Tokenized real estate

A tokenized real estate bond gives the holder a claim against the issuer, most often a special purpose vehicle set up to hold one property or a small portfolio. The issuer pays interest or a share of the profit from rent, and repays the bond from rent or from selling the property. The token is the bond, recorded in a crypto securities register under the eWpG instead of on paper, and it carries the same securities law protections as a paper bond: a prospectus, or a prospectus exemption, and BaFin oversight of the register keeper.

Berlin Hyp, a German mortgage bank, issued the country's first blockchain-based Pfandbrief, a covered bond, under the eWpG framework in 2021. BaFin approved a larger, 250 million euro blockchain-based real estate bond from the Fundament Group, backed by properties in Berlin, Hamburg, Rostock, Jena and Fulda and issued on the Ethereum network. Platforms such as Exporo and Bergfürst have used the same bond structure to offer smaller investors tickets into individual buildings, from residential blocks to commercial property, with BaFin-approved prospectuses behind each issue.

Custody of the crypto securities register itself needs its own BaFin license under section 32 of the Banking Act, described on the tokenization in Germany page; Cashlink is one company that holds this license and runs registers for third-party issuers.

A tokenized real estate bond carries the credit risk of the issuing vehicle, on top of the usual property risks of vacancy, maintenance and interest rates. That sets it apart from a token such as tokenized gold, backed by a physical asset the holder can in principle redeem, and from a tokenized stock, a claim on a listed company with public financial reporting. A real estate bond's income depends on one building or a small group of buildings, so the credit and location risk sit close together, and a buyer needs the same due diligence a direct property investor would run: the tenant mix, the loan-to-value ratio and the special purpose vehicle's other obligations.

Putting a property bond on a blockchain does not by itself create a market to sell it in. Most tokenized real estate bonds in Germany trade, if at all, on the platform that issued them, at prices the platform sets or matches between its own users, not on an open exchange with continuous pricing. A holder who wants to sell before maturity depends on finding another buyer on that same platform, which is a narrower pool than the buyers available for a listed REIT share or a government bond. The eWpG solves the legal question of how a real estate bond can exist as a token; it does not solve how liquid that token turns out to be. A study by Hamburg Commercial Bank and the Frankfurt School Blockchain Center (in German), written by Cyrus de la Rubia, Philipp Sandner and Jonas Groß, reached the same verdict after looking at 41 companies worldwide that had tokenized real estate: liquid secondary markets and digital land registers were still missing.

Finance Loop is the meeting place for people who structure and sell tokenized property bonds under the eWpG. Gubbi AG runs the GDX Primary Market, which brings tokenized real-world assets, including real estate, to financial advisers through Fondskonzept AG, and CoreLedger, a Finance Loop partner since December 2024, has spoken about tokenizing real estate and gold at a real-world asset evening at TechQuartier in Frankfurt.

Tokenized real estate is most often a bond backed by a property or a portfolio, issued as a token under a law such as Germany's eWpG. The investor holds a claim against the issuer, paid from the property's income, not a direct ownership stake in the land.

Yes. Exporo and Bergfürst both offer property bonds under the eWpG, and Gubbi AG's GDX Primary Market distributes tokenized real-world assets, real estate among them, through financial advisers connected to Fondskonzept AG.

Usually yes, unless the offer qualifies for an exemption under German prospectus law. BaFin approved the prospectus behind the Fundament Group's 250 million euro blockchain-based real estate bond, one of the largest tokenized property deals issued in Germany.