Real estate tokenization is gaining traction among cryptocurrency enthusiasts as a new way to invest in real estate, as the broader narrative of putting real-world assets on blockchain rails gains momentum.
What Happened: According to a report in the Financial Times, soaring real estate prices in major cities such as London and New York have made direct investment in real estate increasingly unaffordable, making tokens a viable alternative. It is said that the path is paving the way for standardized real estate.
Unlike real estate investment trusts (REITs), which own or finance large clusters of commercial or residential buildings, tokenized real estate allows for small-scale investments in individual properties.
In real estate tokenization, assets such as homes and hotels are split into digital tokens that represent ownership. These tokens contain details such as asset ownership history and regulatory information and are stored on a blockchain that acts as a digital ledger.
When real estate assets are fragmented during tokenization, their liquidity increases. Therefore, owners of tokenized sections can quickly sell their tokens instead of selling the entire property at once, resulting in a quick change of ownership.
Moreover, thanks to blockchain technology, the market is open 24/7 and has a relatively high level of transparency.
“It’s really about convenience, as assets become liquid, tradable 24/7, and accessible to investors around the world,” said Max Dillendorf, a New York-based digital asset lawyer. he told the FT.
According to Prophecy Market Insights, the real estate tokenization market was valued at $3.8 billion in 2024 and is expected to reach $26 billion by 2034, at a compound annual growth rate (CAGR) of 2.90%.
Some of the biggest companies in the industry as of this writing include Lofty, RealT, and HouseBit.
Related article: Man who accidentally dumped hard drive containing 8,000 Bitcoins worth $500 million in landfill sues local council for not excavating the site
Why it matters: The rise of real estate tokenization was part of a larger story of real world asset (RWA) tokenization, which has emerged as the hottest crypto trend this year.
BlackRock, the world’s largest asset manager, entered the space earlier this year with the introduction of BUIDL, a tokenized US Treasury product built on Ethereum. The fund had a market valuation of more than $550 million at the time of writing, according to Rwa.xyz, a platform that tracks the tokenized asset market.
Anthony Moro, CEO of Provenance Blockchain Labs and a recognized industry expert, predicted that tokenization will become a $1 trillion market by 2030.
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