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Hello reader,
The real estate market in Singapore has always been rather lucrative.
Anyone who’s living in this land-scarce country will tell you that property prices have been shooting up over the last few years, showing a clear rise in demand for housing – and that includes public housing too.
It would seem that many local investors are interested in putting their money in real estate to capture this boom. Eventually, I wouldn’t be surprised if that leads them to consider investing in higher-end properties.
Some startups are looking to enable these investors but in a slightly different way: through tokenization. However, the authors of today’s story believe that the ones and zeroes in the blockchain aren’t exactly comparable to the real thing.
Today we look at:
- Why tokenizing real estate may not be the way to go
- An Indian employee engagement platform raising US$4 million
- Other newsy highlights such as AWS piloting a new carbon removal project and a Mumbai court issuing a contempt notice to Google’s CEO
Premium summary
A token investment
Image credit: Timmy Loen
At first glance, the concept of tokenizing real estate – and lowering the barrier to entry in real estate investing – might sound good. However, this story sheds some light on the potential downsides of the strategy.
- Paper matters: One disadvantage is that blockchain tech cannot be used to legally transfer ownership of real estate. Rather, many tokenization platforms use a separate entity to purchase the property, and token holders get a fractional interest in that entity.
- Who’s in charge?: Because there isn’t a clear ownership structure, dispute resolution can become tricky, such as when tenants or occupants have issues with property management or repair.
- Exiting the investment: Another issue is that without a proper secondary market, the most likely way to exit the investment is for the entire property to be sold. However, doing so could cause issues if other token holders don’t agree to sell, and deal terms may be difficult to finalize.
Read more: The empty promise of real estate tokenization
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