In addition to valuable assets such as works of art or vehicles, real estate also lends itself to tokenization. After the ICO hype of 2017, real estate tokens were considered the gamechanger par excellence. However, this line of business did not really achieve great success. Even taking into account the generally poor sentiment on the crypto market in 2018 to 2019, there was no high level of interest overall. Weighty deals were announced, but did not always materialize, as was evident with Fluidity and a Manhattan property in 2019, for example. Still, entirely off the table this topic is not. New digital bonds of real estate based on blockchain are available at Finexity, among others.
Investors invest from 100 francs
The value of the property is divided into a fixed number of ERC-20 tokens, which investors can then purchase. Ethereum is the blockchain of choice in most cases. Smart contracts automate and regulate the processes. Subsequently, investors benefit either from the increase in value after the sale or from the rental income. Unlike real estate funds, you as an investor can invest in individual buildings. Even small investments starting at 100 francs or euros are possible, as Crowdlitoken shows.
Crowdlitoken – Digital real estate bonds
Crowdlitoken is a Liechtenstein company based in Triesen and has entered the real estate tokenization. It offers trading of digital bonds on several properties from Switzerland, Austria or Germany. The basis for trading are real estate-linked security tokens, also called “CRT”. An investment works as follows:
- Buyers can create their own real estate portfolio on the platform, consisting of different tokens from different properties.
- Interested parties can participate with as little as 100 CHF/Euro.
- In return, Crowdlitoken promises a return of at least 4% per year.
- All this with low administrative costs and a management fee of 0.75%.
The story behind Crowdlitoken
The fintech company was founded in 2016 under the name “Crowdli AG”. At that time, it was still about crowdfunding for real estate. It was renamed Crowdlitoken in 2018, which meant that the company now focused on digital bonds for real estate in token form. But business was slow until Dadvan Yousuf got on board. The then 21-year-old native of Kurdistan became the new CEO. Dadvan Yousuf is no stranger to the crypto scene: He fled Kurdistan with his family when he was 3. He started trading cryptocurrencies when he was 11. In 2021, he founded the Dohrnii Foundation with the goal of spreading knowledge around finance.
“Crowdlitoken brings together the best of old and new economy for me – real estate and blockchain are a perfect match,” Yousuf says. “I’m highly motivated to use my experience from the crypto world with my passion for real estate as the driving force of Crowdlitoken.”
Crowdlitoken brings together the best of old and new economy for me – real estate and blockchain are a perfect matchCrowdlitoken CEO Dadvan Yousuf
Crowdlitoken – some key figures
Fintech with focus on real estate
Number of employees
Private and Instit. Investors
Tokenized real estate for 4% – 7% return on investment
“CRT” is the name for the digital bonds in the form of security tokens. The nominal value of a CRT is CHF 1.00. Crowdlitoken generates real estate tokens based on blockchain technology. Legally, they are subordinated bonds, fixed-rate securities and debt securities. These are converted into a fixed number of tokens and offered for trading. Investors can pay with Swiss francs (CHF), euros (EUR) or ether (ETH). Owners subsequently receive interest annually. Payments are made on the 5th of each month. There is talk of anywhere from 4% to 7% per year. The yields are made up of the rental income from the property. The bonds have a term of 25 years. At the end of this period, the last trading day ends and redemption takes place.
Investors receive the CRT token as a yield
A special feature: investors initially receive the returns in CRT. They then have to convert this into euros or Swiss francs. In addition, there is the possibility to have the CRT flow back into the real estate and thus increase the investment. According to Crowdlitoken, the advantages of digital bonds are cost savings and simplicity. The company can issue the tokens without a bank, and the investor doesn’t need a bank to hold them either. The usual benefits of tokenization, in other words. Instead of having to deal with bureaucracy and a lot of paperwork, users can simply invest peer-to-peer directly in the asset and earn a share.
Costs and fees with crowdlitokens
These are not funds. Therefore, there are no markups. However, there is a property management fee of 0.75%. The basis for this fee is the investment value of the property. Furthermore, there is an annual performance bonus of 15%. This is due if the net income of the property is more than 5% above the net cost price. Furthermore, there are fees on the token purchase of 1%, both in CHF and in Euro. Should you buy with Ether, there is also 1% for the subscription process and another 1% for the stockbroker fee. Furthermore, there are gas costs for token creation, which can vary in price depending on the market situation.
Return possibilities – overview
4 % to 7 % in CRT
Fees in CHF
Fees in Euro
Fees in Ether
1.00% Subscription process*
Taxes on real estate tokens
Not only tokenized real estate can be used to make profits, but also wine tokens, diamonds or classic cars. The speculation period in this case depends on the object itself. Even with real estate tokens, it is important for investors to think about the taxes of token investments. It is not the final withholding tax of 25 percent that applies to speculative gains, but the personal tax rate.
Co-determination rights thanks to CRT tokens
Similar to a share, token owners with crowdlitokens are given the opportunity to determine the property. This includes changes regarding the terms and conditions of the bond, the minimum interest rate or new cryptocurrencies. They can still have a say on the purchase of the property or on other issues if Crowdlitoken schedules a vote on them. A decision must be approved by at least 50%.
Legally secured in the Principality
Crowdlitoken is subject to the Liechtenstein Financial Market Authority (FMA) and also the laws of the country. Furthermore, the company follows the compliance rules of the Money Laundering Act and enforces KYC measures.
Trading via the Crowdklitoken portal
Trading in the CRT tokens takes place via Crowdlitoken’s own investment portal. This is available both as a variant for the desktop and as a smartphone app. Here, investors place their CRT on real estate and manage their portfolios. Settings regarding returns or payouts can also be made in the portal. Paperwork is completely dispensed with here.
The range of real estate on offer and the prospects
Crowdlitoken offers real estate from Switzerland, Austria and Germany so far. Currently (as of December 2021), two properties are available for investment: a commercial property in Heimberg and a property in Oensingen. Investors will only receive exact data when they register and investigate more closely on the investment portal. So far, the selection is not large. Investors must decide for themselves whether an investment in tokenized real estate is worthwhile. So far, it is still too early to really say whether digital bonds actually represent the investment of the future. So far, the market is still very clearly structured. Crowdlitoken has also not yet been able to achieve great success.
What are security tokens?Security tokens are basically "security tokens." They have their origins in ICOs, in Initial Coin Offerings. In these, companies and startups issued tokens as a means of crowdfunding. Legally, ICOs are still controversial. STOs ("Security Token Offerings") are an attempt to create legal clarity. When issuing the tokens, one invokes the legislation of the country and complies with legal requirements for securities.
FAQ – Frequently Asked Questions
CRTs can be purchased by residents of selected countries in the EU. Exactly which these are is not specified. Extension to other countries outside the EU is still under consideration. Citizens in the USA are currently excluded.
The company also focuses on commercial properties such as offices, shopping centers, gastronomy and logistics. Furthermore, the portfolio is to consist of highly leased residential properties in good locations. That, at any rate, is the goal and the aspiration.
Each investor is entitled to a share of the value of the real estate portfolio, should they demand repayment. There is a minimum repayment of CHF 0.70 per CRT. How high the repayment can be in total is further not specified.