Imagine buying a piece of Manhattan real estate during your lunch break for $50. Or selling your stake in a Tokyo apartment building as easily as trading a stock.
While most people think this sounds like fantasy, MUFG just spent $681 million on an Osaka skyscraper specifically to make this reality. Welcome to tokenized real estate—where the world's $654 trillion property market is about to work completely differently.
Major institutions are also quietly moving billions into RWA tokenization:
Goldman Sachs and BNY Mellon are tokenizing money-market funds
Tether spent $600 million buying farming operations for tokenization
US regulatory clarity through Project Crypto is giving institutions the green light
The numbers tell the story: RWA exploded from $5 billion in 2022 to $24 billion by 2025, making it crypto's second-fastest growing sector after stablecoins. Banks are realizing this isn't optional — it's survive or evolve.
Tokenisation, the latest use-case for crypto, promises to change the way real-estate has worked in the last 200 years and giving it a brand-new facelift.
In this issue, we’re going to look at how that works and what effect it will have on us as consumers. We will also find out how much of this is already reality.
From Physical to Digital
The first step in the transformation is digitalisation.
We’re already familiar with being able to view properties on websites, sign documents with electronic signatures and settle payments via bank transfers electronically. Before all this happened, people had to sign on paper and may even have needed to carry the cash to the bank to make a deposit.
Next comes financialisation, which is also familiar to us.
A house is no longer just a place to live but also to make money from, even if you’re living in it. From renting out a room on Airbnb to buying an entire apartment for rental purposes, or house-flipping to the next willing buyer, housing is already as much a commodity as it is a human need.
Tokenisation, the latest phase, is where both aspects are combined in one place. Property information like insurance, mortgages, and ownership records get stored on a digital token, which could be ERC-3643, a token standard suggested for RWA.
It includes ONCHAINID, which acts like digital KYC verification built right into the blockchain. This ensures a clear, traceable owner who can be held accountable.
Why Property Owners Are Rushing to Tokenize
Once tokenized, properties become infinitely more flexible. Instead of buying everything or nothing, you can choose what rights you actually want.
Future house shopping might look like this:
Base property: $1 million
✓ Right to rent (+$200k)
✓ Right to sell (+$100k)
✓ Metaverse rental rights (+$50k)
✓ Digital advertising space (+$150k)
Total: $1.5 million
The last two are concepts that can only exist through tokenization. Finally, you can pay for revenue potential separately from shelter needs, just like how commercial real estate already works.
The biggest change to real-estate through tokenisation is fractal ownership. Just as Robinhood lets you buy $23 worth of an Apple stock (valued at $230), you can now do the same for building. By owning 1/250th of a commercial property, you can collect your slice of the rent or trade it instantly.
This democratizes real estate investing while injecting massive liquidity into the world's most illiquid asset class. More traders mean higher values while smart contracts eliminate paperwork nightmares.
When property investment becomes as accessible as buying stocks, with the same instant liquidity and fraction of the barriers, this is when more people are able to start their wealth-building journey.
Currently, two platforms are racing to become the 'Robinhood of real estate’. Each takes a different approach to democratize property investment for everyone.
RealT
RealT is well-known in the real-estate tokenisation space and offers everyone around the world the ability to invest in US real-estate starting at just $50 per token. You'll need to set up an account and complete KYC before accessing the property listings.
Each property listed belongs to a standalone LLC. A unique set of RealTokens are created based on that particular property.
When you buy tokens, you're purchasing direct ownership of that LLC. You can pay with debit card, credit card, or crypto like USDC, DAI, ETH, or USDT. The tokens end up in your RealToken wallet or you can send them to MetaMask if you prefer.
However, the RealToken wallet works only on the Gnosis chain, so if you want to transfer the tokens to another wallet not on the same chain, it can be a bit tricky, but RealT offers an app to do so.
The platform charges a 10% listing fee and takes 2% of rental income for their services.
What makes RealT interesting is their RMM collateralization feature, which is basically a lending platform built on AAVE's technology. You can use your RealT tokens as collateral to borrow DAI or USDC. When you deposit tokens, you get Armm tokens as receipts. These track your RealToken value and get destroyed when you repay the loan.
The exciting part is the rental yields, which average 6-12% and get distributed to your account every second. It's quite fun watching your portfolio value tick up in real-time as rent payments flow in.
The Armm tokens can be transferred or traded for liquidity, but remember, once they leave your control, so does your claim to the underlying RealTokens. Lose the token and you lose access to your property investment.
Lofty: The “Amazon of Real Estate”
Lofty turns property investing into online shopping. Starting with $50, investors buy tokens representing actual US properties and earn daily rental income. Global investors are welcome to participate after passport verification.
Property owners transfer their building to a Wyoming LLC, then sell portions (say 10%) as $50 tokens to Lofty investors. You're buying direct LLC ownership and get real rental income proportional to your investment.
Investors buy tokens with cash or crypto (USDC/ALGO). The Lofty tokens live on the Algorand blockchain and it can be kept in Lofty's wallet.
Lofty's Proactive Market Maker lets you trade property tokens like stocks. Lend your tokens to the system, algorithm matches buyers and sellers, you get liquidity. It's designed to make property trading as smooth as buying Apple shares. Here’s how it works:
I lend my property token for No. 123, ABC street to the PMM.
Someone buys the same property and my token gets sold to that buyer.
When I want to withdraw from the lending pool, someone else’s token for the same property is given to me.
"For the first time in history, directly buy and sell ownership in a house with the same experience as trading Tesla stock." - Lofty
In the extreme case where too many tokens get sold, there will be a temporary blackout period. Since only 20% of the property’s equity value is in the lending pool, there are sufficient tokens to cater for this scenario. Once the imbalance has been restored, withdrawals will be available once again.
Yield is obtained from trading fees generated by the PMM when facilitating transactions between buyers and sellers. The yield needs to be claimed manually from the account as compounding is not available at the moment.
What You Get:
Daily rental payments (withdraw anytime)
Property appreciation upside
Instant liquidity through marketplace trading
No remortgaging or bank fees
Cautionary Tale: Tangible
While doing my research for this issue, I came across Tangible, one of the earlier platforms offering tokenized real estate back in 2023. What I found was unsettling enough to share as a cautionary tale.
Tangible's mission was to offer liquidity for illiquid assets like real estate, art, and fine wine through tokenization on blockchain. Real estate properties were backed by UK SPVs (special-purpose vehicles), which are similar to LLCs in the US—legal entities created for specific purposes like owning property.
The red flags started immediately. When I clicked on their Marketplace, it showed zero properties despite claiming to have tokenized 192 properties worth $34 million. That's a major warning sign right there.
Their system worked like this: you'd buy TNFT tokens representing ownership in the SPV that owns the property. These tokens couldn't be used as collateral elsewhere, but you could mint "Basket" tokens from them. A Basket groups multiple properties together—say 10 properties worth $10 million total, divided into 10,000 tokens at $1,000 each. You'd own a slice of all 10 properties.
The problems kept piling up. The project ran on something called the re.al blockchain, but when I checked, their bridge had ceased operations.
They also offered their own stablecoin called USTB, which was backed by another stablecoin from a different protocol—and that had also shut down. Even if it hadn't, having a stablecoin backed by another stablecoin feels unnecessarily risky.
The fees were brutal: 5% tokenization fee, 2% annual management fee, plus 0.5% minting fees. The whole process seemed heavily manual, making the tokenization aspect feel like an afterthought tagged onto traditional business operations.
Further research reveals a CoinDesk article talking about how the property prices on Tangible were inflated as the two brothers involved in the project coordinated to make that happen.
At this point, Tangible goes straight into the "Do Not Touch" category. When you see empty marketplaces, dead infrastructure, nested financial instruments, inflated pricing, and excessive fees all in one place, it's time to walk away. I hope sharing these warning signs helps you spot similar red flags in your own research.
This platform is a prime example of how NOT to do tokenized real estate. It perfectly demonstrates why due diligence matters more than fancy whitepapers.
The Real Risks Nobody Talks About
Beyond scam platforms like Tangible, tokenized real estate faces some core challenges:
Price Disconnection Risk Tokens trade faster than buildings sell, potentially creating bubbles. When your Tokyo apartment token hits $1,000 but the actual apartment is worth $800, which price is real? With trillions at stake, this gap could get dangerous.
You're Buying Blind Traditional property investment means walking through neighborhoods, checking foundations, meeting tenants. Token investing means trusting online photos and data sheets. Good luck spotting that structural crack from your laptop in Ohio.
The Multi-Owner Problem What happens when 1,000 token holders own a building and it needs major repairs? Or when someone wants to sell the entire property? Traditional real estate has complex ownership rules for good reason.
The Upside Multi-owner sales are probably simpler than expected. If one person owns 60% of the tokens, they drive major decisions. Small token holders mostly care about rental income, not building management. Want majority control? Just buy up tokens until you hit 51%.
Platform Risk. As with many DeFi platforms, once the website is down, customer support is limited. While the ownership of the assets is intact, gaining access to liquidate your stake might encounter some problems.
Bottom Line: All the usual tokenization risks apply here too: smart contract bugs, regulatory uncertainty, tax complications. Real estate just adds physical world complexities on top.
What the Future May Bring
Picture this: It's 2028. Sarah, a teacher in Ohio, gets a notification on her phone: 'Your Tokyo apartment just earned $47 in rent this week.' She owns 1/200th of the building through tokens she bought for $500 three years ago. The building's value has increased 40%, and she can sell her stake instantly if she needs the money.
Meanwhile, the developer who built that Tokyo property raised $50 million from 10,000 global investors in 48 hours—no banks, no complex financing, just smart contracts and tokens.
This is a very likely future that we can encounter and bits of it are already at our doorstep!
Conclusion
Tokenisation brings about exciting and brand-new ways to monetise a property which we have never experienced before. The next real estate boom might not be about location, location, location—it might be about tokenization, tokenization, tokenization. Early adopters could access investment opportunities that were previously exclusive to the ultra-wealthy.
It is my hope that tokenization could solve the housing crisis by making property investment less speculative, instead of just creating new ways for the wealthy to extract value from basic human needs. Let’s keep an eye out on this space for further developments!
Next week, we’ll look into a different area of tokenisation: financial instruments.
Sources:
https://propertydigitalrights.com/
https://www.lofty.ai/marketplace - the AI agent on the website was most helpful and informative in my research!
Edited with assistance from Claud AI.