Real Estate Tokenization, The Next Big Thing In India
India a home to 1.37 billion has trillions of dollars worth real estate but it is almost impossible to buy a real estate asset today and sell it tomorrow. The real estate market does not have an active trading market as there are no financial exchanges supporting its trading.
Real Estate Investment Trusts (REIT) tried to solve this problem but failed to impress the retail investor class due to its numerous legal compliances and extremely high entry cost. The product never reached the masses as it was expected to reach.
But soon this all is going to change, once for all, the low liquidity in the real estate will soon become a thing of a past, all thanks to the real estate tokenization happening over the blockchain.
So what is tokenization and how is it done?
Tokenization is directly related to the blockchain and crypto's. A real estate is tokenized similar to the fractionalization of ownership in a company by converting them into small units of ownership called "shares". The small units are then traded on the markets.
Similar to it, the real estate tokenization breaks down a property's ownership into millions of small pieces represented as "Tokens" on the blockchain. These tokens are generally classified as "security tokens", since they have a property as an underlying security.
The real estate tokenization can be used by the developers for both constructed and under construction properties. A investor gets an access to a fixed income and has a potential of earning through the price appreciation of the underlying property.
These tokens are either placed to the high net-worth investors or are directly made available to the public in an Initial Exchange Offering (IEO). The tokens can also be initially purchased by the large investors and can then be packaged for retail investors to boost confidence.
India is a large market as most of the investors prefer to invest in the gold and real estate. The Indian investors loves to invest in the tangible assets and the tokenization of real estate will add spice to this dull but full of potential market.
Thanks to the Corona pandemic, the prices of real estate in India has corrected by a good 20-30% as the yield on the properties in terms of rental income has decreased considerably.
The largest real estate tokenization in India is already in the making. A large, 1 million square foot property, called the Cyberwalk located at Manesar, Gurgaon will soon be tokenized on the DigiByte blockchain.
This US $40 million property is being tokenized exclusively by EGW Capital, a blockchain investment bank who has a vision of tokenizing real world assets like real estate, stocks and bonds. Instead of Ethereum blockchain, DigiByte blockchain technology will be used.
DigiByte (DGB) is a listed on several exchanges like Binance and OkEx and is one of the fastest growing blockchain.
"We are in talks with many real estate builders and developers around the world. Tokenization over the blockchain makes the transactions immutable and fully secured. A investor sitting in the USA can easily purchase fractional ownership in the property without going through legal mess," said Rahul Kumar, CEO of EGW Capital.
India Blockchain Forum
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Press Contact: Atul Mishra
The India Blockchain Forum is an international blockchain society. The Group works with the world’s leading blockchain policy experts to develop industry best practices and help shape global regulatory interoperability.
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