Real Estate Tokenization vs. Traditional Asset Management: Key Differences

There are various reasons why people earn money; some want to spend it as they want, some want to invest it, and some want to buy things that act as a symbol of sophistication. As there are various reasons for earning, there are different ways of investment as well. Earlier, we did not have many options for investment and even if we did have options, there were some factors that would not let us completely trust the organization. Earlier, the traditional investment methods included mutual funds, stocks, real estate, financial institutions, etc. But as the evolving world and technical world we live in changed, the options for investment also changed and new ways of investment took the place of your traditional investment. The new investment option we are talking about is “Real estate tokenization.”

Real estate tokenization is a new way of investing your hard-earned money in a secure way that offers higher return value as well as there are no restrictions on global boundaries. Anyone can invest in Dubai. Real estate tokenization ensures that your investment is secure; it offers utmost trust and secure keys for your investment.

Now, you might be wondering which one is the best way for investment, but worry not; this guide will help you solve all your queries.

A thorough guide that assists you in choosing which investment option is better: Real Estate Tokenization or Traditional Investment

Let’s start by clearing our thoughts and knowing what real estate tokenization is and what traditional investment is.

What is Real Estate Tokenization?

Real estate tokenization is a simpler process that turns your real estate properties into tokens that can later be bought and stored on a blockchain. With real estate tokenization, there is no chance that anyone else can claim your asset, as your tokens are stored on the blockchain. Real estate tokenization is backed by blockchain technology and hence ensures utmost trust and transparency. You can buy a fraction of a property as per the capital you have and invest your money in it.

What is Traditional Asset Management?

Traditional asset management simply means the traditional methods of managing your investment, such as mutual funds, stocks, real estate, and financial institutions or organizations. Investing your hard-earned money in a traditional way may include some factors of risks and deceptive factors. Earlier, traditional investment was the only option people had to invest their money.

Why is a comparison of real estate tokenization and traditional asset management necessary?

If you invest in the right place, then it offers the fruitful benefit of your investment. Hence, it is necessary to compare the two options, know them in-depth and then invest your money. This guide will expand your knowledge boundaries and let you invest your money in the right place.

Real Estate Tokenization	Traditional Investment
Fractional Ownership	Whole Ownership
High Liquidity	Low Liquidity
Blockchain System	Centralized System
Global Access	Local Access

Earlier, if we look at the statistics, then only millionaires were investing their money, but blockchain and real estate tokenization have changed it. Now, anyone can invest even a small amount of money and own a piece of a commercial building, a vacation villa, or a residential villa. Real estate tokenization in Dubai has gained a lot of importance due to the fractional ownership benefit.

Let’s explore the major key difference between real estate tokenization and traditional asset management.

1. Intermediaries:
Traditional Asset Management: As you invest in a traditional way, there are some intermediaries, such as banks, organizations, institutions, etc. Hence, they all cost you a commission fee. Some intermediaries cost more than others, which is why you have to be careful while investing.

Real Estate Tokenization: As you choose real estate tokenization in Dubai, there are no intermediaries. Hence, there is no commission fee. Whatever you invest will be fully invested. The blockchain technology mitigates the requirement of intermediaries and ensures the direct peer-to-peer transfer of buyers and sellers.

2. Settlement times:
Traditional Asset Management: As we all know, traditional investment takes 2 or 3 days for settlement. It requires some approvals from a third-party institution or organization. Due to this, you may miss some chances that otherwise would have ensured the profit.

Real Estate Tokenization: On the contrary, when you invest with real estate tokenization, it ensures a faster trade process. The smart contracts can be automated when certain requirements are met. Hence, it offers a faster process. And this is why real estate tokenization in Dubai is highly preferred by many.

3. Transparency:
Traditional Asset Management: As we talk about transparency in traditional investment, we all know there are some drawbacks. Third parties will not share with you the point-to-point information and hence it gains less credibility.

Real estate tokenization: If we look at the statistics, then real estate tokenization in Dubai has gained lots of credibility because of its transparency. Blockchain-backed real estate tokenization is the main reason why real estate in Dubai has gained so much attention. It ensures utmost transparency and immutable records. There is no way anyone can alter the data once entered.

4. Accessibility and Global Reach:
Traditional Asset Management: As we talked about it earlier, only millionaires can afford to invest. As there was a minimum capital required for investment. Additionally, traditional investment options are bound by local boundaries and won’t give you the liberty you want to invest your money.

Real Estate Tokenization: Real estate tokenization is not bound by any geographical boundaries, nor does it require a minimum capital for investment. You can invest a small capital and still be proud of your investment. Additionally, you can invest globally and enjoy global benefits and global investment options. You might be sitting in India and still own a property in Dubai due to real estate tokenization in Dubai. This is the biggest benefit of real estate tokenization in Dubai.

5. Cost Structure:
Traditional Asset Management: Traditional investment options come with commission fees and hence can reduce the profit % you might be getting in the end. Hence, it proved a bit risky and less profitable.

Real Estate Tokenization: Blockchain-backed real estate tokenization has minimal additional cost, as there is less human involvement, automation of certain tasks, and peer-to-peer transfer. Due to all these, real estate tokenization gains more preference and offers maximum profit chances.

6. Customization and Control:
Traditional Asset Management: In traditional asset management, the portfolios are designed by experts, and hence, you gain less control over your assets. There is little space for customization.

Real Estate Tokenization: In real estate tokenization, there are no middlemen, and hence, you get the liberty to customize your investments as you want to. Additionally, we have seen that in real estate tokenization in Dubai, people have full control over their investment and assets.

7. Regulatory Maturity:
Traditional Asset Management: Traditional asset management has been chosen for many years and has established a legal structure around the globe.

Real Estate Tokenization: Real estate tokenization is still evolving. Additionally, some countries are welcoming real estate tokenization development, whereas others don’t have any clear notion or guidelines for real estate tokenization development services.

These are the major key differences between traditional asset management and real estate tokenization. They both have their own characteristics and their own pros and cons. You have to choose wisely for your investment.

Why choose real estate tokenization in Dubai and Digitalroar Softlabs as your real estate tokenization development service partner?

Real estate tokenization in Dubai is gaining a lot of attention. However, we all know there are millions of right reasons for you to invest in real estate tokenization. It reduces the middlemen, has no deceiving factors, has immutable data records, has global accessibility, has higher liquidity, and has much more. Combining all these, it acts as a perfect investment option for many.

Digitalroar Softlabs is a leading real estate tokenization development company in Dubai. It offers you end-to-end real estate tokenization development services. Choosing Digitalroar Softlabs as your real estate tokenization development partner proves beneficial in many ways and ensures the utmost security as well as transparency.

Conclusion

Choosing real estate tokenization or traditional investment might be confusing, but we hope this article guides you on the right path. We have listed all the key factors that assist you in making your decision. If you need any guidance for real estate tokenization in Dubai, feel free to reach out to us at +971 55 168 2166
and we will be happy to assist you.