Real estate security token offerings and the secondary market: Driven by crypto hype or fundamentals?

“Digitization is transforming various industries, including the financial and real estate sectors. We highlight the new way of securitizing assets, using the blockchain and digital security tokens and their issuance processes through STOs. Real estate has been identified as a suitable market for tokenization due to this technical innovation overcoming the drawbacks of direct real estate investments, such as high entry barriers and illiquidity. Technical features facilitate the investment of small amounts of money, eliminate the need for financial intermediaries, and increase transaction speed, consequently lowering the costs for all parties involved. Thus investors can diversify their portfolios more easily among asset classes and countries. The tokens can be traded after issuance on secondary markets, which enables liquidity. Even though the possibility of fractional ownership already exists in indirect investment instruments, such as funds or REITs, real estate tokens come closer to direct ownership with controlling rights.”

Journal of Banking and Finance 154 (2023) 106940
Full paper at: https://www.sciencedirect.com/science/article/pii/S0378426623001450

Posted in Tokenization.

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