Deloitte Projects Real Estate Tokenization to Reach $4 Trillion by 2035
Asset tokenization is transforming real estate by enabling secure, fractional ownership through blockchain technology. This advancement reduces operational inefficiencies and costs, increasing retail investor participation.
Deloitte forecasts that the tokenized real estate market will grow to $4 trillion by 2035, up from less than $0.3 trillion in 2024, with a compound annual growth rate of 27%.
Three main segments driving this market are:
- Tokenized loans and securitizations projected at $2.39 trillion by 2035.
- Private real estate funds expected to reach $1 trillion, capturing 8.5% market share.
- Ownership of undeveloped land and projects may total $50 billion.
Blockchain platforms can enhance efficiency in real estate fund management through simplified issuance and trading, reducing reliance on intermediaries. Two models are emerging: "off-chain" funds using debt tokens and fully "on-chain" trust deeds. A notable example is Kin Capital's planned $100 million real estate debt fund on Chintai's blockchain.
Tokenization facilitates personalized portfolios based on specific criteria. However, managing defaults remains crucial for early adopters, requiring mechanisms to access real-world assets linked to tokens.
Securitized loans backed by blockchain are gaining momentum, offering faster reporting and lower costs. For example, LiquidFi reduced mortgage-backed securities reporting time from 55 days to 30 minutes using Stellar blockchain.
Tokenization also enables dynamic financing for projects, as demonstrated by T-RIZE Group’s $300 million tokenization of a Canadian housing project.
As more blockchains develop, interoperability will be essential for seamless token movement across platforms while adhering to privacy and regulatory standards. Advances like layer-2 solutions and new regulatory frameworks support broader adoption.
Key considerations for real estate managers and investors include selecting the appropriate blockchain, ensuring secure custody, understanding tax implications, and enhancing cybersecurity measures.