The Tokenization of Assets will Create Liquidity in Real Estate Across the Globe
It’s no secret that buying a home has become extremely challenging in the current market environment. You might find that perfect home that checks all of the boxes only to find that there is already one offer on the table, with more coming in later in the day. This generally exciting experience is leaving buyers frustrated and overwhelmed.
Sellers, on the other hand, are temporarily happy about it until they find themselves on the opposite side of the table with the buyers–only to lose what they gained. What we are seeing is that the housing market never really recovered on the new construction side, because developers have been nervous about overbuilding ever since 2008.
The increase in demand is driven by many different variables; one being millennial home buyers now able to purchase their first home according to Century 21 CEO and president Nick Bailey when speaking with CNBC on Tuesday:
“There are things that impact the time frame in which they can [purchase a home]. For example, when you look at the average age of a first-time homebuyer, and some of the reasoning behind why it is delayed, with student loans and marriages and children happening later in life,” Bailey said.
The market is still climbing up in value, and there is still plenty of opportunities to invest in real estate. Whether you are looking at the right type of property in the residential space, or maybe you are more interested in a triple net lease option on the commercial side. Either way, if you know what to look for there are opportunities out there.
In the commercial real estate marketplace, there is enormous demand coming from foreign investors, with over 365 billion invested in commercial real estate since 2010. The U.S by far is the largest recipient of foreign investment, and Evan Gentry Forbes contributor CEO and Founder of Money360 tells us why:
“Real estate has long played an integral role in global investors’ portfolios, but recently U.S. CRE has separated itself from other subsectors within the class. From a top-down perspective, the U.S. market, which has mostly recovered from the financial crisis and is fueled by strong job creation and business expansion, is viewed as stable. The market compares favorably to regions such as Europe, where the economic turmoil caused by Brexit has turned off many would-be investors.”
While demand from foreign investors is strong in both the commercial and residential space, there are still significant barriers to entry on real estate acquisitions. As challenging as this is currently for investors, it’s about to get much easier with tokenized real estate. The tokenization of real estate will provide easy access for both residential and commercial cross-border real estate investments. When real estate is tokenized, it allows real estate to be divided up fractionally and sold through cryptocurrency. Because it’s all in the blockchain, it’s more transparent and less prone to fraud and human error.
Fractional real estate investing through blockchain technology provides the best of both worlds; you get the liquidity and diversification of an equity investment combined with access to diversified international investments around the world. Blockchain security tokens represent legal ownership of fractional real estate and are a unique way of digitizing assets on the blockchain.
Many wonder how disruptive this blockchain technology will be on this 217 trillion-dollar asset called real estate. Could it disrupt the oldest investment in the world? Silicon Valley angel investor, serial entrepreneur and co-founder of RealtyReturns.io Manny Fernandez believes that the tokenization of assets has the power to make real estate a liquid investment. “blockchain technology creates the foundation for dividing real estate assets into pieces that can be traded easily through cryptocurrency, it’s the missing piece that will create liquidity in an otherwise illiquid market,” said Manny.
If blockchain can truly solve the liquidity problem in real estate, it will be groundbreaking in the investment world.
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Trevor Whiting
VP, Investor Relations
RealtyReturns
Experienced Sales Leader of over 14 years and has started offices in London, Toronto, and the US. He was VP of Investor Relations of RealtyMogul where was responsible for revenue growth, sales operations, and growth initiatives. Under his leadership, he developed a sales playbook that resulted in 2x growth.
