New Asset Class in Real Estate Investing
Imagine if I were to inform you that I have an iconic and globally-recognized trophy property. You could buy it today. Your equity is wholly liquid, translucent and SEC-approved being a digital investment. Off the bat, it may sound like I have the Brooklyn Bridge to sell you, but I assure you I don’t. It is a securitized token offering (STO) — and it’s here today.
Block chain has been probably one of the most talked-about (and most invested-in) emerging technologies of late, and it’s truly one of the biggest enterprise opportunities to come around since the advent and mass adoption of smartphones.
And of course, it’s beginning to eke its way into all sorts of real estate transactions.
The very foundations of our international economy are evolving in front of our eyes. The impact that block chain will have with how we live and the way we work in the foreseeable future cannot be understated. Blockchain has been likened to one of the most revolutionary technological advances. I might say the five biggest inventions in human history, include the printing press, power, radio, the internet and, you guessed it, blockchain.
Back to this bridge I’m not trying to sell you. When it comes to global assets, one of the biggest global investment economies is real property. At the close of 2017, the value of the whole world’s real estate reached $280.6 trillion (USD), and by some step, real estate is far and a way the most crucial store of riches, representing greater than just three and a half times that of the whole global GDP.
Evidently, the international property markets are a wonderful spot for the execution of new technologies to advance progress in a industry of old investment strategies. Fintech and proptech businesses are carrying the classic real estate industry by storm through the development and execution of block chain and cryptoasset creations, progressing investment.
By 2025, nearly all global real estate investments will probably be issued as tokenized asset offerings (TAOs) and considered cryptoassets, notably safety tokens, exactly like traditional securities but traded without financial intermediaries, banks or REITs.
What’s more, property, loans, equities and anything now considered by regulators and related legislation as a collateral can be tokenized. While securities laws will clearly apply to this kind of cryptoasset, the investor appeal is clear: the capability to tap a borderless and highly liquid decentralized market for land investment that is available to all.
An example on a massive scale is that of the NYC Real Estate Coin (NYCREC), also a tokenized property fund, which will be starting its security market offering in Q4 2018. The NYCREC is a controlled portfolio of diversified real estate assets that offer people around the world use of NYC property investments by way of a smart contract on the blockchain within an STO.
Liquidity, peer-to-peer and transparent investment in major industrial resources without the need for time-consuming and expensive intermediaries: that is completely new territory in the real estate marketplace. This industry transformation has been afoot as many of the planet’s most desired properties are being positioned through cryptoasset and safety investments, and this movement is simply gaining traction as liquidity grows more available for these new investment opportunities.
Security tokens are the future of property development and also can continue to progress the digitization of more illiquid assets including bonds. Security tokens can also be touted to possess better legal clarity compared to their cryptoasset counterparts, cryptocurrencies and utility tokens. Security tokens also provide regulatory security for investors through the SEC’s and also FINRA’s strict rules and limitations on securities.
Traditional techniques of increasing investment capital like venture funding, bond issuance and stock offerings will certainly be moving toward tokenized asset offerings. What do you think about cryptoassets and tokenized offerings?
