Liquefy, a technology platform which says it specialises in blockchain applications that enable the issuance of digital securities backed by illiquid assets such as real estate property, has closed a deal to be the technology provider for a consortium of Gulf families on a real estate digital securities project, with approximately US$1 billion of real estate assets slated for tokenization
The initiative will begin with the tokenization of a luxury hotel valued at approximately AUD$877 million (USD$600 million), situated in London’s affluent Mayfair district.
As part of the deal, security tokens will be issued which represent ‘economic interests’ in the hotel.
According to Adrian Lai, CEO of Liquefy,
As blockchain technology progresses we’re seeing accelerating interest in digital securities from the real estate sector. The deal sizes and pipeline have grown exponentially over the past year. We’re certain that there’s huge potential for technology to enable new business models in the real estate ecosystem that lower operational costs and increase liquidity.
Digital securities and the global real estate sector are increasingly connected, with other examples around the world including the tokenization of a $30 million property in Manhattan, a 6.5 million euro tokenization of a luxury property in Paris, and the upcoming plans to fund several real estate projects via tokenized offerings prior to the 2020 Olympic games in Japan.
Tokenization of these securities leverages the secure and immutable qualities of blockchain technology in order to enable the digital recording and transfer of economic interests in the property. Thus allowing for a faster and more secure future change of control and sales of the London hotel.
Earlier this year, Liquefy announced a partnership with The Private Office of Sheikh Saeed bin Ahmed Al Maktoum and SEED Group to promote Dubai as a global leader in FinTech, and have also signed a memorandum of understanding with Hong Kong real estate corporation Stan Group to jointly explore the business opportunities of real estate digital securities.
These are exciting developments, and one can only hope that we see this use of technology permeate the real estate industry in Australia to such a degree in the near future.
It is always worth remembering that just because something can be tokenized and made tradeable, it doesn't mean it will suddenly become more liquid, but it cannot be disputed that lowering transaction costs in a structural way provides significant advantages to trade.