Tokenizing the Real Estate: Soon You May Be Able to Buy and Sell Properties on the Blockchain
The 2019 real estate market doesn’t promise much excitement regarding price range, number of real estate listings or great demand, but it does seem to be a year of transitions and experiments. One of the most interesting tendencies that we are noticing is using security tokens in real estate.
This innovative concept has taken our attention when the St. Regis Aspen Hotel sold a share of its property on Indiegogo, a platform that normally sells tech and services before they go mainstream. That makes it an investment platform for indie projects, which is why selling a huge real estate good there is so unexpected. The deal we are mentioning was an $18 million sale through digital token.
This is a great promise for the real estate market and how investors see it, which is why 2019 should be a good year for experimenting and tokenizing properties.
What Will Tokenization Do for the Real Estate Market, Exactly?
Being able to invest security tokens into goods like real estate or fine art helps turn them from an illiquid good into a trade-able, flexible asset. Multiple investors can easily share a property by investing security tokens online, and trading becomes global and instant. This flexibility allowed by security tokens can actually lead to better prices on the real estate market, eliminating the need for applying discounts for such shared deals.
Selling the property to multiple buyers is, by no means, a new idea, but doing it through online security tokens is revolutionizing fast and flexible the market will become.
How Is Tokenization Influencing Prices?
When you have a handful of investors buying a real estate property, they put in large amounts of money and demand proportionally big bonuses (or discounts). But, if you allow 1000 or 2000 individual investors to get shares of the property through the blockchain, the overall amounts that will go on bonuses are significantly lower.
Predictions for 2019 Real Estate Tokenization
Even if the start of tokenized real estate is slow, we might see a great expansion of platforms in 2019, since everyone will want to create a future opportunity to set the standards. More platforms will mean that investors have increased opportunities to take the deal they want and create a high demand for security tokens. Higher demand will increase prices and reduce the holding periods for security tokens.
Currently, this is a moment of bubbling for the token real estate market, and investors are yet to consider it safe. But once SEC will start looking into it and make regulations and rules for this asset, the market will start growing fast, welcoming more and more investors. Re/Max Experts and our top Realtors® definitely are keeping an eye on this exciting new prospect!