Real Estate Tokenization : Structure, Performance and Liquidity Implications

Sammanfattning: This thesis incorporates a quantitative and qualitative approach to studying real estate tokenization. Real estate tokens are a rapidly-growing investment product with a foundation in blockchain technology. Real estate tokenization platforms and market experts view this product as a solution to many drawbacks that real estate investments have traditionally faced. For instance, tokenization of real estate opts to increase the liquidity through fractionalization of properties, enable secondary market trading, and decrease the need for intermediates in the transaction process. Theoretically, this would from the asset owner’s perspective imply a new platform for both debt and equity raising which could reach a new pool of investors from all over the world. This study examines the structure of real estate tokens and finds similarities and differences to traditional existing products. Additionally, an empirical examination of the performance of real estate tokens is conducted, measured as aggregated return, benchmarked against specific reference indexes. The empirical result found that the token indexes at large did not outperform the benchmark indexes adjusted for risk-adjusted return. Lastly, this paper investigated the potential implications increased liquidity could yield on the residential real estate market as a consequence of tokenized properties, three main conjunctions to liquidity were selected and discussed from the basis of real estate tokenization.