What benefits do real estate tokens bring?

No new technology will be prescribed if it does not bring significant advantages. Real estate tokenization is loaded with big advantages.

• It can help raise additional capital. Breaking down and otherwise inaccessible and illiquid assets into small and affordable tokens, the target audience becomes significantly wide. This process also helps investors to diversify their portfolio. They might not want to put all their eggs in a single basket.

• When it comes to illiquid assets, institutional investors have the upper hand over individual investors. Big investors could afford not to see the returns anytime soon. This attribute resulted in the devaluation of the asset in the name of illiquidity discounts. With real estate tokenization, the problem of liquidity is affectively addressed, rendering discounts irrelevant.

• Liquid investment vehicles like REITs traded at a 20% premium. With the introduction of tokenization, it is possible to reduce the premium as well. It can be seen that tokenization addresses both the ends of liquidity. The reduction in discounts and premiums will ensure that the asset’s executable price stays close to its actual value.

• The digital secondary market enables real-time price discovery. The pricing information is based on orders books, and that is a possible chance of discrepancy in information. However, with blockchain, the consistency of pricing information is guaranteed to be uniform and real-time.

• Just like any other blockchain-based system, real estate tokenization brings in the advantages of improved transparency and automation in processing, thanks to smart contracts.