Real Estate Insights: The current state and the new future of tokenization in real estate
| Date | 05 August 2024 |
| Pages | 614-620 |
| DOI | https://doi.org/10.1108/JPIF-07-2024-0087 |
| Published date | 05 August 2024 |
| Author | Seyedeh Fatemeh Mottaghi,Bertram I. Steininger,Noriyuki Yanagawa |
Real Estate Insights: The current
state and the new future
of tokenization in real estate
Seyedeh Fatemeh Mottaghi and Bertram I. Steininger
Department of Real Estate Economics and Finance,
KTH Royal Institute of Technology, Stockholm, Sweden, and
Noriyuki Yanagawa
Graduate School of Economics, The University of Tokyo, Tokyo, Japan
Abstract
Purpose –This real estate insight provides a comprehensiveanalysis of the current state and future potential
of tokenization in the real estate industry mentioningseveral challenges to overcome to take advantage of this
technology. We highlight potential benefits, including enhanced liquidity, increased security and improved
accessibility. Additionally, the real estate insight critically discusses potential drawbacks, such as regulatory
challenges and technological risks, and explores the impact of tokenization on real estate prices.
Design/methodology/approach –This real estate insight employs a comprehensive literature review
alongside a qualitative analysis of various case studies to explore current implementations of tokenization
within the real estate industry. Multiple applications of tokenization in the real estate industry are examined,
including fractional ownership, property management and transaction processes. The study investigates the
optimization potential of tokenization for asset liquidity in the real estate area, transaction transparency and
security. It also critically discusses potential challenges,such as regulatory compliance, security vulnerabilities
and market adoption.
Findings –The future of real estate tokenization, driven by blockchain technologyand smart contracts, offers
significant potential for growth, enhancing liquidity and accessibility through fractional ownership. Smart
contracts automate and secure transactions, while evolving standards and regulatory frameworks in regions
like North America, Europe and Asia support market expansion. Since its initial implementation with the St.
Regis Aspen ResortSTO, a stream of successful projects has highlighted the viability of tokenization. However,
challengesremain, including the need for regulatory clarity, industry and customer education, displacements of
market participants and jobs and environmental impacts. Integrating advanced technologies like AI and IoT
can further streamline property management and investment decisions.
Practical implications –The real estate insight’s practical implications extend to industry professionals,
policymakersand technologydevelopers.Professionals gaininsights into how tokenizationcan enhance liquidity
and security in the real estate sector, guiding strategic decision-making. For policymakers, understanding
potential challenges like regulatory complianceand technological risks informs the development of supportive
regulations. Technology developers can also benefit from understanding the sector-specific applications and
concerns raised.Highlighting the need forrobust security measures and regulatory compliancein tokenization
systemsmay foster better design practices.Therefore, the realestate insight’s findingscould significantlyshape
the future development of tokenizationintegration in the real estate industry.
Originality/value –This real estate insight offers original value through a comprehensive analysis of the
current and future impacts of tokenization in the real estate industry. It examines various applications of
tokenization and critically discusses the potential challenges. The focus on informing strategic decisions for
professionals and policymakers enhances its utility as a resource. Additionally, by addressing both the benefits
and drawbacks, this study contributes to the broader discourse on the societal implications of tokenization. In
JPIF
42,6
614
© Seyedeh Fatemeh Mottaghi, Bertram I. Steininger and Noriyuki Yanagawa. Published by Emerald
Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0)
licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both
commercial and non-commercial purposes), subject to full attribution to the original publication and
authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/
legalcode
As this article is a briefing/insight commissioned by the editor, it has been subject to editorial review
only.
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1463-578X.htm
Journal of Property Investment &
Finance
Vol. 42 No. 6, 2024
pp. 614-620
Emerald Publishing Limited
1463-578X
DOI 10.1108/JPIF-07-2024-0087
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