Unlocking the Power of Inclusive Prosperity through Real Estate Tokenization
The real-world asset (RWA) tokenization market has been on a tear over the past year or so, with a growing number of reputable mainstream entities — including Blackrock, Australia and New Zealand Bank (ANZ), etc. — making their foray into this space. Most recently, Liv Digital Bank, a subsidiary of the UAE’s second-largest bank, Emirates NBD, inked a deal with tokenization firm Ctrl Alt to further spur the interest of millennials and Gen Z investors in alternative assets such as private equity, private debt, real estate, and infrastructure.
Similarly, earlier this year, tokenization firm Securitize closed a $47 million funding round led by BlackRock, Hamilton Lane (HLNE), and ParaFi Capital. According to reports, the funds will be used to expand the company’s blockchain-centric offerings, especially those designed to digitize the existing capital market ecosystem.
A look at the facts and figures
There has been much furor surrounding the concept of ‘tokenization’ in recent months; however, it bears mentioning that the idea has been around for a long time — as long as the idea of the blockchain itself. As a result, estimations by consulting giant McKinsey suggest that with technology continuing to garner momentum, the volume of tokenized digital securities can potentially reach $5 trillion by 2030.
Within this, real estate tokens stand to play a significant role since their cumulative valuation — estimated at $2.7 billion in 2022 — is projected to grow to $16 trillion by 2030, according to the Boston Consulting Group.
Moreover, the global real estate market (valued at $613 trillion in 2022) is set to grow to $729 trillion by 2028. Despite the upside, it remains one of the most illiquid asset classes across the globe, thus underpinning the importance of tokenization in maximizing the fluidity/liquidity of this space.
Changing the game
In this context, several platforms have sought to change the current paradigm. Blocksquare, for instance, has devised a comprehensive suite of solutions designed to facilitate on-click real estate tokenization transactions. As an award-winning company led by co-founders with over 40 years of combined experience, Blocksquare offers the world's leading blockchain-based real estate tokenization system.
Businesses of all types, from startups to large enterprises, can leverage these solutions and APIs to digitize the value of real estate properties, launch their investment platforms, and connect people to tokenized real estate deals online. One of Blocksquare's key offerings is its real estate tokenization protocol, which facilitates the creation of 'PropToken' smart contracts – standard Ethereum ERC-20 smart contracts with a defined maximum issuance of 100,000 digital tokens per property.
These tokens are extended with unique information identifying a specific real estate property and, additionally, limiting transactional rules according to the issuer's requirements. Furthermore, Blocksquare provides a white-label marketplace solution, enabling clients to create, list, issue, sell, distribute, manage, track, and trade properties.
The platform comes packed with features required to launch a full-size investment marketplace, such as listing current, past, and future tokenized properties, easily onboarding investors with KYC automation, and enabling investors to create custom token portfolios and buy or sell real estate tokens peer-to-peer.
Most recently, Blocksquare announced the launch of its regional hub program, which aims to enhance community bonds via real estate tokenization. The initiative focuses on creating a robust sense of community, enhancing social ties, and empowering local residents to make a positive impact in their neighborhoods.
Lastly, in addition to its tokenization and marketplace offerings, Blocksquare has also entered the DeFi market with Oceanpoint.fi, a bridge enabling real estate owners to gain exposure to decentralized financial markets via tokenization. The company has also achieved several impressive milestones, including the tokenization of $94.8m in assets (to date) across 107 properties and 21 countries, as well as the launch of 11 active marketplaces worldwide.
Looking ahead
From the outside looking in, the emergence of real estate tokenization seems to be more than just a mere financial innovation. It represents a profound shift in the way in which investors perceive and engage with property ownership and investment. In fact, by democratizing access to real estate assets, a more equitable and inclusive economic landscape is being paved.
In such setups, offerings like Blocksquare, with their comprehensive suite of solutions — including a real estate tokenization protocol, white-label marketplace, and DeFi integration — are well-positioned to spearhead this movement. Therefore, it will be interesting to see how this yet nascent space continues to mature and grow from here on out!