Benefits of Tokenization of Real Estate


The current Scenario of the Real Estate
markets
Real Estate has been extolled as one of the
prospective spheres for tokenization. The real estate sector covers 60% of
global assets and endorses a $217 trillion worthwhile global market cap. The real estate sector primarily covets
huge capital investments and tokenization seems to assuage this issue.
Tokenization of real-world assets offers several benefits along with few
challenges which include mainly the legal and jurisdictional issues apart from
the massive capital requirement.
But for sure, tokenization through the
blockchain technology has laid new avant-garde in the momentary stagnated
markets after the 2008 economic crisis. The concept of real estate tokenization is
rapidly becoming hot-cake and some emerging startups in this bracket are keen to
enter the booming market of digital assets.
CCAP Platform for Tokenization
CCAP
technology platform of Crypto Asset Rating Inc. is one of the most promising
platforms led by Pramod Attarde. Recently Pramod has been vocal about upcoming
digital projects of this firm. One of their most ambitious projects is the
CCAP technology platform where the tokenization of real estate will take place.
Dwelling on the benefits of real estate tokenization, he enthusiastically put
forth his perspectives. Pramod excitedly asks, isn’t it a great
opportunity that the small and medium investors will be part of the exclusive global
projects and the gap between the small and the big investors will be narrowed
further?
The mass appeal for the blockchain
technology behind the tokenization is growing enormously and it’s interesting
to understand and assimilate it. But starting with what is the tokenization
of real estate. It provides an easy answer.
What is Tokenization?
Tokenizing the real estate is the process
of creation of a digital asset deploying the blockchain technology that
signifies a single or multiple properties. Tokenization of real estate enables a wide-range
of assets to trade on a secondary market. It reduces the gap between the
publicly traded investment and illiquid real estate investments bringing the closer
executable price of the property to the true value.
Benefits of Tokenization
Beneficial in Real Estate Liquidity
The illiquid nature of the real estate especially
the commercial properties is a challenge for small and medium institutional
investors as well as for retail investors. It promises to create a wider scope
to sell the property in secondary markets during any emergency. Though it’s at the
nascent phase right now but has the potential to grow tremendously.
Ease in Cross Border Transactions
While performing cross border transactions,
some of the most rampant challenges could be listed as tracking right property
for investment, high costs of the properties, difficulty in cross border
payments, visa and immigration laws, finance management, varying and varying
jurisdiction and tax laws, various exchange rates and multiple challenges that
can be simplifies by tokenization of the real estate properties. Investors can
explore broader opportunities by combating cross border barriers.
Accessibility and Accreditation to the
Diverse Investors
Tokenization will certainly allow small and
retail investors to be the fractional owner of exquisite properties that are
owned and manipulated by the large players in this sector. Reg D regulation
provision allows only accredited investors whereas Reg A+ allows non-accredited
investors with certain norms.
Capital Raising via Fractional Ownership
for Small Investors
Property owners and developers can offer
fractional ownership of the assets through the blockchain-based tokenization
process. A diverse group of investors can be thus involved to raise capital
through tokenization by the distribution of the denominations.
Improved Price Discovery
As the traditional real-time pricing
information for secondary markets is paper-based and randomly stored, it will
be managed systematically with more automation.
Multiple Benefits of Integrated
Blockchain Technology
Tokenization is based on blockchain technology.
Blockchain Technology has certain features that are disruptive. One of the
features of blockchain is immutability that is irreversible nature which
doesn't allow to change the data once entered in the system. Once the transactions of the investors and
the stakeholders are entered into the system they are irreversible and remain forever.
This further reduces the chances of any fraud. If the token owner tries to sell the single
token to multiple investors, he will be prevented to do so as the blockchain data
will have all the data saved which will make it impossible to further deceive
investors or other buyers.
Other benefits of blockchain technology
are:
- Regulatory compliance for tokens by
verifying KYC/AML regulations.
- Access based on investor’s type and
accreditation
- Improves cap table management
Programmability
Programmability allows automation of wills
and rights process. It improves transaction and shares management. The
programmability and smart contracts in blockchains have predefined rules which
make the tokenization easier for investor management. The automated process further
improves settlement speed and overall governance of the property. Tokenization appears to be a lucrative
business opportunity for the issuers and for the investors as well but it is a
complex process that requires comprehensive consultation and technological
assistance from the professionals in this domain. CCAP is all set to assist the
investors and issuers in this spectrum.
#Tokenization #blockchainTechnology #Programmability #CCAPTechnologyPlatform #RegD #RegA+ #RealEstate #Liquidity

Jayashree Ingle
CBW - External Analyst
INDIA