Is blockchain tokenization of property ownership the next step in the financialization of housing? The case of Luxembourg.

Keywords: Tokenization, financialization; housing; blockchain
Abstract Type: Virtual Paper Abstract

Abstract

Existing critical housing studies are adamant: the digitalization of real estate and proliferation of Platform Real Estate will generate new asset classes ripe for financialization which in turn exacerbate inequalities (Fields and Rogers, 2021, Fields, 2019, Shaw, 2020). However, the spatial implications of property tokenization enabled by blockchain technology remain under-explored. In considering the rise of privately-led start-ups pioneering tokenization of residential property ownership in Luxembourg, this article argues for a more nuanced understanding of this ongoing transformation. It points out that such initiatives should be understood as a response, at least in part, to specific socioeconomic and financial conjunctures. By empirically investigating these developments, this article shows how after several decades of growing demand and restrained housing supply, incumbents have seized the opportunity to trade interest in housing assets in the form of security tokens. On the one hand, such tokenization allows them to create a portfolio of investment accessible for a broader, mostly younger and excluded, public residing or working in Luxembourg by offering them an alternative way to climb the property ladder. On the other hand, the rise of tokenized ownership challenges the legacy arrangements of the existing financial infrastructure by reshuffling power relations and creating unanticipated risks. This article sheds more light on the forces driving the rise of tokenized real estate, the modalities by which these emerging markets are enrolled into more conventional financial economies, and the socio-spatial implications of the real estate transformation induced by blockchain.