CONTRIBUTED BY SEGAL LLP – in the quarterly overview of Canadian news, a newsletter published by the Canadian member firms of Moore North America. This article on international real estate investment is part of our mission to become your partner in success by keeping you up to date.
Segal LLP’s managing partner leads the session on tokenization of real estate assets.
International real estate investments: planning for change
“Right now, the only constant is change,” says Dan Natale, managing partner at Segal LLP and host of the Real Estate Asset Tokenization session held as part of Moore Global’s Real Estate and Construction Summit, Building a Global Future series.
In his introduction, he adds that future generations Y and Z “will use and incorporate technology and new financial tools to further democratize and broaden access to real estate assets. Clearly, the real estate sector is not immune to these societal changes. Real estate managers must accept this evidence and adapt to succeed in this constantly evolving universe.”
To provide insight into how to tackle or adapt to these changes, Mr. Natale asked a panel of experts to share innovative and particularly interesting ideas on approaches property managers can take:
- liquidity for commercial property owners;
- identifying regions suitable for future capital investment;
- promoting gender and racial equality;
- exploring environmental techniques and new construction techniques;
- other sources of capital.
Today, the cost of selling real estate assets is high, and the obstacles to investing in such assets are equally difficult to overcome.
Tokenization reduces these obstacles and truly democratizes the process. Tokenization enables the new generation of individual investors to buy a share in a property. Together, tokenization and blockchain platforms enable individuals to buy and sell shares in independent real estate assets.
But is this type of new product turning investors away from traditional platforms to raise capital? Noah Buxton, one of the presenters and head of blockchain practice at Armanino LLP, thinks so.
“I think software gets its hands on everything, and this is just another example of software getting its hands on another market,” he explains. He goes on to explain how tokenization works, pointing out that its main advantage lies in the fact that “it splits up ownership, which has never been possible before”.
But how do you go about auditing this type of product?
Managing Partner at Moore Cayman, David Walker explains that “to do the audits of these assets, you have to know this technology…and when it’s done correctly, using a blockchain platform or distributed ledger technology, you can provide more complete coverage. It’s possible to achieve a higher degree of accuracy or confidence when it’s done properly.”
Lori Stein, partner at Osler, Hoskin & Harcourt LLP, explains that Canadian securities regulators have identified risks specific to digital assets that all investors should be aware of. They have established guidelines for the disclosure of information on a) custody of these types of digital assets b) audit requirements for public companies c) the structure and type of issuer of the assets to be invested in.
Even if tokenization isn’t exactly straightforward, Dan Natale recommends “embracing new technology platforms, because it’s clear that the real estate consumers of the future will demand change”.
