Deloitte Predicts Tokenized Real Estate Could Reach $4 Trillion by 2035
Real estate tokenization, which was once a niche concept, is poised to become a central component of property financing, ownership, and trading, according to a new report from the Deloitte Center for Financial Services released Thursday.
Deloitte forecasts that the tokenized real estate market could grow to $4 trillion by 2035, expanding at a compound annual growth rate (CAGR) of 27% from its current size of less than $300 billion.
Tokenization of real-world assets (RWAs) has rapidly gained traction, merging cryptocurrency technology with traditional finance. The process involves creating digital representations of tangible assets such as bonds, funds, and real estate on blockchain networks, enabling efficient and transparent ownership transfers.
For the real estate sector, tokenization provides significant benefits. It simplifies complex financial arrangements and streamlines operations, the report explained. For instance, launching a real estate fund on-chain with smart contract protocols can automate ownership transfers and capital flows. A prime example highlighted by Deloitte is Kin Capital’s Chintai platform, which tokenizes a $100 million real estate debt fund with trust-deed-based lending.
Deloitte’s report outlines three key areas of tokenized real estate: private real estate funds, securitized loan ownership, and undeveloped or under-construction land projects. Of these, tokenized debt securities are expected to be the dominant segment, reaching an estimated $2.39 trillion by 2035. Private funds are projected to contribute approximately $1 trillion, while tokenized land development projects could add another $500 billion.
However, despite the promising outlook, the report also identifies several challenges that need to be addressed, including regulatory hurdles, asset custody, cybersecurity concerns, and default scenarios that could hinder the growth of tokenized real estate.
As the sector continues to evolve, stakeholders will need to navigate these complexities to unlock the full potential of blockchain-driven property markets.
