Welcome to this month’s edition of Tokeny Insights.
In terms of adoption, real estate is building strong foundations in the tokenization space. Globally, in the professionally managed industry, the size of the real estate investment market reached $8.9 trillion in 2018, up from $8.5 in 2017 (according to MSCI). That being said, today the real estate industry has significant barriers to entry. The involvement of many middlemen results in expensive lending for issuers. For investors, the lack of liquidity is a stumbling block. Fundamentally, capital formation is currently difficult to achieve for issuers using traditional methods.
Real estate can benefit in a big way from blockchain technology. As it stands, investment in this kind of asset class is attractive to investors thanks to the low interest rates. As tokenization begins to develop, the utilisation of this technology will allow for fractional ownership and the democratization of investment. If we look longer term, as more and more projects come to the fore, exchanges and marketplaces will go live and enable investors to buy and sell their assets at any time, making real estate products as liquid as stocks or bonds.