The past few years saw blockchain technology getting integrated into various businesses and bringing significant benefits and change. Now, according to experts, real estate tokenization can bring beneficial changes throughout the economy, financial institutions and companies. Lets know it how!

One of the industries that blockchain will have a tremendous impact on is the real estate industry. Blockchain here makes it possible for users to tokenize houses, properties and apartments and represent them on the blockchain.

Presently, real estate remains the safest investment type and ensures better returns than any other investment opportunity. Ask anyone about the best investment to make, and they will tell you to buy an apartment or a commercial space. The only downside to real estate investment is the significant capital required. People with lots of money can invest in real estate, but that also means that regular people get left out.

That all changed with the introduction of blockchain technology and real estate asset tokenization

Real estate tokenization can forever change the rules of the market. Things like property rights, investment and raising capital are some areas blockchain will change. But before we get into the details of tokenized real estate assets, let’s first look at tokenization

Tokenization

Tokenization here means converting a real asset into several digital tokens and selling them on an online marketplace. The people who purchase these tokens own a portion of the asset. This asset exists as a blockchain-based digital token. Every token here represents direct ownership of an asset. These assets can be a piece of real estate, shares in a company owning real estate, participation in a real estate investment fund or anything else.

Many companies in real estate already see the potential benefits tokenization can bring to their verticals. Many are integrating the technology to change real estate transactions and change the established business models.

Overview of Real Estate Tokenization

The process of real estate tokenization involves converting a real estate asset into a token on the blockchain and putting it for sale. You can also create tokens for properties under construction. These tokens represent an interest in real estate or can work to raise capital for investment development. The latter process attracts a broader range of visitors and developers to participate or invest in real estate.

Real estate asset tokenization is a way for a business or an organization to raise capital from crowd sales. The process works similar to crowdfunding, but here it involves tokens available on the blockchain.

Real estate tokenization aims to fulfil the objective of making the funding accessible to a broader audience. The purpose of the tokens here is to act the role of stocks in a company. Users can purchase these costs and not rely on expensive intermediaries. This investment method may overtake and replace stock exchanges due to the latter’s expense and complexity.

How to Tokenize Real Estate?

Typically, the real estate tokenization process follows these steps.

1. Identifying the Asset – Here, the company recognizes the commercial real estate asset. The process typically involves purchasing, financing and appraising

2. Generating Smart Contract – Now, the company follows the required securities laws and generates the smart contract.

3. Token Generation – Here, the company decides on the type and number of tokens to generate. The company then lists these tokens on a specified exchange platform.

4. Distribution and Marketing – Now, the company advertises the tokens and lists them on an exchange. The company utilizes a security token offering or STO to list the tokens

5. Post support – Here, the company provides additional support to the investors