The tokenisation of commercial real estate

Abstract

This chapter deals with real estate tokens and tokenisation, a process involving Digital Ledger Technologies and blockchains. The self-proclaimed ‘revolution’ triggered by real estate tokenisation has become somewhat of a buzzword. The concept of tokenisation has first emerged as an application of distributed ledger technology more than as a financial concept. In the context of commercial real estate, tokenisation is a broad term which can materialise under many forms by using tokens to represent a range of ownership interests, e.g. equity in legal structures such as real estate investment trusts or private equity real estate funds, shares in debt secured against a portfolio of properties, cash flow stream from a single property. Fractionalisation of real estate assets, the process of splitting real estate assets into small comportment parts, is not a new concept in real estate finance. Tokenisation’s situation is no different from the one encountered with unitisation in the past.