Sonata Capital
Published in

Sonata Capital

Opportunities For Tokenization In Real Estate

Security tokens offer key advantages over traditional financial structures for real estate developments.

  1. They can be swiftly issued to raise liquidity from an international market.
  2. They can be continuously and globally traded.
  3. They are secure, in the event of loss or theft, they are returned to their owners.
  4. They can be fractionalized to access a broader investor base.
  5. They are covered by similar laws to those protecting owners of traditional securities.
  1. A global investment pool. Tokenization allows access to a truly global pool of investors. Only capital and an internet connection are required for compliant investors to participate in buying, holding and selling global real estate. Compliance processes take only minutes to complete online. Tokenized real estate provides access to investors in other digital asset classes such as cryptocurrencies. Security tokens can be traded around the clock with anyone, anywhere.
  2. Reduced cost of entry. Security tokens can be programmed for fractionalization. This subdivision lowers the minimum investment cost, opening up investment to a significantly greater number of smaller investors who would otherwise be unable to participate in real estate ownership.
  3. Reduced sale time. Compared to traditional methods of real estate sales, well marketed, effectively structured STOs can be placed swiftly. This is particularly pertinent during a period of global lockdown when traditional investors are unable to travel to the real estate location.
  1. Reduced cost of public offering. Compared to an IPO, an STO is faster, cheaper and global.
  2. Standardized transactions. Security tokens are built around smart contracts programmed on a blockchain. These smart contracts are standardized and can be coded to represent sale and purchase agreements. Contracts are therefore not required to be individually negotiated as the terms are automatically enforced. This substantially reduces transaction costs.
  3. Immutability. As transactions are completed, they are registered and confirmed on the blockchain. This immutability gives investors confidence that their transactions cannot be falsely altered at a later stage and ensures there is no illegal double selling of land.
  4. Streamlined management. There are numerous transactional touchpoints throughout the life of real estate contracts. Tokenization offers significant cost savings for managing investors and their ownership rights. Transactions are transparent, and the programmable nature of smart contracts ensures automation of dividend distribution and other ownership rights, such as voting.
  1. Tokenization of a real estate asset. The ownership rights of a property can be tokenized to access liquidity from a global investor base. The value of the token is backed by the value of the land.
  2. Tokenization of equity in an entity. The ownership of the legal entity that owns real estate can be tokenized. These equity tokens can provide rights to any of the other tokens issued by that legal entity.
  3. Tokenization of profits. The rights to profits, such as rental income from real estate, can be tokenized.
  4. Debt interest. Ownership in a debt instrument secured by real estate can be tokenized.
  5. Carbon credits. The carbon credits generated by real estate can be tokenized.



Actively managed, tokenised, and exchange traded investment funds across asset classes and sectors.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Sonata Capital

A collection of actively managed, tokenised, and exchange traded investment funds across asset classes and sectors