5 Reasons to Invest in Tokenized Real Estate

Tokenized real estate preserves the perks of traditional investment and enriches it with the flexibility of blockchain technology.

Real estate brings a very nice income to its investors, but this market is notoriously inaccessible. To enjoy the benefits of investing in real estate, you need to have a six-digit sum of money and to be ready to speed weeks, if not months, picking a property and signing the documents.

The trend for real estate tokenization is a revolution unfolding right before our eyes. It allows for tractional ownership of properties, meaning you can collect a full-fledged real estate investment portfolio with just a several hundred dollars.

Tokenized real estate preserves the perks of traditional investment and enriches it with the flexibility of blockchain technology. Let’s list 5 reasons to invest in tokenized real estate.

Low barrier to entry

Most tokenized real estate marketplaces allow you to invest as little as $50, sometimes $100. For this money, you become an official co-owner of a property with all the benefits, including profit from rent that it brings.

The barrier is also lowered in terms of required knowledge and time. To invest in real estate in a traditional way, you need to delve into legal details, properly arrange the deal, and probably spend money on a lawyer or a real estate agent. In the tokenized real estate market, you can simply buy tokens in a few clicks. It still takes time to do research and pick a marketplace and a property, but striking a deal is many times easier.

In the meantime, we do understand that investing in real estate tokens on the blockchain may seem hard to non-tech-savvy audience. That’s why a part of the Binaryx mission is to share knowledge and simplify investing as much as possible.

The market is growing

For the past decade, the residential property sector has been steadily growing. In the $330 trillion real estate market, the share of the residential segment is about 79%.

The most profitable part of this market is rental real estate, and it is also experiencing immense growth. Here’s why:

Traveling is increasingly popular: from year to year, it becomes easier to travel worldwide as countries become more open.
The number of remote workers is growing, and the trend was reinforced by the recent pandemic. According to research, rent demand is being boosted by the increasing number of expats and digital nomads (~300M) residing in foreign countries.

The cost of buying real estate is growing, so more people prefer renting. Here’s just some of the data: over the time span of 2010 to 2022, house prices witnessed a surge of up to 126% in 24 European Union countries.

Stable

Real estate has been recognized as one of the most stable asset classes. Properties win in stability not only over volatile cryptocurrency but also over more familiar financial assets like stocks. Real estate poorly correlates with crypto & stock markets and remains mostly immune to the volatility they face.

However, there’s always a risk. Real estate bubbles do exist, and property prices can decrease due to the government’s fiscal policy or worsened market conditions. To mitigate this type of risk, it’s worth diversifying. Luckily, tokenized real estate allows that, too.

Diversified

To invest in real estate in a traditional market, you need quite a pile of money in your bank account. But what if you want to reduce the risk, diversify your portfolio, and buy a few properties? Then you’d probably need millions of dollars.

Tokenized real estate allows you to co-own properties worldwide at a small fraction of this cost. If there’s sudden instability in one of the national real estate markets, you will stay safe.

The most profitable markets worldwide include Bali, UAE, and Europe. Binaryx Platform is already listing properties in Bali, and we are entering other markets soon to enable diversification to our customers.

Liquid

99% of the world’s real estate is illiquid, according to research. This means only 1% of properties are traded on stock exchanges. Most investors and landlords end up with an asset that cannot be easily sold or exchanged: the average time to sell a property is no less than 3-6 months. This hinders capital efficiency and flexibility in investment.

When real estate is tokenized, owners can sell their properties in days, and the buyers can easily re-sell their tokens if they want. It’s much easier to trade blockchain-based $50 tokens representing a property than this $500,000 property as a whole. As a result, the liquid market unlocks numerous opportunities like borrowing/lending against these real estate tokens, issuing real estate-backed stablecoins, and so forth.

The Takeaway

Tokenized real estate lowers the barrier to entry: anyone can invest as little as $50 and earn rental income. The real estate market is famous for its stability, and it’s rapidly growing. Investing in property tokens gives you the possibility to diversify your portfolio at a low cost and enjoy trading in a liquid market.

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