This discussion could be called “Real Estate Tokenization 2.0 or 3.0” parallel to the evolution we witnessed in the CMBS market some years ago. We remain in the PropTech era of numerous startups, some offering real estate tokens or platforms for tokens, each believing they will change the world and often naïve about other players including established firms already engaged behind the scenes with their own R&D. Blockchain and AI (artificial intelligence), which is really ML (machine learning since AI does not yet exist), is being touted as a source of proprietary advantage over other firms, ubiquitously I might add, along with blockchain. In previous blogs, we tried to explain how blockchain works using decentralized distributed ledgers, allowing for identification, event dating and tracking of all transactions, independent of any centralized authority such as county governments. Blockchain’s freedom from costly recording fees and delayed bureaucracy is the foundation by which tokenization and more efficient transactions can occur. The transition is like moving from old fashioned taxi cabs to an Uber-like system, or booking your own flights versus travel agents, or downloading a movie instead of driving to Blockbusters for a cassette tape.

Efficiencies will occur and yet the title industry will not whether and disappear, nor the need for real estate consultants, brokers, appraisers, lenders, or managers, albeit in some cases doing more with less. Based partially on discussions at the Hoyt Institute thinktank in North Palm Beach, FL in May of 2023, with colleagues that included Andrew Baum, Guy Tcheau, Justin Earley, Herwig Konings, Brad Case, Jeff Fisher, Glenn Mueller, and others, this is one vision of where we might go with respect to real estate tokenization.

History of real estate tokenization in brief

Nearly five years ago (2018) the world’s first real estate tokenization offering was born when the St. Regis Aspen resort in Colorado, sold almost a 20 percent interest to investors via $18 million US dollars of tokens. The resort was reported to be worth $224 million according to businesswire.com. Today if one visits Stomarket you can find the tokens listed as “AspenCoin” with a market cap of about $49.5 million US with tZero as one of the platforms. Each token is worth about $2.75 as of May 23, 2023, with the last trade on May 23, 2023, and a 24-hour trade volume of 11,000 shares or $30,250 dollars. This compares to the smallest of micro-cap stocks on any exchange but remember this is a babe in the woods compared to traditional stocks. Solid Block assisted in the technical aspects of this launch in 2018 and now several other firms are providing white board platforms. Today, Forbes estimates the market size of real estate tokens as $200 million US. Those who invested in AspenCoin seem to have done well with $18 million almost tripling in three years.