- Polygon CEO Mark Boiron sees real estate tokenisation as a way to reduce costs, eliminate intermediaries, and improve liquidity in the property market.
- Tokenisation allows fractional ownership, making real estate investments more accessible to retail investors while also speeding up transactions and reducing documentation complexity.
- Boiron says real estate’s illiquidity discount is the real problem, noting that tokenisation can unlock higher property values by enabling faster sales and broader market participation.
The tokenisation industry keeps on building momentum, but it’s not just the digital transformation of US treasuries that is attracting investors; real estate is gaining traction as well.
The tokenisation of real estate has become an alternative way to ease the industry’s high costs, reduce excessive intermediaries, and provide more liquidity.
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That’s according to Polygon CEO Mark Boiron, who, in an interview with crypto outlet Cointelegraph, said blockchain-based tokenisation can eliminate some of the many long-standing barriers for property investors worldwide, streamlining transactions, and boosting the overall value of real estate holdings.
Moreover, Boiron highlighted real estate’s main problem — lack of liquidity:
The thing you really want is the ability to eliminate the illiquidity discount on real estate. All real estate is illiquid and therefore it’s discounted to some degree. It can be more valuable if it’s liquid.
Mark Boiron, Polygon CEO According to Boiron, tokenised real estate makes it possible to purchase smaller portions of a property, allowing for more access for retail investors. Additionally, by using blockchain, settlement times are much faster, and it also simplifies documentation — speeding up the entire buying and selling process.
One example of on-chain real estate is Lumia Towers, a US$220M (AU ($9.91)$355M) commercial development project in Istanbul, Turkey, using Polygon’s blockchain to allow developers to tokenise skyscrapers mixed with residential and commercial units. This allowed fractional ownership, allowing more investors to own a piece of the building.
How Tokenisation Works
How does someone tokenise a building, you may ask? Well, a blockchain developer basically creates a number of shares, each representing a fraction of the building’s overall value or its income (rental profit, for example).
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Those shares are then digitised and placed on a blockchain. By assigning each share a token, investors can see who holds which portion of the property. Every transfer or sale is recorded transparently, preventing unauthorised changes. Moving on, once the tokens are created, they can be made available to investors looking to purchase real estate holdings in smaller increments.
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