What is Real Estate Tokenization?

Real estate is a multi-billion-dollar industry that spans worldwide. Yet, despite being such a huge industry, attributing to its characteristics, real estate has been lagging in automation and liquidity. However, the introduction of tokenization is changing the entire real estate ecosystem affecting real estate players in the space. 

Fundamentally, tokenization is the process of digitising a physical asset. Real estate tokenization converts the value of the real estate asset into digital tokens through specialised blockchain platforms. Digital tokens or “security tokens” can be thought of as shares of a real estate property. When a token is offered for sale on the market, an investor who purchases it will be given fractional ownership of the real estate property. 

At the core of tokenization is blockchain technology, which is a type of distributed ledger of transactions that is duplicated and distributed across a network of authorised stakeholders. Hence, it is a system that is seemingly not likely to be hacked. With this tool, tokenization enables digital fractional ownership with protected transaction records and instant settlement processes to any investor. 

Tokenization is catching on to the real estate market with many major companies adopting the technology. As more technology-backed real estate projects are launched and completed, we expect the awareness of tokenization to grow. This causes a ripple effect in real estate investments as more retail investors explore their increased access to quality property investments. Ultimately, all factors will contribute to an invigorated real estate market climbing to greater heights. 

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