Disruptive technologies such as asset tokenization could transform the real estate sector over the next decade, paving the way for trillions of dollars of economic activity in new markets and products. It could also help real estate organizations overcome challenges relating to operational inefficiency, high administrative costs charged to investors, and limited retail participation.1 Built on blockchain technology, tokenization converts physical or financial assets into digital representations that can be securely traded or owned in fractional portions on a digital platform.
Over the last eight years, since the first tokenized real estate deals were completed, new avenues for real estate investment have emerged through fractional ownership.2 The Deloitte Center for Financial Services predicts that $4 trillion of real estate will be tokenized by 2035, increasing from less than $300 billion in 2024, with a compound annual growth rate of 27%. The global forecasted tokenized real estate ecosystem includes several underlying components, and the three largest include:
- Tokenized private real estate funds, which are expected to grow to $1 trillion by 2035, with a total market penetration rate of 8.5%, representing the greatest potential opportunity
- Tokenized ownership of loans and securitizations, expected to reach the highest share of tokenized real estate at $2.39 trillion by 2035, with a total market penetration rate of 0.55%
- Tokenized ownership of undeveloped land or under-construction projects, expected to reach $50 billion by 2035, with a total market penetration rate of 0.80%
