The Future of Tokenized Real Estate Depends on Regulatory Clarity

Tuesday, May 13, 2025

• Chain reaction: Tokenized real estate is promising but stalled by unclear rules and weak infrastructure.

• Retail retreat: Retail real estate is losing momentum as bankruptcies, inflation, and tariff fears slow leasing.

• Great wall: China’s property market is split, with first-tier cities rebounding on policy support while lower-tier regions remain mired in oversupply.

• Multifamily outlook webinar: Join us May 20 to hear how industry leaders are navigating tighter margins and rising renter expectations in the months ahead. Sign up

Investment

The Future of Tokenized Real Estate Depends on Regulatory Clarity

Real estate tokenization has evolved from curiosity to credible strategy, offering fractional ownership of property through blockchain-based tokens. Supporters tout its potential to improve liquidity and accessibility in a $300 trillion asset class, yet adoption remains limited and fragmented. The core problem isn’t technology—it’s regulation.

In the U.S., tokenized assets are treated as securities, which means navigating a patchwork of compliance exemptions that restrict access to wealthy investors. Europe has taken a more unified approach, and the U.S. may soon follow, especially with a new administration focused on building a digital asset framework. A forthcoming SEC roundtable could be a turning point.

But regulation is only part of the puzzle. Identity verification, asset custody, and interoperable trading systems remain underdeveloped. Without trust and clarity, institutional capital will stay on the sidelines. Tokenization may be the future of real estate finance, but its full potential hinges on what happens next in Washington and on Wall Street.

Overheard

Is Retail Real Estate Slipping Back into Slowdown Mode?

The retail real estate rebound is losing steam as bankruptcies, inflation, and tariff uncertainty drag down leasing activity. In the first quarter, retailers vacated 6 million more square feet than they occupied, the weakest performance since the onset of the pandemic in 2020. Big-box closures from chains like Big Lots, Joann, and Party City are creating gaps in shopping centers, with landlords struggling to fill space amid growing tenant caution. Even in well-located properties, leasing has slowed, and tenants are pausing due to inflation fatigue and concerns about a potential tariff hike on Chinese imports.

While national discounters like Burlington and Five Below continue to expand, many retailers are using the market uncertainty to negotiate concessions, signaling a shift in leverage away from landlords. Costs to reconfigure large spaces—especially in high-cost states like California—are outpacing potential rent gains. Landlords who once eagerly upgraded tenants for higher rents are now more wary, facing a market shifting from expansion to caution as the second half of the year looks increasingly uncertain.

China’s Property Recovery Gains Ground in Big Cities, Lags Elsewhere

China’s property market is sharply divided between thriving first-tier cities and struggling lower-tier regions. Major urban hubs like Beijing, Shanghai, Shenzhen, and Guangzhou are seeing a resurgence in both new and existing home sales, fueled by government stimulus such as reduced mortgage rates and relaxed purchasing restrictions. Investor confidence is returning as land sales in these cities draw large premiums, and developers benefit from improved funding conditions. Policymakers are actively supporting demand in these areas, and analysts expect continued stabilization and modest growth through the second half of 2025.

Meanwhile, lower-tier cities face a very different reality. Years of overbuilding and weakening local economies have led to steep price declines, sluggish demand, and high inventories of unsold homes. With fewer buyers and lower purchasing power, recovery in these regions is expected to be slow, likely not arriving before 2026. Despite national policies aimed at revitalizing the market, structural issues such as economic stagnation and oversupply persist. Analysts warn investors to be selective, focusing on higher-tier cities where fundamentals are stronger and recovery appears more certain.

Are You Enjoying This Newsletter?

Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

📧 Forward it to a friend and suggest they check it out.

🔗 Share a link to this post on social media.

🗣 Have ideas for future topics (or just want to say hello)? Share your feedback and tips at [email protected] or connect with us on X through @propmodo.

✅ Not subscribed yet? Sign up for this newsletter here.

📫️ Please add our newsletter email, [email protected], to your contacts to make sure you don’t miss any updates.

Enjoy reading about trends and innovation in commercial real estate? Subscribe to Propmodo.com for unrestricted access to reliable, data-driven journalism and exclusive insights available only to subscribers.