Empirical evidence on the ownership and liquidity of real estate tokens

Abstract

Empirical studies on the tokenization of real asset markets are necessary to better understand the potential and limitations of this radically new organization of financial markets. We examine the financial economic consequences of the tokenization of residential rental properties in the United States. Consistent with the goal of tokenization, we find fragmentation as the median residential property has 254 owners. In contrast with the literature on stock markets, investors in real estate tokens diversify their real estate ownership across properties within and across cities. Property ownership changes on average about once per year, and significantly more for properties available on decentralized exchanges. We document that the prices of real estate tokens move in line with the house price index, suggesting that investing in real estate tokens gives economic exposure to residential house prices.