Real estate tokenization is when a real estate property or its cash flows are described as a blockchain token (or tokens) for:

  • increase liquidity
  • streamline processes
  • enable digital ownership

In fragmenting assets, real estate tokenization involves digital tokens, representing fractions of the underlying properties. Tokenization opens up a real estate investment in a wider range of possible buyers by breaking down expensive properties into smaller, and more affordable units.


The blockchain will be the backbone of the process, as it provides a transparent and secure platform to store and transfer tokens. These are smart contracts with self-executing agreements, defining the contractual specifics and executing transfers automatically of certain conditions. The combination of technologies reduces the need for intermediaries and streamlines the transaction process, making the entire process more efficient.

This combination of technologies streamlines the transaction process and reduces the need for intermediaries, ultimately making the entire process more efficient.

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Benefits and challenges

Tokenization offers the benefits of an extension beyond efficiency. Here are the top two notable advantages of tokenization:

  • increased liquidity
  • accessibility

Real estate has been an illiquid asset class because of the high costs and lengthy process of buying and selling properties. Tokenization deals with the issue by enabling investors to buy and sell fractional properties’ shares with greater ease and improves liquidity in the market. The tokenization of real estate can’t have its benefits without its challenges. The lack of a consistent regulatory framework is the primary concern that governs the market.

There are varying rules and regulations in different jurisdictions surrounding digital assets leading to uncertainty and confusion for investors and issuers. Furthermore, the absence of a centralized reporting system for the tokenized real estate transactions stops transparency and is difficult for regulators to monitor and enforce compliance.

Advantages to real investors

The ability of small investors is one of the advantages of tokenized real estate to buy fractional ownership in properties. The approach is allowing expensive properties to become accessible. People can buy smaller shares of assets, instead of needing to invest large sums of money. The real estate market, through tokenization, becomes more included and offers investment opportunities to a wider range of individuals.

In fractional ownership, tokenized real estate brings increased efficiency and transparency to transactions. The transactions become more clear and straightforward by using automated smart contracts and eliminating intermediaries, which allows regulatory efficiency and greater traceability.

This ultimately benefits both investors and the overall real estate market, as it becomes easier to navigate and understand the intricacies of property investments.

By Elora