The tokenization of real estate : investing in real estate with the blockchain

real estate tokenization

The evolution of blockchain and its growing role in the economy will disrupt many industries in 2024. Real estate is no exception and several companies are now offering to invest in real estate via the tokenization of real estate. What is it? The tokenization of real estate consists of dividing a property into several parts, called tokens, and then making them available for purchase by investors. Let’s take a closer look at an innovation from across the Atlantic that is revolutionising property investment in France and Europe.

What is the real estate tokenization?

The tokenization of real estate is the inscription of a real estate asset and the rights attached to that asset on a digital token.

In other words, tokenising real estate is like registering your ownership (the real estate asset) and the rents that accrue to you (rights attached to that asset) on a given token (digital token).

Well-known on the other side of the Atlantic (we speak of real estate tokenization), tokenizing one’s property is a practice that is gaining ground among investors in Europe and several players are trying to take their place on the market.

To understand the precise definition of real estate tokenization, it is important to understand the terms surrounding this concept.

What is a token? What is tokenization?

The token is the digital representation of an asset registered on the blockchain.

A token can represent different types of assets, it is possible to tokenise :

  • A property (land or building)
  • A share in a company
  • A work of art, a creation

Not all crypto-currencies are necessarily tokens. We talk about tokens if the crypto in question is based on an already existing blockchain (for example all crypto-currencies based on the Ethereum blockchain). If a specific blockchain is created for this crypto and the project it carries, then it is called a coin (bitcoin and the Bitcoin blockchain, ADA and the Cardano blockchain…)

What is blockchain?

Blockchain is the technology on which all digital assets (Bitcoin & other cryptocurrencies for example) are based.

The blockchain allows the storage and transmission of information in a decentralised manner (no central entity controls it) in the form of a chain of blocks. A block is unforgeable, each modification leads to the creation of new blocks, replacing the content of the previous ones so that the information contained is always up-to-date and accurate.

The blockchain is fully accessible: anyone has the right to consult it, at any time.

As part of the tokenization of real estate, all your real estate assets associated with tokens will be searchable on the associated blockchain.

How to tokenize a property?

As we have seen, tokenising real estate means making a digital asset with information permanently accessible on a large public register: the blockchain. Let’s now see technically how your flat can be tokenised.


There are several techniques for tokenising property, and we’ll introduce you to one of these methods, which is to use a company. If you want to get started, try RealT! The leader in real estate tokenization.

The need for a company to tokenise real estate

A person creates a company called a Token Real Estate (this can be a SARL, SAS or an LLC for the USA). It is this structure that will buy the real estate in its name.

The management of Token Real Estate decides to make a rental investment by buying a flat in New York for $1 million.

The flat was immediately rented out, and the new occupants paid the rent every month to the Token Real Estate company.

Enterprise tokenization and asset issuance

Token Real Estate owns the flat in New York.

The switch to tokenization is made at this point: the directors of Token Real Estate will issue on a given blockchain 1 million TI tokens (for Token Real Estate) each representing 1 dollar, i.e. the equivalent of the value of the single property managed by the company.

Once the company is tokenised it is then possible to put these 1 million tokens on sale on the primary market, available for purchase by any investor.

The sale of real estate tokens

If you decide to buy 1,000 tokens, you will have to pay 1,000 dollars and you will own 1% of Token Real Estate and therefore 1% of the flat held by the company in New York.

Thus, 1% of the rent will be paid to you, because as we have seen, the token makes you the owner of the real estate asset but also of the rights attached to this asset: the rents.

Rent payments through smart contract

The tokenization of real estate works with tokens, which are themselves based on blockchain technology which is decentralised: there is no centralised entity to deal with rental management. So how are rents paid?

This is where smart contracts come in.

A smart contract is a program that is capable of executing tasks in accordance with the indications that have been set out in its code. The operations performed by smart contracts do not require any external human intervention (since they are smart).

In the case of real estate tokenization the understanding of a smart contract is simple: if a person holds x tokens then they own x% of the company and should receive x% of the rents.

When you buy 1,000 tokens, the information is written directly into the smart contract, which must, in accordance with its schedule, pay you the corresponding 1% of the rent on the scheduled date.

You want to buy real estate tokens? We suggest you go through RealT! Launched by 2 real estate experts, RealT has been operating across the Atlantic since 2017 with a very extensive catalogue. Setting up the wallet is quite quick and their customer service is available to help if needed.

The benefits of tokenization of real estate

What are the advantages of using real estate tokenization rather than traditional investment channels? Whether you are an issuer or a buyer of tokens, you will find that tokenization offers a considerable number of benefits.

The costs of tokenization

The rent payment system implemented with the smart contract requires no human intervention and costs very little.

Thus, you completely avoid notary fees, which represent about 2 to 3% of the purchase price for new properties and 7 to 8% for old properties. This is one of the most interesting features of peer-to-peer networks: you cut out the middleman.

Because it is a token and not the real estate it represents, its resale on the secondary market can be done with very low transaction costs. Indeed, a token is not subject to all the regulations and successive administrative layers of real estate assets involving the intervention and billing of professionals in the sector.

Secure real estate transactions thanks to blockchain

As we saw at the beginning of this article, the blockchain is a decentralised register accessible to the public.

It is completely tamper-proof as nothing can be permanently deleted without noticing that a change has been made. Therefore, any human error or deliberate change could not result in the loss or transfer of your real estate token without your consent.

The blockchain therefore allows full ownership of your real estate token.

This is a real paradigm shift when one considers that today in France, proofs of shares in SCIs and transfers of these shares are kept in a register which is itself guaranteed by a centralised company managed by humans. Like any human, these people are susceptible to error or manipulation of these contractual documents.

The blockchain overcomes the problems caused by human behaviour: errors, corruption, etc.

The speed of execution of a smart contract

If you have already made a first real estate investment, you may have witnessed the extreme administrative slowness of the different actors: real estate agency, owner of the property, notary’s office, etc…

Each party involved must check and respond to a series of very specific administrative procedures: signing the preliminary sales agreement, expiry of the withdrawal period, fulfilment of the suspensive condition, signing the deed of sale, etc.

The smart contract is programmed to perform its task 24 hours a day, instantly. This whole time-consuming contracting process is completely eliminated with smart contracts.

The liquidity of real estate tokens

Put your house or flat up for sale today and count the number of days before you receive the first dollar from the transaction. According to a Se Loger study, it takes between 90 and 100 days to sell a property (of all types) in France.

In the same way that you buy and sell shares on regulated markets, a real estate token is ultra liquid: you can sell it very quickly.

This characteristic is all the more important in difficult contexts, when the markets are strongly bearish for example. If a real estate crash occurs tomorrow, the liquidity of your token would allow you to avoid a sudden drop in the value of your property.

The liquidity of a token will depend on the configuration of the market on which it is issued. The company that issued the token on the primary market may offer you the possibility of an unconditional redemption. That is to say that at any time, whatever the context, it buys back your token at the market price. This absence of negotiation is paid for by a small redemption fee (2-3%).

You can also sell your real estate token on the secondary market: this is the market where all buyers who have acquired real estate tokens (like you) can freely exchange their property titles.

This secondary market operates as a peer-to-peer network, with exchanges taking place directly between the two players (buyer and seller), without the need to ask a third party to validate the transaction.

This second dimension is interesting insofar as the tokenization of the property (i.e. its fragmentation into several parts) makes it possible to sell it in its entirety to dozens or even hundreds of different investors.

It will then be much easier for the seller of a multi-million dollars property to sell the entire property by selling hundreds of tokens to hundreds of investors, rather than finding a single buyer willing to pay the full amount.

Access to the global real estate market through tokenization?

This is the advantage you get when you add the three previous ones: security, speed and liquidity. These three factors allow you to invest in any property, anywhere in the world, without the constraints of today.

Buying a residence today in Turkey, India or the United States, while being resident in France, is a very complex matter:

  • Do you know the person who will carry out the operation? Will they trust you? Do you have a good command of the language?
  • How long does it take to become an official landlord? How soon will you start generating income from rent?
  • How can you sell your property without taking months if you are not there when you want to part with it?

Tokenising a real estate asset allows you to address these three issues in a simple way:

  • The interlocutor is no longer there, he is replaced by a smart contract written in English, you have access to the entire program that governs it.
  • Obtaining the token symbolising the ownership of the asset (and the rights attached to it) is instantaneous from the moment the purchase is validated. It is stored in a wallet adapted to digital assets.
  • The resale of the real estate asset takes place as quickly as the purchase via the company that sold you the property or on the secondary market.

Regulation and legal framework for real estate tokenization

MiCA law and European framework for crypto-assets

At the end of 2020, a standardisation of the laws surrounding crypto-assets is proposed at European level to ensure a balance between the different countries in the European area.

The draft regulation is called MiCA (Market in Crypto-Asset Regulation) and opts for a single authorisation valid throughout the European Union for issuers of public offerings of tokens (i.e. the company that sells you the real estate tokens) in excess of 5 million euros.

However, the European Banking Authority and the European Securities and Markets Authority are expected to develop the final text and complementary technical standards around this text in the near future.

Tempted by real estate tokens? You can start investing with only €50 at RealT. The installation of your wallet is done directly online and the customer service is very reactive (and speaks French!) if needed.

Tokenization is revolutionising the property sector. Although the workings of this new technology are not the easiest to understand, the benefits are undeniable and surpass those of the traditional scheme of investing in property: cost, speed, liquidity. The market is still young and the regulatory framework is in its infancy, but there will be many opportunities for those who take advantage of blockchain technology applied to the real estate sector.

Jordan Houi
Article by

Jordan Houi

Passionate about savings and investment topics. I modestly try to offer you simple, sometimes not so simple, solutions to beat inflation.

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