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Real Estate Tokenization Moves Toward Mainstream
Real estate tokenization is rapidly transitioning from the experimental stage to mainstream application. According to a report released on Thursday by the Financial Services Center of Deloitte, an international accounting and consulting firm, this innovative mechanism that combines blockchain technology with traditional finance is expected to become the core infrastructure for real estate financing, ownership transfer, and transactions in the future. Deloitte estimates that by 2035, the global real estate tokenization market size will reach $4 trillion, with an annual compound growth rate of up to 27%. Compared to the current market value of less than $300 billion, the growth potential is quite remarkable.
Three Key Development Directions
Real estate tokenization is a part of the concept of “Real World Assets on the Chain” (RWA), aimed at transforming physical assets into programmable and tradable digital tokens through blockchain technology. This process not only enhances operational efficiency and asset transparency but also shortens settlement times, reduces transaction fees, and attracts more small and medium-sized investors, realizing the democratization of capital markets. The report indicates that tokenization can simplify the complex financial agreement processes in traditional real estate transactions into self-executing smart contracts, further lowering financial and legal costs.
Deloitte outlines three major development directions for real estate tokenization:
- Private real estate funds
- Securitized loan ownership
- Undeveloped or under-construction land projects
Among these, bond-related products are expected to become the primary application category, reaching a market value of $2.39 trillion by 2035; private funds are projected to contribute about $1 trillion, while land development assets are estimated at $500 billion. Deloitte also mentions practical cases, such as the $100 million real estate debt fund launched by Kin Capital in collaboration with the blockchain platform Chintai, which has adopted an on-chain tokenization structure based on trust agreements, demonstrating the potential of this technology in the automation of financial products.
Challenges Yet to Be Addressed
Despite the promising outlook, Deloitte warns that the industry must face several challenges, including regulatory uncertainty, the immaturity of trust mechanisms for asset custody, cybersecurity and hacking risks, and issues related to the handling of debt defaults and legal applicability. The report concludes that if these obstacles can be overcome, real estate tokenization has the potential to become a significant engine driving the transformation of the real estate and financial industries.
