Real estate tokenization: why RWA's flagship use case still has not taken off

Real estate tokenization is the eternal pitch-deck slide: "invest in an apartment from $100, receive rent on-chain". The idea is many years old, yet the segment remains a dwarf next to tokenized bonds. The reasons are systemic.

Why it does not work

• Law is stronger than the token. Real estate ownership lives in government registries. The token is a share in a company that owns the property, plus a contract. Any dispute is settled by the court where the property sits, and the blockchain is no argument to it.
• No liquidity on either side. Real estate is physically illiquid, and tokens on it are also legally illiquid: there is no one to sell a stake in an SPV holding an apartment in another jurisdiction to. The promised "liquid market of square meters" never assembled anywhere.
• The economics do not add up. The property manager, custodian, audit, lawyers - the entire offline infrastructure remains, with token-layer costs added on top. Rent minus costs often loses to treasuries carrying none of those risks.

What does work

Not "apartments in slices" but debt instruments collateralized by real estate: credit pools, mortgage tranches. Debt is standardizable and does not require selling a "piece of an apartment" - only the cash flow. As usual in RWA: it is not the romance that wins, but paper with interest.