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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.
Real estate tokenization involves dividing an asset, such as a home or hotel, 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.
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When real estate assets are fragmented during tokenization, their liquidity increases. Therefore, owners of tokenized sections can quickly sell their tokens and quickly change ownership, rather than selling the entire property at once.
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 players in the industry as of this writing include Lofty, RealT, and HouseBit.
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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.
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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 (CRYPTO: ETH). The fund had a market valuation of more than $550 million at the time of writing, according to Rwa.xyz, a platform that tracks tokenized asset markets.
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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Real estate is a great way to diversify your portfolio and earn high returns, but it can also be a big commitment. Fortunately, there are other ways to harness the power of real estate without owning it.
The Arrived Homes investment platform has created an income fund that provides access to a pool of short-term loans backed by residential real estate, targeting a net annual yield of 7% to 9% paid monthly to investors. The best part? Unlike other private credit funds, this fund has a minimum investment of just $100.
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This article Will high real estate prices keep you away from investing? Blockchain-backed property tokenization could be an alternative — what you need to know originally appeared on Benzinga.com
