Real estate has always had a reputation for being an illiquid asset-class due more closely to being a traditional business. Property can take long to change hands when it is bought. According to Crypto Briefing, the real estate sector is no stranger to risks when the tech revolution is involved. One such project involved using Stellar (XLM) to give a 'liquid' boost to real estate.
The first property to be recorded as 'tokenized' was a student accommodation block. It was located in the city of Nottingham, and the building's 30% equity was made available in the marketplace to the tune of $1.3 million. The property was made into tokenized assets, allowing more than one person to hold the property for themselves.
Tokens have allowed more than one investor to lay claim on a building's equity, according to Smartlands CEO Arnoldas Nauseda. Investors can then expect their returns to come--usually in the form of rent from property tenants--as well as when the property itself is sold. From the Notthingham property, investors can be guaranteed of annualized returns to the tune of 16%.
Such is the case of Brickblock, a technical service provider in Berlin. The Tokenizer reported that the firm had tokenized a residential real estate vehicle, which was in charge of a €2 million property in Wiesbaden, Germany. The sale was exclusive to investors which had proven their eligibility to place a bid or to place an investment.
It was completed last March and held the distinction for being one of the first transactions in the European Union. It was also significant because properties have rarely been traded as 'tokens' previously. The token holder was entitled to economic benefits of the real estate asset as if they were the holder of the whole property, even if they were only part-owners.
Axel von Goldbeck, a partner at the global legal business DWF, stated that the transaction was significant for proving that properties can become flexible assets with tokenization. Real estate is illiquid, but with blockchain-based tokenization, these assets can become easily liquid. Brickblock only proved that it is easy to create a broad variety of applications for tokenization.
Tokenization is more easy to deal with than Ethereum since it affords far more liberties and benefits than the latter. The deal with Stellar gave Smartlands more benefits such as cost-efficiency and a great 'use-case' to prove that tokenization and blockchain could work hand in hand to make the usually 'illiquid' real estate properties 'liquid.'
