular place to invest, they can invest anywhere in the globe from the comfort of their home.
There are several companies at the moment that have launched platforms offering services connected with tokenized ownership of properties and blockchain based P2P rentals.
Allow me to give you a simple example of how it works:
· Property Listing Price: 10 Million
· Property Square Meters: 10,000
· Property Square Millimeters: 10 Million
1. So in the case of this property, you´d have a token supply of 10 million tokens for a property worth 10$ million, and with each token representing 1sq millimeter of the property and with a value of 1$ for a token.
2. The tokens would then be listed on an exchange or several exchanges to be traded;
3. Theoretically, any given individual could purchase from anywhere in the world a single token or all 10 million tokens for the given property.
The total value of the token supply will be equal to the total value of the property. The quantity of the token was determined by the number of sq. millimeters in the property, each token, therefore, representing 1mm of fractional-ownership in this particular property.
This industry is overdue for renewal. Now that it has finally entered the fast track to renovation there will not be a stop for this market until it has reached its entire potential on the blockchain; and the benefits of liquidity, the use of smart contracts, and the fractional ownership sounds darn good; all of which ensures the modern future of real estate. It also benefits regular individuals, professional investors, sellers, and even the cryptocurrency community because this new real estate system has the potential to bring some stability to the virtual currency industry.
Why dont we just tokenize everything?
What do you say?
You might want to check out “ The Pros and Cons of acquiring a property utilizing crypto”
Disclaimer: Our team works hard to bring you the best content in the cryptocurrency market, but it is only our point of view and not legal advice, and may be divergent from other opinions, so please do not make any decisions without concluding studies of your own to understand the profit possibilities and uncertainties involved at your own risk.