“Tokenization is a promising technology that is changing the real estate market”.
Tokens reach the real estate sector and are becoming more and more prominent among people interested in the world of decentralized finance. Real estate sales and rental processes are evolving, and although they do so slower than technologies the real estate sector represents an asset class that is ripe for integration with blockchain technology, and is dominating the market of security tokens, occupying 89% of security token trades. Tokenize means digitize a specific asset, where said token could be considered as the virtual representation of a good through blockchain, and becoming a unit of value issued by a private entity. In addition, thanks to the cryptography of the tokens, it can be proven that the owner is the sole owner of a certain asset.
Taking this to the real estate sector, the tokenization of a property provides greater accessibility and ease of transfer of properties, allowing small savers the opportunity to actively participate in the real estate sector, since by tokenizing the asset you are dividing the real estate into shares. digital. Unlike the traditional real estate market, where in order to invest in a property, it is necessary to have sufficient capital to acquire that asset, which is a barrier for many.
On the other hand, just as deeds represent ownership of a property, in the digital world the token could represent rights to exploit the home or the valuation of the property generated as a result of its sale. Another benefit of real estate tokenization is its impact on the transparency of the housing transfer process, since the owners of the properties would have greater facilities to liquidate them, and the owners would have the possibility of financing the tokens of their assets. In addition, transactions with tokens do not have intermediaries and do not require any person to authorize the process, which would reduce the costs of buying and selling real estate and would encourage the automation of property registry changes.
According to a report published by the London-based accounting and advisory network Moore Global, the tokenized real estate market could reach USD 1.4 million in the next 5 years, where 0.5% of the global real estate market will become tokenized.
In the case of Spain, on February 10, 2021, a tokenized property was sold and, in Sevilla a startup dedicated to the tokenization of real estate managed to complete a sale in just 4 minutes using tokens. Also, in the city of Valencia, an office building is about to be tokenized, for which the real estate company in charge of the project will issue different digital shares that will divide its value (estimated at 3.2 million euros).
In Argentina, the Real Estate Chamber (CIA), since April 2021, is training developers, builders and real estate companies in the country so that they can accept payments in cryptocurrencies and be able to use digital money, this in order to avoid frictions, and seeking security of the transactions.
Another case in Latin America is Mexico, a country where the use of cryptocurrencies for the acquisition of properties is being promoted, reinventing the way of doing business in the real estate sector. In the Mexican Rivera de Maya, a real estate company With cutting-edge technology sold a property, specifying the payment in cryptocurrencies in an integrated manner in the purchase process.
All industries change and real estate is no exception. Tokenization could have the ability to completely change how the real estate market is operated, providing different benefits such as greater flexibility by not having to buy an entire property, resolving possible liquidity problems in the real estate market, avoiding reliance on physical meetings to conclude contracts thanks to smart contracts would help reduce paperwork and save time and money, it would also increase transparency and automation, and even allow the international transfer of real estate shares in a matter of seconds.