Real Estate Tokenization: Making Premium Property Investment Accessible
Real estate tokenization is transforming the property investment landscape by enabling small investors to own a piece of high-value properties with as little as ₹10,000.
Real EstateTokenizationInvestmentFractional OwnershipLiquidityReal EstateSep 30, 2025
Real estate tokenization is the process of dividing a property into digital tokens on an online platform, each representing fractional ownership. This allows investors to buy small portions of high-value properties through these tokens, making real estate investment more affordable and accessible.
“It can be as accessible as a mutual fund,” Avinash Rao, founder of Alt DRX, highlighted at the Mint Money Festival. He emphasized that real estate need not be a hyperlocal asset class. The scale of opportunity is significant, with around 300,000 homes sold each year in India’s primary real estate market alone, representing more than $200 billion in value. Yet, only a fraction of investors actively participates because of high entry costs and illiquidity.
The income from tokenized real estate is in the form of rent and capital appreciation. If the property generates rent, investors receive a share in proportion to the tokens they hold. Rao emphasized the potential of such investments in portfolio diversification. “You don’t need to make a bank-breaking investment to participate in capital appreciation. Smart, smaller investments across multiple properties can yield meaningful returns over time,” he said.
Platforms such as Alt DRX allow investors to browse listed properties, check related information like location, market value, and developer details, and invest digitally. Investors can choose from land plots, holiday homes, and rental housing, depending on their goals. The platform lets investors track rental income and asset updates and provides access to a resale marketplace to sell the tokens.
“Most people invest in real estate for capital appreciation, and tokenization makes that possible even with small ticket sizes,” Rao said. These investments are treated like digital assets, and income is taxed at a flat 30% tax rate.
Real estate tokenization is different from Real Estate Investment Trusts (Reits). Tokenization gives investors direct fractional ownership of a property, and the returns are linked to its rent and value appreciation. Reits, on the other hand, pool investor money to buy and manage a portfolio of properties, and investors own units of the trust, not individual properties. In short, tokenization is property-specific, whereas Reits offer diversified, fund-like exposure.
While tokenization democratises real estate investment, it is not without risks. It is currently unregulated, and sudden regulatory changes could impact investors. Rao said they are working with regulators to become a regulated financial product. “Gift City has already mooted norms for tokenization,” he added. The International Financial Services Centres Authority, the regulator at Gift City, is examining tokenized models for physical assets.
Liquidity may also be constrained since the secondary market for tokens is still developing, meaning exits may not always be immediate. As with all investments, careful research, platform selection, and a long-term perspective remain essential for mitigating these risks.
Frequently Asked Questions
What is real estate tokenization?
Real estate tokenization is the process of dividing a property into digital tokens, each representing fractional ownership. This allows investors to buy small portions of high-value properties through these tokens, making real estate investment more affordable and accessible.
How does the income from tokenized real estate work?
The income from tokenized real estate is in the form of rent and capital appreciation. If the property generates rent, investors receive a share in proportion to the tokens they hold.
What are the differences between real estate tokenization and Reits?
Tokenization gives investors direct fractional ownership of a property, and the returns are linked to its rent and value appreciation. Reits, on the other hand, pool investor money to buy and manage a portfolio of properties, and investors own units of the trust, not individual properties.
What are the risks associated with real estate tokenization?
The primary risks include the lack of regulation, which could lead to sudden regulatory changes, and constrained liquidity due to the developing secondary market for tokens. As with all investments, careful research, platform selection, and a long-term perspective are essential.
How is income from tokenized real estate taxed?
Income from tokenized real estate is treated like digital assets and is taxed at a flat 30% tax rate.
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