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Japan real estate

Japan’s Real Estate Security Token Market Gains Traction, Forecast To Reach US$18 billion by 2030

Kenedix and Mitsui & Co. Digital Asset Management seen most active.

Dec 17, 2022 – Japan’s real estate security token market is expected to reach 2.5 trillion yen (US$18 billion) in value by 2030, with Kenedix and Mitsui and Co. Digital Asset Management (Mitsui & Co. DAM) seen as particularly active, according to the Nikkei Real Estate Market Report.

Kenedix, having positioned the real estate security token (ST) business as its third pillar after REITs and private funds, is stepping up its efforts in this area, the report said. In July 2021, it announced Japan’s first real estate ST, “Kenedix Realty Token Shibuya Jinnan.” Together with “Kenedix Realty Token Akabane Shimo,”  announced in February 2022, and “Kenedix Realty Token Lonco Profit Mart Atsugi I,” unveiled in July, the company operates a total of three real estate STs. The offering amount and appraisal value of the incorporated assets are approximately 10.52 billion yen and 21.25 billion yen, respectively.

Kenedix believes the real estate ST market will “grow to 2.5 trillion yen” by 2030 based on the appraisal value of the incorporated assets. It has secured eight properties in its pipeline on the premise that these will be incorporated into real estate STs by the end of 2023. While continuing to purchase, the company intends to steadily create real estate STs that incorporate these properties and grow its number of STs to nearly ten in 2023, the report said.

Kenedix is also establishing a securities firm specialising in digital securities to handle real estate STs. In August 2022, it established KDX Securities Establishment Preparatory Company (KDX Securities). Aiming to begin operating in 2023, it is going through procedures to register as a type I financial instruments business operator, allowing it to handle real estate STs, according to the report.

Mitsui & Co. DAM manages four real estate STs. As of September 2022, its pipeline contained 60 properties worth 100 billion yen, the Nikkei report said. The company aims to create real estate STs steadily, reaching an AUM of more than 500 billion yen in the fiscal year ending March 2025.