Trendspotting: Is Real Estate Tokenisation the Way Forward?

Potential home buyers alert: a new form of real estate property ownership is gaining traction and has the potential to revolutionise how you invest and secure properties. The trend is real estate tokenisation, currently valued at US$3.8 billion in 2024 and projected to reach US$26 billion by 2034.

According to Yohann Libot, influencer manager at real estate crypto platform RealT, tokenised real estate works by dividing a real estate asset into tokens, each represented on the blockchain. This digital representation on the blockchain authenticates the transaction and ownership history of the asset.

“Tokenised property enhances marketliquidity and enablesfractionalownership. Therefore, one property can be owned by different investors through the purchase of tokens,” Libot says.

The experimentation with tokenisation began in 2017, with the St. Regis Aspen Resort in Colorado making headlines in 2018 by becoming the first major real estate asset to sell security tokens, raising a staggering $18 million through the sale of Aspen Coins.

RealT emerged in 2019 as the first viable tokenisation project dedicated to real estate investments, as declared by Libot. However, it was in 2023, following BlackRock CEO Larry Fink’s statement that "the next generation for markets, the next generation for securities, will be tokenisation of securities”, that the tokenisation trend truly gained momentum.

The future of liquidity

With tokens and cryptocurrencies going hand in hand, the strong performance of cryptocurrency in recent years has certainly fuelled the blockchain-based real estate industry. Libot adds that post-pandemic, cryptocurrencies are widely accepted as a payment method, especially online, with major payment getaway providers such as Stripe and PayPal now accepting major cryptocurrencies.

According to Cryptonews, 11 per cent of all homebuyers used cryptocurrency for down payments in 2021, and some industry experts anticipate that purchasing homes with cryptocurrency will be a trend in 2024, and beyond.

What are the benefits of using cryptocurrencies in home buying?

“Transparency, cost efficiency, and, in some cases, depending on the amount, paying with cryptocurrencies is the fastest way,” Libot says.

Co-founded by brothers Remy and Jean-Marc Jacobson, RealT enables investors worldwide to own a slice of real estate, with as little as US$50. It has since become one of the most established names in the realm of real estate tokenisation.

With time being the most valuable commodity today, the flexibility to buy, sell, or trade their stakes in real estate assets with ease – without intermediaries, minimal transactional friction (compared to traditional assets), and the benefits of enhanced liquidity, transparency, and global accessibility – makes real estate tokenisation an appealing prospect.

But like any other investment, Libot’s advice is to do your own research.

“Risk factors exist, but keeping in mind the intrinsic transparency of the blockchain, you can, at any point, keep an eye on your assets.”