Taiji Capital Group reportedly made history by initiating Hong Kong’s first Real Estate Fund Security Token Offering (STO), as a local news source reported.
Under the management of its subsidiary, Pioneer Asset Management, the closed-end investment fund will issue tokens exclusively to professional investors to raise approximately HK$100 million.
This initiative will raise funds to acquire five interconnected retail properties on Prince Edward Road West in Kowloon.
Subject to regulatory sanction, these tokens will be made available on Taiji Capital’s virtual asset trading platform, HKbitEX, enabling continuous 24-hour trading and reducing financing costs.
This newly introduced token, aptly named the “PRINCE token,” is poised to transform real estate financing.
Security Token Offerings (STOs) provide a cost-effective alternative to conventional financing methods for property proprietors and real estate developers.
Since bank loans frequently carry high interest rates, sometimes up to 5 percent, tokenization of funds can result in substantial savings, with financing costs reduced by at least one-third.
Compared to lengthy and complex processes such as Initial Public Offerings (IPOs) and Real Estate Investment Trust (REIT) listings, which require the participation of investment banks, legal professionals, and accountants and can take up to nine months to prepare, fund tokenization, which fund managers oversee, can be completed in three months.
This innovation substantially reduces the financial barrier to investors’ entry into the real estate market. Historically, real estate investments required a substantial quantity of capital.
On the other hand, fund tokenization enables opportunities with an entrance fee as low as HK$1,000.
In addition, once these PRINCE tokens are listed on the platform for trading virtual assets, they can be perpetually traded. Investor’s ownership is recorded securely using Ethereum or other blockchain technologies.
