According to Coin Telegraph (2022), 89% of security tokens are traded in the real estate sector, with 87% coming from residential and 2% coming from commercial real estate. In 2019, the first piece of land was ERC-20 tokenized on the Ethereum Blockchain and after just two years, the growth of real estate tokens has increased to 107% in 2021. What makes real estate tokenization a blockbuster in the area?

1. Reduce barriers to entry and diversify investment portfolios

The real estate industry is often referred to as expensive and reserved only for institutional investors with a large amount of capital. However, tokenizing plots and splitting investments can help small individual investors participate in the market, besides minimizing the involvement of 3rd parties and complicated paperwork and procedure. Through an open and low-cost international market, investors will have access to a wide range of projects from residential houses to commercial centers, thereby adding more portfolios to their investments and creating more market liquidity.

2. Increase Transparency and Safety

With Blockchain application and smart contract, all relevant information from ownership to signing rules will be stored securely on a shared ledger which is immutable and can be verified at any time to ensure transparency. Based on complex algorithms and the application of consensus mechanisms, hacking the blockchain seems impossible with 51% of the network having to agree to the attack.

3. Increase access to more capital sources

For construction project owners, more investors can participate in the market meaning large projects can receive more capital sources to conduct construction more quickly and efficiently.

With a huge global real estate pie worth $280 trillion in 2020 (Coin Telegraph 2021), according to Moore Global, if only 0.5% of the pie is tokenized in the next 5 years, the real estate market will increase its value to $1.4 trillion. So are you ready to grab a piece of this delicious cake?

Source: PropTech Vietnam Network