According to Moore Global’s newly published report which gathered expert opinions worldwide about the future of the tokenized real estate market, it showed the industry will grow to $1.4 trillion in years to come.
Tokenized property is still a small market, owing to its novelty and regulatory uncertainty. However, according to a new report, even if only 0.5 percent of the global property market is tokenized in the next five years, the industry will grow to $1.4 trillion.
The overall value of the global real estate market has surpassed $280 trillion in recent years, surpassing most other major asset classes and approaching the size of total world debt owed by 2020.
Moore Global, a London-based international consultancy and accounting firm, has released research that compiles expert viewpoints from around the world on the possibilities of tokenization for this flourishing, albeit typically illiquid, asset class.
Blockchain’s major benefit to the sector, according to Dan Natale, Moore Global’s real estate and construction leader and managing partner of Segal LLP in Toronto, is a boost to liquidity by providing efficient, disintermediated infrastructure to underpin new secondary markets.
According to David Walker, a managing partner at Moore Cayman who works as a digital asset auditor, the technology’s openness and security offer obvious benefits from an auditor’s perspective.
Because of institutional investors’ hesitation and the lack of established secondary markets for security token trading, the expansion of real estate tokenization has fallen short of expectations so far.
However, with the Financial Conduct Authority of the United Kingdom giving an operational license to digital security exchange Archaz in August of last year, this may be progressively changing.
Germany’s Federal Financial Supervisory Authority (BaFin) had approved the country’s first blockchain-based real estate bond, which was based on Ethereum, a year before.
Andrew Baum, director of Oxford University’s Said Business School’s Future of Real Estate Initiative, believes that tokenization in real estate could eventually take off if there is evidence of investor demand for fractional ownership – something that tokenization proponents have pushed since 2017.
Last summer, Overstock’s regulated tZERO exchange launched a security token reflecting fractional ownership in the premium St. Regis Aspen Resort in Colorado, garnering record trade volumes.
In less than a month, however, investors were being offered significant discounts on their vacations at the resort to help promote token sales, despite the token’s somewhat flat performance due to the coronavirus slowdown.
tZERO has just partnered with NYCE Group to tokenize $18 million worth of shares in the platform, which has been dubbed the “Robinhood of real estate investing.”
