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$6B Hong Kong Property Group Seeking SFC Approval to Tokenize Real Estate Holdings

$6B Hong Kong Property Group Seeking SFC Approval to Tokenize Real Estate Holdings
  • Hong Kong-based firm is planning to sell tokenized securities.
  • If the firm succeeds and gets a licence, it will be the first one that the Securities and Futures Commission (SFC) has given a nod to use tokens for legal trading in Hong Kong.

Hong Kong-based Company Seeking Regulatory Approval for Issuing Tokenized Securities

A family owned company known as Stan Group that is based in Hong Kong that represents the assets of “shop king” Tang Shing-bor, is scheduled to have a meeting with Hong Kong securities regulators as the company intensifies its pursuit to sell tokenized real estate assets.

According to Cointelegraph, if the firm succeeds and gets a licence, it will be the first one that the Securities and Futures Commission (SFC) has given a nod to use tokens for legal trading in Hong Kong with real assets as the underlying asset. The firm is looking to set a precedent in the blockchain and real asset industries in the country.

The approval bid comes at a time when the Hong Kong real estate industry is facing a slowdown due to the escalating trade war between China and the US.

The conglomerate has a property portfolio that is estimated to be more than HK$50 billion or approximately $6.38 billion. Stan Tang, the company’s chair praised tokenization as the new frontier in the real estate industry. He said:

“In taking this bold first step towards the future of the real estate sector in Hong Kong, we envision far better access and greater liquidity in the real estate market due to the fractional ownership that will be attained with tokenisation and our real estate exchange under development.”

Tokenization as New Way of Selling Properties

Stan Group tried to sell part of its commercial properties worth HK$8 in July last year but failed to attract buyers due to high prices. The company now believes that tokenization will offer alternative means of selling properties when the conventional ones fail to work especially during unconducive market conditions.

To make tokenization of properties attractive to potential investors, Stan Group entered into an agreement with Liquefy, a security token insurance platform. The two companies said they were combining their synergies to seek business opportunities through real estate tokenization.

“Together, we can change the way many in Hong Kong look at real estate investment as out of reach,” explained the chief executive at Liquefy, Adrian Lai.

According to Lai, tokenization will offer more opportunities to potential investors in property markets as it will add to Reits.

“Investors can trade tokens from asset owners or from securities brokerage firm that we partner with,” Lai added.

The CEO says that tokenization will allow even professional investors to invest in a portfolio of property assets.

Edwin Lee from Bridgeway Prime Shop Fund Management, a SFC approved consultant, believes that distributed ledger technology will help in lowering the financial barriers existing in the market and enhance transparency.

The consultant says that it would be possible for investors to purchase a token that would give them ownership of a given house rather than purchasing the whole of it which might not be possible. He says that the current regulations are restrictive as only investors with $1 million can engage in security token trading in Hong Kong making it a club of about 100,000 people who are eligible.

Will property tokenization open up the real estate industry to many traders? Share your thoughts with us in the comments section.

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