Asset tokenization with blockchain represents a new paradigm within the real estate industry.
Through blockchain and smart contracts, it is possible to provide greater access, liquidity, and transparency to real estate investment. Real estate tokenization transforms real estate markets by opening opportunities for its participants. Learn how real estate tokenization works with blockchain and which are the leading platforms dedicated to the sector.
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Blockchain real estate tokenization
Real estate tokenization refers to converting properties and real estate into digital assets using blockchain technology. These digital tokens, which you can trade, represent the ownership of a part of the real estate. Thanks to the fact that the process allows the fractionation of the property and its immutable registration in the blockchain. Investors earn income-based returns on the property and other benefits.
Thanks to this process, investors can access a part of the property without the need to acquire it in its entirety. It is a way to democratize access to real estate investment without having significant capital. Other benefits include investing without geographical limitations, accessing greater liquidity, and increasing the efficiency and transparency of investments.
How does it work?
The tokenization process begins with the real estate property, such as houses, apartments, hotels, or buildings, you want to tokenize with blockchain. Different companies facilitate this service, offering the platform to perform the entire process, from Smart Contract implementation to token issuance. These companies perform the process to ensure regulatory compliance and regulatory frameworks.
Once you select the property to tokenize, you must evaluate the property to determine the number of tokens to issue on a blockchain, such as Ethereum, Solana, or BNB Chain. Each of these tokens will represent a fraction of the property. For example, a house valued at $200,000 can be divided into 200 tokens. The share for each token purchased at $1,000 represents 1% of the real estate. The property tokens are made available to investors through an initial offering at a determined price, depending on the property and its fractionation. These tokens are known as security tokens.
Interested users must register on the platform. They must verify their identities to access the token offer, which can be bought and sold in secondary markets. In this way, investors receive the benefits of token acquisition, thanks to the yield offered and based on property income, rents, and capital gains. In some cases, depending on the platform, these benefits are complemented by the possibility of using these tokens to access new markets, products, and services, such as decentralized finance (DeFi).
Real estate tokenization platforms
RealT
RealT is a platform that allows investors to buy fractions of real estate properties in the United States. The platform does this through property title tokenization, issuing an amount of RealTokens tokens, determined on a per-property basis, on the Ethereum blockchain. Users can buy real estate tokens on the RealT marketplace, where they will evaluate property details, images, financials, and expected revenue per token, among other elements. The minimum investment in RealT starts at $50, while they pay rental returns in the USDC stablecoin every week. They delegate property management to a third party responsible for renting the property, collecting rental income, and the maintenance and necessary repairs.
One of the outstanding features of RealT is that it provides access to DeFi functions to access additional returns on investment. It does this through the platform’s RMM protocol, based on Aave. Thus, they can access credit leverage by using their RealTokens as collateral to borrow.
REtokens
REtokens is a real estate tokenization company that launched its platform, built on the Polymesh blockchain, in early 2024. It aims to democratize access to real estate investment by enabling accredited users to purchase tokens of commercial and residential properties while owners raise capital.
REtokens has already tokenized 30 million in real estate assets on Polymesh, including an apartment building, a townhouse, a church, and a multifamily fund, all located in the United States.
Blocksquare
Operating as a tokenization infrastructure for real estate built on Ethereum, Blocksquare designs a simplified platform for tokenizing real estate assets, where investors can buy and sell fractional real estate ownership. In this way, Blocksquare allows a maximum of 100,000 tokens per real estate. A Smart Contract on Ethereum is responsible for registering a Corporate Public Resolution, signed by the issuing legal entity, and uploaded to the IPFS distributed file system. Investors generate income from leasing or selling the property to a third party.
Blocksquare offers Oceanpoint, a liquidity platform that seeks to serve as a bridge between DeFi and the real estate industry. In this regard, Oceanpoint facilitates the trading of real estate assets. They also provide access to DeFi products, staking, and liquidity pools as of version 0.5. Blocksquare’s native token, called BST, governs the platform.
Reental
Reental is a Spanish, Polygon-powered, real estate investment platform. The company looks for profitable investment possibilities. They tokenize properties and purchase and refurbish them to rent them and offer returns to investors. They tokenize the properties so that the minimum investment is one token, equivalent to 100 euros or dollars. The annual return on properties tokenized by Reental is around 13% to 30%. They distribute the returns using USDT stablecoins, and users choose to claim them or reinvest them.
Reental operates under a dual tokenization model with regulatory compliance in mind. They tokenize one equity loan per property and offer it through a Security Token Offering (STO) in Spain. In the United States, it creates an LLC for each of the properties and tokenizes the shares of that company. In this way, it complies with the US Securities and Exchange Commission (CNMV) guidelines and the Securities and Exchange Commission (SEC). Reental has tokenized 65 properties in 82 countries to date. They manage 16,600 users and more than $46 million launched.
Estate Protocol
Estate Protocol is a fractional tokenization platform for real estate built on Ethereum’s Layer 2 network, Arbitrum. The protocol facilitates real estate investments starting at $100 via security tokens created with a proprietary standard called ST-20. Eligible investors can buy, sell, and trade the tokens using the USDC stablecoin. The available investment projects are in Dubai, but the intention is to expand its tokenized real estate offerings to other territories worldwide, such as the United States, Japan, France, and more.