Manhattan's first major asset to be tokenized on the blockchain is a luxury condo recently valued at $30 million.
The East Village building contains 12 condos, each with 1700 square feet of space and each now tokenized on the Ethereum blockchain. The real estate property is now represented with a sum of tokens available for purchase on the blockchain. A token represents a portion of the value of the property, allowing people to invest in luxury condos even with a small investment, something which was previously very difficult if not impossible.
Bestselling author Ryan Serhant brokered the deal and favors tokenization as a viable modern financing method. Speaking to Forbes, Serhant said:
“The market in New York is always strong, but it can take some time to sell for the right price in a new construction building. With blockchain tokenization, we can remove the unruly pressure of traditional bank financing, which is much healthier for the project and all of the stakeholders. Tokenization is paving the way for a new forefront in real estate development."
Digital assets firm Propellr partnered with tokenization specialists Fluidity to tokenize the real estate and the firms will continue to collaborate in future. Propellr is a FINRA registered broker-dealer and will use its experience in capital markets to sell securities (both traditional and tokenized) under Reg D rule 506(c). Fluidity, on the other hand, offers tech services to broker-dealers and other financial institutions dealing in tokenized securities. The parent company of AirSwap, Fluidity ensures that Propellr can accept fiat payments in exchange for securities in a way that is legally compliant.
“Going to market with a landmark deal allows us to make a statement—that this technology is now real. With the right partners and an optimized structure, we are bringing a major real world asset online. We are grateful we have the opportunity to lead the blockchain community in this new paradigm,” says Michael Oved, co-founder of Fluidity.
Real estate tokenization has been on the horizon for some time, and the tokenization of the luxury condo complex is a major step in seeing that use case realized. Tokenization can be applied to numerous other asset classes to increase liquidity and provide investment opportunities for smaller investors, potentially revolutionizing the investment industry.
In 2014, Visa CEO Charles Schaff stated the case for asset tokenization. Four years later, there are companies like ArtPro which will allow investors to purchase a sum of tokens representing an investment in classic and modern art pieces, whereas other projects like Inveniam are tokenizing global debt markets for investors to buy into. Binance recently led a $12 million funding round in tokenization startup Republic which aims to identify other tokenization investment opportunities as the list of use cases in asset tokenization continues to grow, providing new investment opportunities to the world through blockchain technology.
Manhattan skyline image from Shutterstock.