Hi, this is Tristan from Evergon.

Lately, we’ve been speaking with a number of Real Estate portfolio managers and hearing some recurring questions around tokenization.

We will address them head-on and share what we’ve learned in a series of short, focused articles.

This first one gets straight to the point:
What exactly are we “tokenizing”?

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The real estate sector has always is slow to change. Every transaction is tied to regulation, paperwork, and layers of intermediaries.

And yet, here we are.

By mid 2025, tokenized real estate already represents around $20B in value, and the trend is accelerating.
For property developers, owners, and promoters, this shift is not about hype. It is about solving persistent problems that limit capital efficiency, investor access, and liquidity.

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Why This Matters Today

Traditional real estate transactions are time consuming and expensive. Bringing in a new investor or transferring ownership can take weeks or even months. Intermediaries add cost and complexity, and liquidity remains scarce.

→ Tokenization streamlines the process.

By issuing digital tokens that represent ownership shares, debt instruments, or revenue rights, projects can welcome investors with a streamlined onboarding process. Transfers can be executed digitally without piles of legal paperwork. Assets that were traditionally illiquid gain mobility, which opens new opportunities for partial exits, refinancing, and global distribution.

This does not mean reinventing the business of real estate.

Instead, tokenization makes existing processes faster, more transparent, and more cost effective.

• For owners, it means keeping control of the underlying property while expanding access to capital.
• For property developers, it means tapping into broader investor pools at earlier stages of a project.
• For promoters, it means offering innovative structures that attract new categories of investors.

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What Can Be Tokenized

We've watched a wide spectrum of projects attempt tokenization.

What you want to absolutely avoid is a lose management of the actual underlying asset. Legal or operational mismanagement at this level can be fatal. Like in this recent case in Detroit.The most effective approach focuses on assets that are legally clean, financially stable, with a tight grip on operations on the ground.

Now, here is broad definition of what you can actually tokenize:

1. Single stabilized properties

Income-producing properties such as multifamily residences, logistics centers, or commercial buildings with a clear rental history are among the most straightforward candidates.

These assets can be placed in an SPV (LLC, SCPI, or Trust), and tokens represent shares of that entity. Investors gain direct ownership exposure with rights defined in shareholder agreements.

2. Funds and aggregated vehicles

Tokens can represent shares in real estate funds, aggregated SPVs, or similar pooled vehicles.

These structures provide investors with exposure to a diversified portfolio of properties, reducing the risk concentration tied to single assets. Tokenization enhances this setup by allowing fractional access, improved liquidity via secondary markets, and streamlined onboarding for a broader investor base.

For managers, it offers operational efficiency: assets can be added or removed from the portfolio without triggering constant legal rework for investors, and governance remains centralized.

Real Estate Investment Trusts (REITs)

REITs are a regulated subclass of real estate funds, governed by strict distribution and tax rules, such as the obligation to redistribute the majority of income to shareholders (e.g., 90% in the U.S.).

Already designed for public or semi-public investment, REITs benefit from tokenization by becoming easier to fractionalize and trade outside traditional exchanges. This modernized wrapper improves reporting transparency, facilitates cross-border access, and maintains compliance with established regulatory frameworks.

3. Debt instruments

Mortgages, mezzanine loans, or other property-backed debt can be digitized. Tokens in this model represent claims on debt rather than equity ownership.

The value lies in predictable interest income, with repayment and transferability managed digitally.

What you actually tokenize here is the Loan Participation Agreement or the Debt Security issued by the SPV.

A key success factor is the liquidity and the transparency of the collateral asset to back the loan.
Asset-backed financing is just emerging in RWAs, but shows a lot of potential.

4. Revenue streams

Rental income from a property can be tokenized separately from ownership. Investors purchase tokens that entitle them to a share of ongoing revenues.

The legal wrapper here is usually a Revenue Sharing Agreement (RSA) or a similar instrument, issued by the SPV that owns the property.

Token holders don’t participate in the capital upside, nor do they have governance rights, but they get direct access to recurring income, which is attractive to yield-focused investors.

5. Property and building data

So far we have almost exclusively covered financial and ownership tokenization.

Some initiatives today go beyond and deeper with the tokenization of the building's data.

At the time of writing this article, in some jurisdictions like Dubai, the actual land register is tokenized ; meaning the very administrative root level.

Take another initiative like Magma Real Estate. Their protocol allows the creation of Digital twins of actual buildings. They are the first smart step if you want to address the complete data-centric approach to tokenization.

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Timing and Size Matters

→ Launch your tokens to support an important milestone in the lifecycle of your asset(s).

The right moment to tokenize is usually after an acquisition has been completed and stabilized, when revenues are predictable and ownership is clear.

Some managers choose tokenization during refinancing cycles to bring in new equity investors. Others use it when preparing for partial exits, allowing early backers to sell part of their stake while maintaining long term structures.

The common factor is that tokenization works best when the asset is already performing and its economics are understood.

Another key take away ; and we can not stress this one enough:

→ Start with one simple asset as a proof of concept.

Especially if this is the first tokenization project handled by your team and company. You want to take a quick win to bring everyone on board and ensure a positive push, both from investors and internal support.

With Evergon, a simple first fundraise with a compliance layer can be setup in minutes: Watch this demo video showing what your own marketplace could look like.

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Market Signals

→ Global adoption is gaining momentum.

The market for tokenized real world assets surpassed fifteen billion dollars in 2024 and continues to grow quickly.

• Deloitte estimates that up to four trillion dollars in real estate could be tokenized by 2035.
• In Japan, the majority of tokenized securities issued in the past year were backed by real estate.
• In Dubai, fractional property sales using tokenized structures sold out in minutes, drawing thousands of investors.

This is no longer a pilot experiment.Tokenization has become a live part of real estate capital markets.

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Regulatory Considerations

→ Tokenization always comes back to one rule: if a token behaves like a security, it is treated as one.

A couple of regional distinctions:

• In the European Union, security tokens fall under MiFID II. Non security tokens are covered by MiCA, which governs utility and payment tokens.
• In the United States, tokenized real estate is almost always considered a security. This means SEC registration or exemptions are required before offerings can be made to investors.
• In the United Arab Emirates, VARA has introduced a clear framework for issuing and trading tokenized assets. Dubai Land Department has even piloted a blockchain based property registry that enables fractional ownership of title deeds.
• In Singapore, the Monetary Authority of Singapore regulates tokenization through the Payment Services Act and the Securities and Futures Act. Real estate tokens must comply with both financial regulation and property transfer laws.
• In Malaysia, digital tokens that represent ownership or generate yield are treated as securities under the Capital Markets Services Act. Offerings must be approved through licensed exchanges and IEO platforms.

Other jurisdictions are also moving.

Thailand is testing tokenized property through local banks with oversight from its SEC. Hong Kong applies its securities framework to tokenized assets and enforces strict investor protections. Switzerland, Luxembourg, and Liechtenstein allow sandbox environments and digital asset laws that make tokenization easier to trial.

Across all of these regions, investor onboarding, KYC, AML, and tax treatment remain essential. Real estate tokenization must be designed with local compliance in mind, otherwise the structure will not stand.

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Tokenization is not a shortcut

Weak projects or poorly managed assets will not suddenly attract investors simply because they are digitized. But for high quality, stable, and well managed projects, tokenization offers a more flexible, transparent, and efficient way to raise and manage capital.

For property developers it provides a way to raise funds faster, open presales to a wider pool of investors, and create global partnerships. For owners it turns existing properties into flexible capital instruments while retaining control of ownership. For promoters it enables new kinds of investment products that are compliant, transparent, and appealing to modern investors.

→ Real estate has always been about long term value.

Tokenization does not change that. It simply unlocks new tools to make ownership more flexible, capital more mobile, and investor access more global.