The Cointelegraph Research Terminal, the leading provider of premium databases and institutional-grade research on blockchain and digital assets, has added a new report to its expanding library from the industry leader in tokenization.
The report, produced by Security Token Market and its sister company Security Token Advisors, covers the emerging sector of asset-backed real estate tokenization. It contains information on the changes that are taking place in the sector and is essential for any company or business with a portfolio that includes real estate.
The tokenized real estate sector is growing rapidly amid the current market frenzy. As investors seek a more secure investment that uses emerging technology, the demand for investment opportunities based on blockchain and backed by real-world assets is increasing. Real estate assets represent more than 40% of the portfolio of certain technology providers in the industry, which probably makes it the largest and most “urgent” sector when it comes to future security token offerings.
Download the full report, with charts and infographics, from the Cointelegraph Research Terminal
To understand what the 2022 landscape looks like, the report sheds light on notable developments and deals. This sector of tokenization offers investors access to high-yielding fractional investments that can be purchased with cryptocurrencies and traded through secondary markets.
Emerging technology disrupting a traditional market
The existing tokenized real estate market can be divided into the following tranches: assets owned on the blockchain, fully tokenized assets but not actively traded on secondary markets, and fully tokenized assets that are actively traded on secondary markets.
Historically, Real estate has been one of the most illiquid asset classes, perhaps alongside hedge funds and private equity. This is not surprising, as real estate often involves extensive planning requirements, cost constraints, property management, security requirements, and legal prowess. These variables can cost an investor months and years of time, along with expenses like unavoidable fees, depending on the size and scale of the project. As of the last Cointelegraph Research report, the real estate sector still accounts for 89% of the total stock market pie; however, the global pie has grown. The number of commercial real estate operations went from 2% a few months ago to 3% of the total security tokens in which it is invested.
Tokenizing assets such as real estate allows these historically illiquid investments to gain additional liquidity. By trading fractional portions of a property, investors can enjoy the return generated from rentals and operations without the time and legal hassles associated with paper real estate investment and management.
Both residential and commercial real estate continue to increase in terms of capitalization over time. In June 2021, there was a modest $65 million cap, but as of May 2022 there was $194 million total monthly market cap. The aggregate market capitalization of all security tokens is over $16.4 billion, of which real estate is currently around 1.2%. This may seem small now, but it is the fastest growing security token sector and should be watched closely.
Authors of research reports
The security token market has been extensively researched for more than four years. This coverage can be used to inform issuers, investors, and trading companies at multiple stages of the tokenization process.
Peter Gaffney is the head of research at Security Token Advisors, a full-service consulting firm facilitating asset tokenization on behalf of clients, where he develops the security token ecosystem that helps connect organizations and services.
Aneesh Shinkre works on the Security Token Market data science team, where she statistically analyzes, visualizes, and narrates the market performance of tokenized assets, while ensuring data systems consistency to deliver in-depth research.
Thor Wahlestedt also works on the Security Token Market data science team. Wahlestedt manages the data assets and infrastructure of the Security Token Market while covering the security token ecosystem through analyst reports and market summaries.
This article is for informational purposes only and does not represent investment advice, investment analysis, or an invitation to buy or sell financial instruments. Specifically, the document is not intended as a substitute for individual investment or other advice.
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