According to many experts, real estate investments should move towards tokenization, as they believe it is the next inevitable step in the blockchain’s disruption of capital markets. They believe that in the next five years the tokenization could play a huge role in real estate investments.
As per a report given by a prominent business advisory network, Moore Intelligence, there could be an emergence of new secondary markets for digital property assets. This could translate into lower costs for investors and also higher liquidity and efficiency. The efficiency can be further improved by tokenization, which would also aid in driving down transactional costs. This could be accomplished with the help of smart contracts, which could end up replacing the copious amounts of paperwork and administration required otherwise.
However, institutional investors are likely to remain on the sidelines until more clarity is obtained on the regulatory front. The report further said that blockchain technology comes with the advantage of making transactions more trackable and transparent. This is why the addition of digital assets to a portfolio could prove to be advantageous from an audit perspective.
According to recent news reports, a commercial real estate marketplace in Texas by the name of Red Swan has used the security token platform Polymath for tokenizing almost $2.2 billion in real estate. Besides this, it has almost $4 billion in properties in the tokenization pipeline. Since the real estate tokens are equipped with register features, they can be useful in mapping the corresponding ownership and liquidity relationships in the digital world. This would allow for a more efficient and daily management of the real estate.