British real estate start-up company Smartlands has made the first tokenised real estate sale in the U.K.
Smartlands, based in London, and led by CEO Arnoldas Nauseda (LinkedIn profile) who joined in Jul. 2018. Smartlands connects the real economy to blockchain and is a global platform for tokenization of assets in the real economy.
Its use in the real estate sector is to connect asset managers and property owners with investors by offering blockchain based asset backed securities. It plans to use the technology to reduce the level of investment required to buy a share in real estate by fractionalising real estate into tokens. This should increase liquidity because blockchain allows easy trading of tokens which represent a share of a tangible asset – the property.
The first use in the U.K. is the tokenisation of a £12 million ($15 million U.S.) purpose build block for student accommodation in Nottingham.
This investment would usually be aimed at institutional or professional private investor. It can be used globally. Tokenisation allows individual investors to get involved and become “fractional” owners in the property. They can invest from as little as £500 and benefit from the capital appreciation of the property and any increase in earnings like rent.
If an investor decides they want to sell their share it’s relatively easy to do.
“We are building a secondary market where the tokens can be traded on a peer to peer basis which allows the investor to exit their investment”, Nauseda told start-up website 150sec.com
This is less onerous than selling a property outright, where the owner must complete all aspects of a property sale transaction.
He expects widespread take up from institutional investors and other finance providers in digital real estate assets to take at least five years because they “need to see the traction”.
He thinks 10 percent of the estimated $200 trillion real estate market will be tokenised 10 years from now and that it could be used in other sectors. He cites art as a prime area that could suit tokenisation.
Smartlands are testing how to enable tokenisation through the Stellar blockchain and a project has started in the U.S. to tokenise $1 billion worth of property.