Blockchains seek to construct more sophisticated monetary policies.
While REITs are just one of many types of investment vehicles, and there is an entire galaxy of real estate ventures and investment funds looking to take advantage of distributed ledger technology, in my opinion, specifically nonlisted and private REITs may stand to reap the greatest benefits of tokenization.
What does tokenization potentially mean for the real estate sector?
Solving the illiquidity discount problem.
Firstly, through the utilization of blockchain technology, conventional and highly regulated real estate investment vehicles (like REITs) can operate at unprecedented levels of efficiency by making programmable governance and built-in regulatory compliance possible on the platform and/or the security token levels, as well as by automating cap table and investor management processes. This will, at least in theory, lower management expenses and increase the profits that get returned to investors.
Secondly, the symbiotic emergence of digital security issuance and secondary trading platforms brings with it not only the possibility to significantly reduce (if not eliminate) the traditional counterparty risk and transactional friction, but to also make the underlying assets more liquid. This suggests that, in the future, nonlisted and private real estate investment vehicles (like private REITs) — which once represented a highly illiquid section of the market — may no longer have that unfortunate distinction.
When, or if tokenization will help traditional types of private real estate investment vehicles to qualify as viable short-term investments?
The timing for this opportunity is auspicious.
https://cointelegraph.com/news/tokenizing-commercial-real-estate-and-promise-of-liquidity
