Blockchain CRE
What is tokenized real estate? Real estate tokenization allows property owners to issue tokens through blockchain platforms. These tokens represent a certain number of shares for some real estate asset. Other investors can purchase these tokens, and by doing that, they become partial owners of that asset, which further allows them to be involved in cash flows and asset appreciation. At the same time, they have the freedom to sell any amount of their shares whenever they want, and they can do this even through some other online markets.
Some of the Pros of Tokenizing Real Estate
The property developers gain access to additional amounts of capital as they can fractionalize a property efficiently. This facilitates more participation from investors leading to greater capital inflow in a project by reducing the barriers.
The price of the asset will be quite close to its real market value as the illiquidity discounts will be significantly decreased. A lot of assets can be easily traded at low fees by potential investors in the secondary market.
Real-time pricing information can be obtained from the order books. Cumbersome paper-based systems that share data asymmetrically, need not be relied upon anymore. This ensures that better trading deals are discovered by investors on a timely basis.
Investors can experience a higher level of transparency as the blockchain-based system will be updated regularly to know their rights and restrictions related to the use of the tokenized digital asset. They will know the value of the underlying property beforehand.
Various overhead expenses will be reduced and settlement of funds will be done faster. The entire governance of the platform is taken digital and happens automatically. Real Estate Tokenization removes the role of intermediaries like brokers and agents.
The chances of fraud are decreased as a transaction that is recorded on the blockchain network cannot be changed by anyone. This establishes more trust and confidence in the minds of property investors.
Real estate tokens are financially supported by real-world assets.
Prompt checks and balances are ensured to maintain stability so that the value of the security token does not fall below the net asset value (NAV) of the real estate asset.
