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Tokenization of Real Estate: Case Studies

STO
21 OCTOBER, 2021
Learn the benefits of real estate tokenization based on compelling cases from the industry.
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Tokenization of real estate is a marvelous technology for raising capital for the projects of this area, and it is one of the main services provided by Stobox. In our previous article, we described how real estate tokenization really works; in this piece, we will focus on tokenized real estate success stories and highlight a specific way both project managers and investors would benefit from implementing such a solution.

Disclaimer

The information provided in this article may not be precise due to the lack of knowledge available in public space. The specifics on the following cases are provided courtesy of the Stobox Internal Research team, and in particular circumstances, some evidence may be uncertain or absent. The content writing team does not claim to have provided complete and comprehensive data on the subject; however, we aim to stress the positive effects of the technology in question.

This article is not intended to be financial, investment, or legal advice. We highly encourage you to consult professional and licensed advisors before making any decisions relating to any trading marketing or the purchase or sale of any speculative instruments. This author's opinion does not reflect an official position of Stobox technologies inc. or any affiliated entities.

Case #1. Legend Siam Theme Park in Thailand

Located in Pattaya, a popular tourist destination of Thailand, Legend Siam Theme Park is a vast tourist attraction whose goal is to promote Thai culture and symbolism while also providing an all-encompassing experience for different people from around the globe. The theme park is 65 acres in size and has a total worth of $131 million. It is now at capacity, with a total of eight attraction points open.

Via East West Capital curates the park's security token offering. Together, they raise funds in order to renovate and expand the park; there is $50 million left to go. According to Via East West Capital, the company will tokenize 25% of the equity shares, or 1,000,000 shares, in return for the aforementioned amount of money.

The case of Legend Siam Theme Park proves that the STO is a highly suitable option for large projects because it allows both to attract and manage a large number of investors easily.

Primary source: Via East West Capital
Consulting for Security Token Offerings (STO)
We offer advisory, legal expertise and software solution to help successfully execute a security token offering.

Case #2. Historical Lueneburg Token in Germany

Lüneburg is a town in the German state of Lower Saxony, which used to be a crucial trading hub in the middle ages. Once a vital infrastructure object, Lüneburg has carried the beauty of its old town architecture until today, and property tokenization has helped it preserve a part of its heritage and make it prosper.

The offering is now closed; it was conducted successfully as the Lüneburg community raised $1,500,000. A security token offering was led by TBA; however, the provider didn't use its native blockchain (or popular for this purpose Ethereum blockchain), preferring to use Stellar instead. Though believed to possess certain misses, the possibility of engaging in different infrastructures certainly has its hits: for instance, the Lueneburg Token case managed to target diverse investors who had various investing preferences.

Primary source: Security Token Market

Case #3. Small properties in Detroit

Usually, tokenization is a relatively expensive process. This is why tokenizing small objects worth $50 000 or $100 000 isn’t that cost-effective. On the other hand, it makes sense to place all such projects on a single tokenization platform to ensure investors’ flow. It enables the issuer to reduce the price per object up to the level when it becomes cost-effective.

For instance, at the moment of writing this article, the most recent RealT case of property tokenization managed to raise $148,890, and there are multiple other successful cases with similar or even much smaller checks. The offering was provided for the house located at 5846 Crane St, Detroit, and its potential investment return constituted 11.73%.

A strategy like this teaches us that economies of scale can drastically reduce the price of the tokenization process.

Case #4. Hello World in Switzerland

Hello World is a Swiss resort project including a restaurant and accommodations. The STO was held in partnership with tokenization provider Blockimmo.

The Hello World case is notable because within this project, Blockimmo, the official tokenization provider, managed to attract 200,000 SEK, which is 20% of the initially planned 1,000,000 SEK. Nevertheless, it can also be perceived as a positive side of a story. The case demonstrates that tokenizing the business fractionally ― namely 20% in this case ― is a viable idea just as much as full tokenization.

Primary source: Hello World

Key takeaways

Real estate tokenization cases mentioned in this article stand as solid proof that property-based STOs are feasible and cost-effective options when it comes to raising funds for renovation or finishing the project. In practical cases, it's also notable that a tokenization project doesn't necessarily mean transferring all 100% of real estate to the blockchain; instead, you can tokenize just a part of it.

Real estate tokenization helps access investors all over the world, create liquidity thanks to the possibility to trade tokens, attract smaller investors and get more capital.
21 OCTOBER, 2021
STO
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