It’s good that you have identified the potential of blockchain technology in transforming real estate and your startup is ready to take the lead. But how do you plan to reach potential investors to turn your ideas into reality?
As innovative startups and technology experts continue to explore the possible use cases of blockchain technology, asset tokenization has emerged as one of the most revolutionary concepts. Tokenization of assets means using tokens to represent the ownership of a property or asset.
Let’s understand this with an example
Suppose there is a 10,000 sq ft property whose worth is $10M. It is impossible for a common person to purchase that property for such a huge amount. But if we tokenize the property, it would mean assigning 10,000 tokens to the property where every token represents 1 sq ft and costs $100. Tokenization of real estate is a revolutionary concept that makes real estate investment accessible to a wider section of society. Tokenization gives investors the flexibility to invest in a fraction of a particular property.
The Role of Blockchain In Asset Tokenization
Real estate tokenization is revolutionizing real estate investment globally, and this revolution is driven by blockchain technology. Investment in real estate is a multi-step process involving brokers, government parties, and other intermediaries. The involvement of so many intermediaries not only makes the entire process complex but also reduces profit. The use of blockchain in real estate has eliminated all these intermediaries by making it easy for buyers and sellers to communicate through online channels. Moreover, all the transactions are executed securely at lightning speed due to the immutable nature of blockchain. Buying and selling real estate on the blockchain is already becoming a norm, with startups like LAND and RealT streamlining the entire process.
As of 2020, the estimated value of the global commercial real estate market was approximately 32.6 trillion. The size of the managed real estate market is shockingly low at $10.2 trillion. Meaning, one-third of the global real estate market is still unorganized, leaving a huge gap to be filled. Tokenization is filling this gap effectively by attracting investment from a wider section of society.
Benefits of Real Estate Tokenization
Liquidity: The biggest problem that asset tokenization solves is the liquidity of real estate. Liquid assets are great for real estate, just like any business, and asset tokenization also omits intermediaries, simplifying the buying and selling process.
Governance: Since tokens represent a property in the tokenized model, token holders also enjoy voting rights and decision-making rights. Any decision related to the concerned property is taken unanimously.
Fractional Ownership: According to a study from 2008, 95% of the world population lives on 10% of the land. There are chances that these figures might have changed, but the fact that only a small portion of the global population has property ownership speaks volumes about the centralized structure of the real estate industry. With tokenization, one can buy a certain number of tokens representing a specific share of a property. These tokens can be staked for a passive income as well. Tokenization allows users to invest in real estate for as little as $50, and this is nothing less than a revolution.
Transparency– Where there is blockchain, there is transparency. Storing the real estate tokens on a distributed ledger not just ensures undeniable proof of ownership but also guarantees complete security for tokenized assets. All the transaction data is stored in the ledger and hence there’s no chance of a breach or fraud.
Final Word
The global real estate market is humongous, and asset tokenization enables cross-border investment, opening the doors of investment to small-scale traders and commoners who, otherwise, can’t afford to invest in properties worth millions. The impressive ROI on staking real estate tokens is a wonderful concept to help investors generate a passive income and become financially independent. The removal of intermediaries from the entire process reduces the transaction cost significantly and brings transparency to the system.
Are you planning to scale your real estate tokenization startup?
We have a team of seasoned business experts and professionals with years of experience who have raised over $500 million for more than 100 companies, including Morpheus.Network, Vulcan Forged, and Landshare. Working with leading businesses and clients in the crypto space has helped us understand the vitals of the blockchain industry really well. From launch and marketing to full-stack funding advisory, we do it all. We also have an association with Keynote, the organizers of the longest-running crypto conference- TNABC. The exponential business growth of our clients is a testament to our quality work. For more info, contact us at hello@zuvomo.com