# Blockchain's Grand Promise for the Real Estate Sector: A Systematic Review
## 3 Results
### Blockchain Merits in the Real Estate Sector
#### 3.2.3 Blockchain in Real Estate Investment  
Real estate investment refers to investing capital in real estate or its parts to obtain profit or other benefits. Real estate investment may be direct or indirect, e.g., through a real estate investment company or funds [4]. Indirect real estate investment does not give the investor control over the real estate or the right to possess the property [4]. Real estate investment was the third-most-popular real estate subsector for blockchain. Most real estate investment papers were reports [16, 17, 114, 121, 122], followed by examples and some concepts [87, 123, 124, 125]. One of the papers was a real-world blockchain application describing the BrickMark tokenization case [126]. Given the real estate sector's tremendous environmental burden, it is not surprising that recently, some blockchain applications in green real estate investment have emerged. For example, some suggestions have been made of blockchain-based tokenized securities for green real estate bonds tied to environmental objectives [127, 128]. Primarily, the blockchain benefits for real estate investors come through tokenization. The literature proposed both direct and indirect real estate investment solutions via tokenization. The primary real estate investment benefits of tokenization are inclusion and efficiency while providing better liquidity and cost reductions. Inclusion refers to blockchain's ability to fractionalize and democratize traditionally lumpy real estate investments, lower entry barriers, and allow more investors to join the real estate market [129, 129, 130, 87, 95, 114, 131]. This larger pool of potential global opportunities might lead to lower capital-raising costs and better valuation for corporate real estate buyers and sellers [90]. The fractionalization and customizability of tokenized real estate assets would also offer greater diversification possibilities [87, 114, 129, 130, 131]. Tokenization also allows customizing new investment and utility products and opens doors to new opportunities. Overall, tokenization could provide greater liquidity for the real estate market [80, 87, 129, 131, 130], both by creating efficient secondary markets [17, 129] and by increasing the potential pool of investors and global investor base [17, 114, 129]. Combined with smart contracts, the tokens could allow faster [17] and cheaper investment transactions with greater transparency [114, 129, 130] and accessibility [17, 129], as smart contracts could automate steps such as compliance, document verification, trading, and escrow [17; 114]. Real estate investment tokenization suffers similar legal challenges to blockchain-based property transactions. Regulatory uncertainty, ambiguity, and terminological differences exist [80; 114; 131]. In general, directly tokenizing real estate assets is not possible in most jurisdictions, requiring intermediate structures, such as special purpose vehicles (SPV) or real estate funds [17; 129]. While real estate generally is not a regulated asset (e.g., in the US or UK), tokenized security that offers access to a real estate asset, debt, or fund would be [17]. Token classification is important from the regulatory perspective, as security tokens must meet strenuous regulatory criteria [131]. Additionally, firms carrying specified security token activities require correct permissions and must follow relevant rules and requirements [129]. Real estate investment tokenization might also have some unwanted economic consequences. The fear is that the liquidity improvements through primary and secondary markets and fractionalization could damage real estate returns, as the illiquidity premium of real estate may be diminished [17]. Another fear of increased liquidity is increased price volatility and a more extensive bid-offer spread [17]. Furthermore, if there is no demand in the market to purchase the real estate investment tokens, the assets remain illiquid; the liquidity benefits would require large enough participants to materialize [125].