Tokenization of Real Estate: A Case Study

Asset tokenization is an area of explosive growth in blockchain and many industries are starting to embrace the great potential of the token economy, not only because of its efficiency-gains but also because of the advantages of having access to a global base of investors.

We are convinced this will be the future of capital markets, so we have created this Case Study, showing one of the industries with the biggest development potential thanks to tokenization and DLT.

Current Real Estate Industry

By nature, some asset classes have suffered from limited liquidity and prohibitively high economic buy-ins. That is the case of real estate, one of the largest asset classes worldwide, with acquisitions of income-producing commercial assets achieving $963.7 billion in 2018 (Real Capital Analytics).

With a total estimated value of $217 trillion and a settled volume of transaction of $1,4 trillion (N. Axford, 2017), the real estate market has positioned as one of the most complex and important elements within the capitalist system.

Due to the complexity of the structure of participants, it has high and increasing transactional costs that hinder entry opportunities. On average, a transaction for the purchase and sale of the property takes at least 15 days (Kalyuzhnova, 2018), and given the complex system of interrelations between the participants, there is a high share of the transaction costs in the price of real estate. Meaning…