Security token offerings (STOs) could “revolutionise” the way developers raise capital to fund their projects, providing a shot in the arm for the property markets of Hong Kong and the Greater Bay Area, according to a report.
An STO is a form of initial coin offering in which a digital token backed by tangibles such as assets, or the profit or revenue of a company, is issued using blockchain technology.
Their use could serve as an alternative fundraising channel within the property sector, allowing owners of illiquid assets access to a broader base of investors, according to the second edition of a white paper series jointly published by accounting firm Deloitte, digital asset exchange HKbitEX, property consultancy Colliers and law firm Baker McKenzie on Tuesday.
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“Real estate STOs could revolutionise capital raising within the real-estate sector,” said Lau Chun-kong, managing director of Colliers Hong Kong.
“Property investors and developers can utilise STOs as a fundraising means across the property life cycle, from greenfield projects, through construction stage to stabilised income-generating assets.”
The trajectory for property STOs is bright in the next few years as developers will probably need alternative fundraising channels for “mega projects” across Hong Kong and the rest of the bay area, including the Lantau Tomorrow Vision, Northern Metropolis, and the Julongwan, according to the report. Increased demand for premium offices as the region emerges from the Covid-19 pandemic is also likely to boost their use.
“Against the backdrop of a strong real estate sector in Hong Kong and the GBA, we foresee that the demand for capital from developers will increase at a more than 10 per cent compound annual growth rate in the next…
