A digital real estate revolution is spreading across the world as property specialists increasingly ‘tokenise’ assets to improve liquidity in the world’s most valuable asset class.
Real estate experts at Moore Global predict that $1.4 trillion of international property assets will be converted to digital tokens within five years, making real estate investment easier, cheaper, more efficient and more accessible.
“Tokenisation is an emerging trend with potential to become a mega trend – and it is absolutely going to be a disrupter in global property markets,” says Dan Natale, leader of Moore Global’s real estate group and managing partner of Segal LLP, said: “It has potential to lower the cost of capital, increase the pool of potential investors and increase liquidity.
“It could take time for a critical mass of institutions to invest with confidence in tokenised real estate. However, if even just 0.5% of the total $280 trillion global property market were tokenised in the next five years, it would become a $1.4 trillion market.”
Though real estate dwarfs the value of other major asset classes, it remains relatively illiquid and has typically been the domain of large institutions focused on steady income flow and capital appreciation over long periods.
The emergence of new secondary markets for digital property assets holds the promise of increased liquidity. It also lowers the barriers to property investment for individuals and opens up new and cheaper pools of capital for property developers and funds such as mid-tier Real Estate Investment Trusts (REITs).