A
seismic shift is underway in the private real estate market, as blockchain technology begins to reshape the way property is bought, sold, and traded. According to a Deloitte report, tokenization - the process of creating digital versions of assets on blockchain rails - could soon become an integral part of how property is financed and owned.

    The market for tokenized real estate is poised to explode, with forecasts suggesting it will reach $4 trillion by 2035, growing at a staggering 27% compound annual rate. This rapid growth is driven by the operational efficiencies, reduced costs, and increased accessibility that blockchain technology offers.

    Tokenization's appeal lies in its ability to automate complex financial agreements, such as launching real estate funds on-chain with coded rules handling ownership transfers and capital flows. For example, Kin Capital's Chintai platform has successfully tokenized a $100 million real estate debt fund using trust-deed-based lending.

    The report identifies three key areas where tokenization will have a significant impact: private real estate funds, securitized loan ownership, and under-construction or undeveloped land projects. Tokenized debt securities are expected to dominate, reaching $2.39 trillion in value by 2035, while private funds could contribute around $1 trillion and land development assets may account for some $500 billion.

    However, challenges remain, particularly around regulation, asset custody, cybersecurity, and default scenarios. As the market continues to grow, it will be essential to address these issues to ensure the long-term viability of tokenized real estate.