Taking a critical look into the disrupting concept of non-fungible tokens (NFTs), it appears that you can virtually turn anything – like real estate – into tokens and sell for an affordable amount. This exploding tokenization capacity is creating a new market in the crypto space, and many investors are jumping on it.
The increased rate of investors’ participation indicates the possibility of small-scale or medium-scale investors acquiring valuable assets as tokens. This gives them ownership of some components of the real estate investment. That is, they don’t necessarily own the whole property. They only own a fraction of it.
When you think of real estate tokenization, consider it an effort by a group or individuals to crowdfund a real estate project. With this tokenization effort, they break the real estate investment into fractions. As a result, they are eliminating the investment barriers in the real estate sector. Next, they turn every asset’s fraction into a token.
These tokens are encrypted to contain the investment details that give ownership to an investor based on the unit of tokens they acquire. That explains that the number of tokens you acquire and what they represent in the entire real estate property is what you own. Then, you can have the tokens exhibited on secondary exchanges.
The real estate sector is a part of the world’s biggest asset categorization. This resulted from considering the rate at which investors pump money into it. But the number of investors in this sector doesn’t match the global industry value. That’s because it is expensive to participate in it. And small-scale investors don’t have an advantage at that.
Another problem facing the industry is the level of transparency across the industry. There are concerns about the inefficiency of paperwork. But investors believe that leveraging tokenized real estate investment would increase transparency across the industry.
What Is the Significance of Tokenizing Real Estate?
The COVID-19 pandemic has been a big impounder of the world economies. As a result of its impacts on the world economy, individuals and investors seek a sustainable way to counter inflation. The most accepted mechanism is to invest in scarce assets. And real estate is one of them. But the problem with real estate is, it is expensive to start despite being lucrative.
However, tokenizing real estate is a significant attempt to eliminate the setbacks – such as huge capital – investors face with real estate. Blockchain technology will make it possible for both small-scale and medium-scale investors to participate in the real estate economy with tokenized real estate.
And this appears to be the most effective way to counter inflation problems and break investment barriers associated with real estate. Below, we compile some importance that comes with real estate tokenization.
5 Advantages of Real Estate Tokenization
- Reduces the Risk of Counterparty
When there is a long connection chain for an investment, the investment purpose becomes weak. But for a tokenized real estate investment, the employment of smart contracts removes the middle man. As a result, transactions undergo peer-to-peer execution medium. This reduces the counter-party risk. And investors become more confident in the investment.
- Improves transparency
Blockchain technology makes it easy for real estate investment to be bankable. Likewise, investors can predict possible trends based on the leverage given by the technology. And also, blockchain technology helps investors remove the stress of conducting due diligence before buying in on a real estate investment.
- Enhances efficiency
One of the significant leverages of blockchain technology is how seamless the process is and how it works nonstop around the clock. With the digitalized process, there is no paperwork to sign, and the transaction speed is faster than the traditional method. This reduces the stress for the investors and enhances their participation.
- Enhances liquidity
If you want to increase the value of an asset, make sure it beats the lack of liquidity. You can achieve this by real estate tokenization. There are no middlemen and no such thing as heavy transactions with real estate tokenization.
- Establishes new capital channels
With tokenization of real estate investments, small-scale investors can now purchase small fractions of an entire real estate investment. This is because it is affordable and retail investors would see it as an avenue to own a property. Likewise, there are no territorial barriers in the blockchain.
Top Tokenized Real Estate Projects in 2021
The next question you want to answer is if there are tokenized real estate projects. Don’t stress it further. This section brings you a list of top real estate projects tokenized in 2021.
ATLANT is a part of the new tokenized real estate platforms. It is powered by blockchain technology and has a digital securities exchange community known as Uvas.com. This forum is regulated and secure. With this, you can understand risks and the investment barriers associated with the project.
United is a crypto project attributed to being the first global crypto city. With its tokens – UTED, you can buy different things, such as tokenized real estate in the virtual world. The ‘U’ in United describes its utility. To eliminate investment barriers and present UTED users with more crypto assets, United recently launched the U-Cube platform.
This platform makes it easy for crowdfunding to improve asset liquidity and enhance the participation of retail investors in tokenized real estate investments. Part of the tokenization efforts is the recent listing of about 300 apartments on U-Land, which are up for ownership. But you can only transact with UTED and Bitcoin (BTC) at the moment.
Etherland is a decentralized platform wherein users upload their real estate details like pictures and create unique NFTs for that information. As a result, the NFTs have embedded real estate data. As a result of this digitalization, such real estate investments are tokenized and made available to the platform’s users for acquisition.
With this effort, the middlemen are eliminated, and asset liquidity increases. Investors are more confident about the tokenized real estate investments they want to engage in. Meanwhile, the native token is ELAND, and you can trade it on Bilaxy and Uniswap. You will use a specific mobile application to create a property profile and generate a unique land ID.
Nasdaq predicted a significant boom in tokenized real estate in no time. So, this is the best time to invest in tokenized real estate. The best advice for you here is to begin your research and discover tokenized real estate projects you can invest in. With your early research, you will find the best projects for you.