Among other things, blockchain is ideally suited for the tokenization of assets. This can typically include illiquid assets such as real estate. An STO (security token offering) has just been launched in Germany for a real estate project in Berlin.
The Berlin real estate STO is being conducted by Black Manta Capital Partners, a German company specializing in asset tokenization. According to a company spokesperson, the offer will be regulated by the German BaFin. According to the company, BaFin had some questions to clarify, but then confirmed the project. Initially, only German and Austrian investors will be able to participate in the STO, with further EU-wide offers to follow later, which will also include other asset classes.
This year, the company would like to conduct several STO’s via its own platform. For example, securities issues are planned for start-ups of small and medium-sized companies. Christian Platzer, founder and CEO of Black Manta expects a new industry in the field of “Tokenization Services”, which can bring the liquidity of larger players to the market.
Tokenization on the advance
Tokens can be used to represent ownership via objects and possessions in the real world (=tokenization). For this purpose, a central agency (e.g. institution in the form of a trustee or auditor) can connect the tokens on the blockchain with the given objects. In this way, blockchain can improve the liquidity and transparency of large assets such as real estate or famous works of art. This is already used in several areas.
Access for small investors in real estate projects
Investors can invest as little as 500 euros in the project at Stralauer Allee 17A in Berlin. According to the provider, the maximum sum for the purchase of tokens is 2 million euros. The offered real estate comprises of a total volume of around 2000 square meters, divided into individual apartments with a size of 40 to 60 square meters.
The project is expected to be completed in 2022. Investors who become shareholders are to receive a 20 percent share of the profits from the sale. Small investors and private investors will thus be offered the opportunity to participate in a real estate project that is normally reserved for professional investors.
Blockchain could revolutionize the real estate market
For a long time, the real estate industry was reserved for wealthy investors. Blockchain is likely to change this in the foreseeable future and open up the market to retail investors as well. Tokenization democratizes access to investment opportunities, access to which was traditionally reserved for wealthy investors. For example, token owners can own a fractional ownership of an asset.
Those who want to invest in real estate have two options: One can acquire property directly or indirectly, via shares of a real estate company or a fund. According to experts in this field, blockchain technology will really boost the investability of the real estate industry. Processes will not only be digitalized from start to finish, but will become more efficient overall. The tokenization of real estate in particular is currently expected to be very promising.
Already in January, the company BrickMark AG realized the world’s largest tokenization of real estate to date with the purchase of a high-quality commercial property on Zurich’s renowned Bahnhofstrasse. The transaction volume amounted to more than 130 million CHF.
Security Token Offerings (STO’s)
By the end of 2018, the crypto-community had already placed great hope in Security Token Offerings, or STOs for short. This is the result of the exuberant and unregulated flood of ICO’s. In contrast to many ICOs, the issued tokens are backed by an asset. This can be shares, participation certificates, bonds or profit-sharing of the issuer – in principle all classic financial products of the capital market. The tokens represent the financial products. They can be used in a variety of ways. For example, a company from Liechtenstein recently planned the tokenization of 500 collector cars worth over 200 million dollars.
*Originally published in German at CVJ.ch