The real estate business is being hidden by investments in blockchain. The leader in premium databases and institutional-grade research on blockchain and digital assets, Cryptooshala Research Terminal, has added a new study from the leader in tokenization to its growing library.
This paper from Security Token Market and its partner Security Token Advisors looks at the growing field of tokenizing assets backed by real estate. This study gives information about new trends in the industry and should be read by any organization or business with a portfolio of real estate.
Even though the market is in turmoil right now, the tokenized real estate business is growing quickly. As investors look for safer investments that use new technology, the demand for investment options based on blockchain and backed by real assets is growing. Some tech companies’ portfolios are made up of more than 40% real estate assets. This makes real estate the biggest and most “urgent” area for future security token offers.
This study looks at important trades and events to give an idea of how things will be in 2022. This tokenization industry gives investors access to fractional investments that are very efficient and can be bought with cryptocurrencies and traded on secondary markets.
The established market is being turned upside down by new technologies.
The current tokenized real estate market can be split into three parts: assets that are securitized on the blockchain, assets that are fully tokenized but not actively traded on secondary markets, and assets that are fully tokenized and actively traded on secondary markets.
In the past, real estate was one of the least liquid types of assets, maybe second only to hedge funds and private equity. This shouldn’t come as a surprise, since real estate often comes with complicated needs for planning, budgeting, property management, security, and legal force. Depending on the size and scope of the project, these unknowns could cost the investor months or even years, on top of other costs like fees that can’t be avoided. Since the last study from Cryptooshala Research, real estate still makes up 89 percent of the whole stock market, but the size of the market as a whole has gone up. Before a few months, commercial real estate transactions made up only 2 percent of all security token investments. Now, they make up 3 percent of all security token investments.
The tokenization of assets like real estate makes investments that were once hard to sell easier to sell. By trading in small parts of a property, investors can make money from rent and operations without having to deal with the legal issues and time-consuming maintenance of paper-based real estate.
Residential and commercial real estate capitalizations continue to rise over time. In June 2021, the value was $65 million, but in May 2022, it was $194 million. All security tokens have a market capitalization of more than $16.4 billion, and about 1.2% of that is in real estate. Even though it may not seem like much now, this is the area of security tokens that is growing the fastest and should be studied closely.