Real Estate Tokenization Based on the Blockchain

Abstract: Real estate is one of the largest assets in the world, but it is also synonymous with low liquidity. Tokenization of real estate emerged in the era of real estate 4.0 as technological innovation to counter the low liquidity, long and expensive transaction process, and high entry threshold of the real estate industry. By Fractionalization, tokenization of real estate reduces the required capital that investors need. It is also based on blockchain and smart contract technology, which provides open and transparent information and greatly improves transaction efficiency. However, tokenization also faces the problems of low demand and insignificant economic benefits.The purpose of this study is to investigate the economic performance of publicly traded real estate tokens in the US market and the application prospects of tokenization in China. The results of this study indicate that real estate tokens always have higher returns than market portfolios, although sometimes it is not obvious. And accordingly, real estate tokens have higher risks, although these risks are mainly from themselves rather than the market. Even if tokenization can play an important role in promoting the reform of China’s real estate industry, there are still big obstacles to its promotion in China, including profitability, policy, financing needs, and risks. Therefore, it is difficult to be widely promoted in China in the short term.In the future, more accurate conclusions about economic performance can be drawn based on a larger historical data set of real estate tokens. In the case of continued above-market economic performance, if China’s real estate market is actively transformed, and legislation and technology have been improved, real estate tokenization can be widely applied in China and further promote the reform of China’s real estate industry.