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June 26, 2020

Property Week | Is tokenisation set for take-off?

This article originally appeared in Property Week on 26 June 2020, written by Graham Lanktree.

To date, efforts to ‘tokenise’ commercial property have largely failed. Earlier this year, the University of Oxford’s Saïd Business School issued a report questioning whether the idea will ever get off the ground.

In ‘Tokenisation: the future of real estate investment?’, Andrew Baum, the leading professor of Oxford’s Future of Real Estate Initiative at Saïd Business School, argues that the prospect of a market for the tokenisation of single commercial real estate assets “may be some way down the road”. However, despite the global Covid-19 pandemic, a handful of big commercial property tokenisation projects are under way or slated to launch later this year.

In June, Vietnam’s My Thuy International Port Project broke ground by using cryptocurrency token RLX, which operates on the Ethereum cryptocurrency platform, to crowdfund investment in the port.

Next month, tokenisation platform Red Swan says it will tokenise $2.2bn (£1.7bn) in institutional-grade property. And IPSX, the London-based real estate digital securities exchange, says it will have its first deal listed by the end of the summer.

So is the tokenisation of commercial property finally set to live up to the hype or will the flurry of recent activity prove to be a false dawn?

According to Steven Lang, a commercial research director at Savills, tokenisation essentially breaks down “ownership of real-world assets into tokens, or digital securities”.

These tokens operate on blockchain technology and are essentially digital shares. The idea is these digital security tokens bring liquidity to building owners who can then invest in their next project.

Baum argues that the commercial property industry could really benefit from tokenisation.

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