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Tokenised investment Slice of prime Zurich real estate sold on blockchain

Bahnhofstrasse

Bahnhofstrasse in Zurich is one of the most upmarket shopping streets in the world.

(© Keystone / Gaetan Bally)

A building on Zurich’s most exclusive shopping street has been converted into a blockchain-powered investment following its CHF130 million ($134 million) sale. It is the latest attempt to unlock the value of bricks and mortar using digitally-coded tokens.

Bahnhofstrasse 52, which houses offices and a Swatch retail outlet, was bought by Zug-based real estate investment firm BrickMarkexternal link on Wednesday. The company has issued digital tokens, underpinned by a bond, which can be bought and eventually traded by investors who want a slice of the building’s rental income and increase in sale value.

BrickMark funded about 20% of the purchase by giving the seller, RFR Holding, a batch of its newly created tokens. This means that RFR Holding retains a stake in the future income of the building.

“There has never been a token-financed transaction of this magnitude,” said BrickMark CEO Stefan Rind in a statementexternal link. “We are implementing what was once no more than a concept in the real estate industry.”

The Bahnhofstrasse buildling is the first of a planned global real estate portfolio that could be worth upwards of CHF1 billion, the company said. BrickMark is accumulating a €50 million cash stockpile from investors but also intends to part-finance further acquisitions with its tokens.

Smart contracts

The tokens are created by drawing up digital “smart” contracts that entitle holders to a share of the portfolio’s financial spoils (they could also result in losses if the properties lose value).

The tokens are created and traded on a blockchain – a digital platform that proponents believe is a much more efficient system than the current paperwork-based method of buying and selling properties. The smart contracts embedded in the tokens can also be custom-made to automatically carry out a range of functions, such as paying dividends and fees.

BrickMark is the latest in a growing list of blockchain companies setting their sights on the real estate market. Last year, a consortium led by blockimmo converted a Swiss building into digital shares and sold a 20% stake to investors over the blockchain.

More recently, Geneva-based company WeCanexternal link tokenized two properties in Portugal in a €11 million deal, which it plans to repeat across other European countries.

swissinfo.ch

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