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How Propbase Is Tokenizing Real Estate
Is the future of real-world assets on Aptos?
Our Chief Growth Officer Alejo Pinto recently hosted an X Space with Kevin Goos, founder and CEO of Propbase, to discuss real-world asset tokenization, on-chain real estate, and Aptos. The discussion covered how tokenized real estate works, how it makes real estate investment accessible, and the future of real world assets on-chain.
Propbase is a tokenized real estate investment platform, currently focused on residential and commercial developments in Southeast Asia. Propbase works with developers to tokenize properties on Aptos. Those fractionalized shares can then be traded on their platform, starting as low as $100.
Goos and Pinto explored real world asset (RWA) tokenization, which has become one of the leading trends in crypto in 2023. Goos noted that RWA tokenization has been hot for the last six to eight months, and that Propbase is lucky to be launching amid that excitement.
Goos summarized RWA tokenization as “simply creating a representation of the physical asset on-chain. The representation of that asset on-chain can be displayed through smart contract interaction, through a token.” Those assets could also be hotels, luxury cars, stocks, or physical collectibles.
Goos went on to explain real estate tokenization in particular. He noted that tokenization solves some of the most frustrating “pain points” in traditional real estate investment, namely tokenization, namely capital requirements, fees, and liquidity.
Real estate investment has long been made inaccessible by its high financial barrier to entry. “We all know that if you wanted to invest in property, it was a time consuming process and it required a lot of capital,” Goos said. “But now through fractional ownership and tokenization, it becomes less of a barrier to entry. It becomes more accessible to a much larger total addressable market size.”
Goos added that traditional real estate has extremely high fees, with brokerage, escrow, and other costs exceeding 10% of the property value. Propbase, built on the scalable and affordable Aptos blockchain, costs far less.
Tokenization also vastly improves liquidity. Real estate often appreciates slowly, over years and decades, which increases costs and risks. “Now you can come onto [Propbase], and within 5 minutes, select the property that you'd like to purchase, and buy a fraction of the property,” Goos said. “And then the next day, if you'd like to sell that asset, you can do so.”
Goos also explained why Propbase is focusing on Southeast Asia. He noted its 650 million residents are the most crypto-native in the world: Vietnam has 20% market penetration (meaning 20% of the population uses crypto) and Singapore has 15%. He also noted that Thailand has a “pro-crypto prime minister” who “recently announced a $1 billion tax break for all investment tokens.” Additionally, he noted that cities like Singapore, Ho Chi Minh City, and Bangkok are developing rapidly, which creates a lucrative market for real estate investment.
Pinto then asked how Propbase actually tokenizes real estate property. Goos broke down the process in detail: “We specifically work with qualified real estate property developers who are building commercial or residential assets, such as condos, large housing developments, hotels, or resorts.”
Goos added that their developer partners are often publicly traded with 25+ year track records.
Properties must be listed by the Propbase team in order to ensure compliance. “We qualify the asset, not only in terms of third party due diligence, such as [through] a reputable auditing firm,” Goos said. “We also look at the asset to say, ‘Is it a good asset? Is it adequately priced? Is it appraised at the correct price?’ We also invest in the properties that we're looking at to tokenize, so we come at it from a user perspective and investor perspective.”
Goos said that Propbase properties “have qualified yields and these yields are generally accountable.” Propbase works with “reputable, global, brand name” property managers like Windham. “Now people can get access to this asset class, which has never really been seen before,” he said.
The asset is then placed into a legal entity called an SPV, which retains ownership of the property. Propbase securely stores all of the property’s documents on IPFS with a hash directly tied to the smart contracts of that asset’s tokens. This gives investors proof that their tokens actually constitute shares within the SPV.
Global financial accessibility was a major theme of the conversation, as it’s a major goal of both Propbase and Pontem.
“These traditional asset investment vehicles were reserved for very rich individuals, but now they can become accessible to people with a few hundred dollars,” Goos said.
Both agreed on real estate’s long track record as an investment. “It is the most proven asset class,” Goos said, adding that only Bitcoin compared. “The offset on inflation is huge.”
Pinto compared real estate tokenization to stablecoins, as the first example of a real world asset brought on-chain. He lauded Propbase for improving “access to global markets [and] allowing folks all over the world to not be locked out of financial institutions.”
Goos responded that the mission of widening access to real estate investment “makes us work extra hard because we genuinely feel we're doing a good thing.”
The complete podcast is available on Spotify.
Pontem Network is a blockchain studio building for Aptos, the most scalable and powerful ecosystem. Pontem is known for its popular Aptos wallet with over 300,000 downloads, the Liquidswap DEX, and is now building an AI-powered chatbot called PontemAI.
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