Tokenised Real Estate: How Blockchain Is Beginning to Transform Property Investment.

The proposition of tokenised real estate — the conversion of a property asset into digital tokens recorded on a blockchain, allowing fractional ownership, near-instant settlement, and potentially continuous liquidity — has been discussed in theory since the emergence of the Ethereum platform in 2015. The translation of this theory into operational market practice has been slower than its proponents predicted, but the infrastructure has matured significantly in the past three years, and a small but growing number of institutional transactions have demonstrated that the concept is operationally viable at scale.

The mechanics of real estate tokenisation involve the creation of a Special Purpose Vehicle (typically a limited liability company or a limited partnership) that holds legal title to the property. Digital tokens representing fractional economic interests in the SPV are then issued on a blockchain platform — currently Ethereum, Polygon, and Avalanche are the most commonly used for real estate applications — and sold to investors. The tokens carry economic rights (income distribution, capital gains participation) but typically do not confer direct legal ownership of the underlying property, which remains with the SPV. This structure is important because it means that tokenised real estate transactions must still comply with relevant securities law in each jurisdiction where tokens are offered to investors — they are, in effect, digital securities rather than direct property interests.

The platforms currently operating in this space include Lofty AI (focused on US single-family residential), RealT (US residential, with secondary market trading), Blocksquare (European commercial real estate), and Propbase (Asian markets). The most significant institutional transaction to date — the tokenisation of a $3.5 billion commercial real estate portfolio by a US-listed REIT in partnership with a major European digital asset platform — demonstrated that the technology can accommodate transactions of institutional scale. The open questions concern secondary market liquidity (token holders who wish to exit must find willing buyers in what remains a thin market), regulatory clarity in multiple jurisdictions simultaneously, and the practical challenge of price discovery when the underlying asset is illiquid and infrequently valued.