Real estate tokenization has gained considerable attention in recent times and, above all, in an inflationary context like the one that is currently going through. The frequent question, for those who have the ability to save, is which investment is more profitable and reliable as a safeguard of value?
In this sense, tokenization is growing among the favourites, thanks to its ability to democratize investments that were previously only accessible to a small group of people. Today the tokenization of real estate, as well as other assets in the real world, such as agriculture, allow more people to invest in these segments in a simple and secure way, thanks to blockchain technology.
In the case of real estate, tokenization involves the conversion of real estate assets into digital tokens, backed by a smart contract on a blockchain. And this allows small investors or savers to enter a very attractive market due to its profitability in dollars but without the need to pay large amounts of money.
“The truth is that today the so-called “Real World Assets” or real world assets tokenized on the blockchain -such as real estate- are setting a trend of sustained growth. Argentina is one of the Latin American countries with the highest penetration of crypto transactions with more than 1.3 million crypto investors. And many of these investors are the ones who are increasingly choosing these types of projects today because of the security they provide, the higher return they offer and the stability they guarantee compared to other much more volatile crypto assets”, explains Álvaro Castro Burgueño, co – founder & Rext Chief Portfolio Officer .
For his part, Guillermo Escudero, regional manager and Strategic Alliances manager for Cryptomarket -cryptocurrency exchange platform-, adds: ” I find real estate tokenization projects very interesting, but there are also other types of projects, not just real estate, such as in agriculture, and also coins issued by Latin American governments or even gold tokens that can be purchased on platforms such as CryptoMarket”
According to this reference, one of the advantages is the optimization of shipping, without depending on too many intermediaries and bureaucracy: “It does not mean that the managers that mediate these operations are going to be eliminated or that there are no entities that support the operation, but surely the process is optimized and facilitates the transfer of that tokenized good”.
Gateway to real estate investments
Rext -a company specialized in real estate tokenization and real economy assets- is an investment platform in Real Estate assets that fragments the property into tokens to be able to accept investments of very low amounts, and allows Latin American investors to invest in real estate in the United States States and receive monthly returns in dollars. Its flagship product is a boutique hotel in the city that today has Leo Messi as its main star: Miami.
“Tokenization is a process that allows rights to an asset or security to be converted into a token on a blockchain. In our case, we focus on the tokenization of real estate in the United States, allowing investors from Latin America to invest from USD 1,000 and obtain monthly returns, through buying tokens that represent a fraction of a property”. expands Castro Burgueño.
Advantages of tokenization vs. traditional investments in real estate:
- Democratization: Allows investors to access assets that might otherwise be out of their reach. For example, real estate in the United States can be expensive and difficult to acquire, but if it is tokenized, investors can buy a fraction of the property at a much lower cost.
- Cost Efficiency : Tokenization cuts out traditional intermediaries, which can lower transaction costs and make investing more affordable.
- Simplicity and speed: It can be purchased in a few clicks from the place where the investor is.
- Red tape is reduced : there is no need to register an LLC, hire lawyers and accountants in the United States.
- Greater liquidity: although real estate investments are traditionally not very liquid, through Tokenization it gains liquidity since tokens can be bought and sold more easily.
- Greater transparency and security , since transactions are recorded on a blockchain, an immutable and secure digital record.
“Thanks to tokenization, the investment processes are much faster and cheaper, making the market more agile and cheaper, attracting more investors and enriching the system,” he considers. Ramiro Raposo, VP of Growth and Country Manager for Argentina at Bitwage Inc. -the pioneer platform for payment of fees in cryptocurrencies and digital dollars most chosen by workers, freelancers and service exporters.
“It is encouraging for younger generations to be able to access investments that would otherwise be impossible. I have 30-year-old non-millionaire friends who own part of a luxury hotel abroad without even having traveled to the country where the property is located. This at another time would have been unthinkable ,” adds the 33-year-old millennial.
From Koibanx -a leading company in financial tokenization using blockchain technology-, the CEO and co-founder Leo Elduayen , comments that tokenization is an innovative format for financing real estate projects in Argentina, which “is positioned as an interesting alternative for both small investors, as well as for developers or construction companies”.
And he explains: “It is based on the real estate crowdfunding modality, with the particularity that each participation is represented by tokens. This provides benefits such as transparency and traceability through blockchain technology. Also, the immutability of the tokens allows investors to verify the status of their stake.”
In this way, it is expected that this new modality that is revolutionizing the traditional real estate market will continue to grow, offering new projects and opportunities so that more people can be part of and benefit from the new possibilities that blockchain technology offers today together with the tokenization.