Real Estate Asset Tokenization Platform

Get fractional ownership through investment via Real Estate asset tokenization. We facilitate investor-friendly benefits like regular cash flow, lower maintenance cost, adequate liquidity, better capital efficiency, and frequent rent payments.

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What is Real Estate Asset Tokenization Development

The global real estate value is worth a staggering $9.1 trillion and is about $1 trillion more than what it was a couple of years ago. With this rapid growth, real estate does not show any signs of slowing down either as a commodity or as an investment.The challenge with real estate is that it has been stuck in the traditional system of paperwork and intermediaries for decades or maybe even centuries. The introduction of the decentralized and immutable ledger called the blockchain is all set to solve this problem.Another challenge with real estate and especially commercial real estate is that it is not easily sellable because of its humongous value. This makes the asset extremely non-liquid, presenting a threat to the asset owner because they cannot dispose/sell the asset as and when they need it.

The concept looks simple on paper but there are a lot of complications, convolutions, and complexities involved in real estate, not the least of which is the different types of real estate tokenization processes. Therefore, Cryptocurrency Exchange Script is here to give access to the world of real estate tokenization in the simplest manner.

Types Of Real Estate Tokenization

Considering the various types of real estate available, they can be classified into

Commercial Real Estate Tokenization

Tokenization of commercial real estate is done under complete legal framework.

Residential Real Estate Tokenization

By tokenizing residential real estate tokenization one can earn capital and dividends.

Single Real Estate Tokenization

Single real estate tokenization helps to reduce liquidity premiums, and raise funds.

Trophy Real Estate Tokenization

One can raise funds through trophy real estate tokenization within high regulatory compliance.

Strategies For Real Estate Tokenization Platform Development

The core strategy of real estate asset tokenization involves three major steps: deal structuring, technology selection, and token creation/distribution. While we will deal with these parts later, the umbrella strategy for real estate tokenization should revolve around its benefits of access to additional capital, enhanced price discovery, improved transparency, and automation of processing,

Checklist For Real Estate Asset Tokenization

Before you venture into the territory of blockchain real estate and into tokenizing a real estate asset, you will need to ensure that your real estate tokenization solution has a few major pointers that can be ticked without any compromise.

Blockchain, by nature, is decentralized. Therefore, your real estate tokenization platform should also be uncompromising on decentralization.
Smart contracts form the epicenter of processes in the blockchain ecosystem. The smart contract should be robust and should be able to effectively address all your process-needs.
You will also need to define the type of interest that you intend to gain for your real estate property.
The real estate property that needs to be tokenized will be put as a legal entity. In the context of investments, it is called a special purpose vehicle (SPV).
Real estate, as an asset class, falls under the definition of a security. Therefore, you will need to ensure that there are no lapses in terms of establishing compliance with regulatory compliance frameworks.

The corporate code needs to be defined.
You will need to define what is the asset type that will be tokenized. You will also need to specify the location of the asset, the ratio of tokenization, the mortgages on the asset, and any other liabilities that you might have.
The investor-portfolio should not be diluted in terms of quality for the want of liquidity. Therefore, the investor should be traceable, and the KYC/AML formalities should be automatically completed. If the investment mandates an accredited investor, the accreditation status should be verified and validated.
Some real estate tokens might attract an international audience. In those cases, you will need to verify if your legal system allows such investments.
You will need to comply with all the possible jurisdictions and requirements that cover not only the process of tokenization but also the aspects of real estate being a classic asset.

Process Involved In Tokenizing Real Estate Asset

As we have already seen, there are three major processes involved in real estate tokenization

Deal Structuring

To structure the deal, you will need to determine the specific property that needs to be digitized.
Once this process is done, you will need to form a legal structure for which you will need to create an investment vehicle. There are different types of investment vehicles available like the single asset special purpose vehicle, the real estate fund, the project finance, and the real estate investment trust.

Technology Selection

You will also need to work on the rights of the shareholder, the possible types of investors, the regulation involving the execution, and every other aspect on the legal and structural side of the investment.

The next step is to work on the technology. You will need to select the right blockchain and the right token.
It is to be remembered that the token represents the property itself and you should also work on the data and transfer restrictions.
The next part is selecting custody. You will need to have a physical custody solution that can store real estate tokens.
Since we are looking at a wide variety of investors, we will also need to have a KYC/AML process in place that will seamlessly integrate with the issuance and security platforms.
You will also need to determine how and where these digitized tokens will be offered.

Token Selection/Distribution

Once you have decided on all the aspects of your token, the next step is to distribute the tokens, so they can fulfill the intended purpose.

When you distribute your token, you will need to define the type of funds that will be accepted. Some tokens can accept only fiat currency and some of them can accept crypto and stable coins.
With the click of a button, you can start to create the supply of tokens, commonly referred to as minting.
You can either choose to conduct a live sale or you can directly send tokens to investor accounts based on the process that you intend to follow.

Security Token Offering For Real Estate Asset

Real estate, at its core, is a security. Holding real estate is an investment that is bound to bring tangible monetary benefits and it also, without any discrepancy, passes the Howey test. Therefore, when you conduct a sale of real estate tokens, it is, in essence, a security token offering.

Automatically, a security token offering comes under the scrutiny and regulation of the SEC. Therefore, compliance with these regulations should be strictly followed to ensure that there are no legal lapses or loopholes that might affect the asset, the owner, or the investor in the long run.

Real Estate Tokenization Platform

As you may have done, a real estate tokenization platform is crucial to your tokenization endeavors. The real estate tokenization platform should ensure that you are able to perform all the processes talked about in the above paragraphs without any hassle and in a lenient and intuitive fashion.

The most preferred blockchain for real estate tokenization is, without question, Ethereum. Ethereum blockchain real estate is on the rise and it will continue to be one of the most preferred real estate blockchain platforms. There are new age blockchains like Tezos That present significant advantages over Ethereum, and they might eventually take over the global blockchain real estate ecosystem.

Benefits Of Digitizing Real Estate Platform

Tokenizing real estate presents a lot of benefits for both the real estate owner and the investor.

The most obvious advantage is the addition of capital. When real estate owners can offer smaller investment denominations by fractionalizing a real estate property using a blockchain, it becomes accessible to a wider group of investors.
The widening of the investor portfolio, without question, enhances liquidity. Commercial real estate and trophy real estate that was once considered highly lucrative but at the same time, highly non-liquid, can now see the light of the day in terms of liquidity because they can be broken down into smaller tokens without compromising on the value.
Since the entire process happens on the blockchain, there is assured transparency. There is no way of falsifying the records of ownership or any other data about the real estate property because of the immutability of the blockchain.
The smart contract real estate token handling ensures that all processes are automated. This not only reduces the extent of paperwork but also ensures that the process is fast and efficient.

Factors To Consider While Digitizing An Asset

Before you digitize an asset, you will need to build a case for digitization. You will need to answer questions like why does that particular real estate property need to be digitized and if digitization how tokenization will help in the long run by enhancing the possibility of attracting more investments and liquidity?

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Practical And Legal Issues That Need to Be Tackled Before Starting Tokenization

Inertia is probably the most significant challenge when it comes to transition in technology. There are a few issues that might slow down the adoption of real estate tokenization. The legal system is not evolved yet to handle and accommodate these processes. While this might not actually slow down or hamper the process, it also gives room for people to look out for loopholes that are designed to circumvent the legal system.

Before the legal system and regulatory requirements become capable enough to handle tokenizing a real estate asset, it will be a bit difficult to take real estate tokenization services forward.

Another small yet significant hassle in the process of real estate to tokenization is the general aversion that people have towards this new process. They have been so used to the traditional way of handling real estate and they might not be comfortable in a process that says that their real estate property will be broken down!

Scope Of Real Estate Investment Tokens

Real estate investment tokens have already proved to the world that fragmented and digitized real estate is practical and present a lot of solutions. Blockchain-based real estate is just another upgrade to this ecosystem. Decentralized real estate through blockchain and tokenization will ensure that the most evergreen avenue of investment does not lose out on its luster but at the same time, becomes universally available!

Why Choose CES For Real Estate Tokenization Platform

Cryptocurrency Exchange Script brings a vast spread of expertise and experience when it comes to real estate tokenization.

Our thorough analysis of worldwide real estate markets, our understanding of the legal systems that govern real estate and blockchain, and our updatedness with the latest progress in the real estate blockchain world make us ideal choices for all your real estate tokenization needs.