Is Tokenisation the Future of Real Estate Investment?

Traditionally, investing in real estate has been a capital-intensive venture, requiring large amounts of money upfront and long-term commitments. However, new technologies, coupled with a shift towards building a more accessible and inclusive economy, are creating solutions that enable a broader-base of investors to enter the property market. This is being driven primarily by the ability to tokenise and fractionalise real estate using blockchain technology.

"Blockchain and tokenisation technology is revolutionising the way we approach real estate investment," says Barry Tuck, co-founder of giraffe. "By tokenising a property, it can be divided into smaller units or fractions which represent ownership in the asset. These tokens can then be bought and sold on an exchange, allowing investors to easily sell or invest in fractions of a property."

Tokenisation refers to the process of representing a real-world asset, such as a piece of property, as a digital token on a blockchain. This token can then be bought and sold on an exchange, opening up the asset to a much wider pool of potential investors. Fractionalisation, on the other hand, allows investors to purchase a fraction of a property rather than the entire asset. This makes it possible for individuals to invest in high-value properties that may have previously been out of reach.

The benefits of tokenisation and fractionalisation using blockchain technology are numerous. For investors, it provides an easy and secure way to purchase a stake in a property without the need for extensive paperwork or intermediaries. It also allows for increased liquidity, as assets can be easily bought and sold on a global scale.

For property owners, tokenisation and fractionalisation present a new source of funding and a way to diversify their portfolio. It also allows for the creation of a secondary market for property ownership, enabling owners to sell their stake in a property without having to go through the traditional sale process.

"Most property owners are tied to the ownership of an entire property," Tuck continues, "increasing their risk exposure. Fractionalisation enables owners to liquidate a portion of their asset and then reinvest this capital into fractions of other properties, diversifying their portfolio and mitigating their exposure."

Conversely, tokenisation has a wide range of benefits to the investor market too. For a broad-base of retail investors, the barrier to entering the property market are insurmountable, with billions globally excluded from investing in this stable and lucrative asset class.

"There is a massive untapped global market seeking to invest in real estate," Tuck continues. "These people are excluded due to their financial situation. Providing a platform that enables property investment from as little as $1 was never possible before, but giraffe enables this, having the capability to seamlessly manage millions of micro-investment portfolios."

By breaking the equity in a property down into fractional units, it becomes more affordable for individual investors to buy into a property. This increased accessibility allows for a wider range of investors to participate in the market, including those who may not have had the resources to invest in a whole property before.

"The giraffe platform includes seamless onboarding in terms of KYC, AML and other requirements," Tuck explains, "a simple fiat payment on- and off-ramp, a marketplace in which properties can be listed, and an OTC trading desk where a secondary market can buy and sell their shares."

giraffe automates the administration of all investor portfolios, making ownership simple to track, accounting quick to confirm, and profits/dividends easy to disburse.

The potential for tokenisation and fractionalisation of real estate using blockchain technology is vast, and it is clear that it will significantly impact the way we approach real estate investment in the future. Those who are able to get in on the ground floor will be well-positioned to take advantage of the exciting opportunities that this technology presents.

Fraxeum Limited
Unit 11 Bluegates
Epsom
KT17 2SA
United Kingdom

giraffe is a proptech startup that aims to democratise real estate investment by tokenising and fractionalising properties to enable broad-based investment.

This release was published on openPR.