Take real estate tokenization to the next level
AAlthough many individuals and institutions find real estate an attractive investment alternative, the expensive upfront investment creates a significant barrier to entry for the average property investor or builder. Combined with inefficient and labor-intensive paper-based processes and a lack of oversight, participation, liquidity and performance are limited. Making the real estate market accessible to a wider investor base requires improving the efficiency of the initial investment process as well as the ongoing management and administration of real estate. Issuing real estate tokens on a distributed ledger technology (DLT) -based platform and creating a marketplace for issuers (owners), investors and other stakeholders can be the solution to push through the real estate market to the next level.
Think of tokens as representations of actions of a property, encoded with information about the property and property rights. The distributed ledger is the single source of truth for all parties and a clear, transparent, unchanging, real-time record of who owns what. Using a private DLT-based platform, as opposed to a public blockchain, allows the market operator to validate participants and allows information relating to a transaction to be only available to participants involved in the transaction. the transaction. The automation of processes, including approvals and the exchange of funds, ensures the confidentiality of market participants, by centrally linking, via tokens, all documentation associated with the issuance of land titles.
Using a DLT platform eliminates the need for reconciliation between parties through channels such as email and agreements. Getting a new asset on the market and closing a deal is much faster and less complicated. Splitting ownership into affordable stocks allows the real estate market to become more inclusive and accessible to a broader investor base, removing the high barrier to entry and allowing issuers to access capital.
Bringing together information on counterparties, price sources and other data in a way that facilitates consumption and use by token holders for investment decision making helps standardize and automate the flow work for the entire life cycle of the asset in a complex ecosystem.
Theoretically, tokens could be based on a legal structure in which a trustee looks after the interests of token holders. Many processes – including payment confirmations, management fee deductions, trust deposits for repairs, and dividend distributions – could be performed automatically through smart contracts, and token holders could have a digital record of the activity. Smart contracts could also handle default scenarios, such as when tenants fail to pay on time or managers fail to perform their duties.
The evolution of DLT and the ability to tokenize and trade any asset digitally has unveiled new opportunities for exchanges and start-up markets. To get started, you need a robust enterprise DLT platform that offers a seamless workflow throughout the lifecycle of tradable assets and complementary services including market monitoring, reporting. and risk management.
To learn more about Nasdaq’s technology for tokenization of real estate assets on a DLT-based platform, you can visit our website.