Developer Will Try to Raise $140 Million by Tokenizing London Property

This will be the first tokenization of a building to be undertaken in central London

The developer of a London residential project will try to raise up to £140 million (US$167 million) by tokenizing the property, the first tokenization of a building to be undertaken in central London. Hong Kong-based Knight Dragon is the developer of the project, saying in a press release the tokens would give investors the right to profits from Building Four, a 191-unit block that’s fully leased.

Knight Dragon will sell 100,000 digital tokens, called KDB4, initially valued at £1,400 (US$1,670) apiece. Token owners will be entitled to 80 percent of profits from the building, meaning the net rental income generated from the residential scheme. The developer said if the rental income goes up, the token value will likely go up, and vice-a-versa.

The announcement of another huge real estate tokenization project is great news for investors interested in the new practice. According to Sohail Hassan, co-founder and managing partner of MarketSpace Capital, less than 1% of the market capitalization of real estate is tradable on a national stock exchange. The potential large-scale tokenization of real estate could significantly increase market participation in a historically illiquid industry. Once real estate companies and investors overcome notable hurdles such as lack of familiarity and regulatory clarity, tokenization could gain popularity as a way to invest in commercial real estate. However, if these projects encounter problems, it could scare partners and investors away from symbolic real estate.