The Moscow Stock Exchange is set to revolutionize the real estate investment landscape by introducing a digital financial asset (DFA) specifically tailored for the industry. This innovative development, scheduled for 2024, aims to democratize real estate investments and enable a wider range of investors to participate.
Under the leadership of Sergei Kharinov, the director of digital assets at the Moscow Stock Exchange, the new DFA will significantly lower the entry barrier for real estate investments. This will open up opportunities for a broader group of investors, providing them with access to the previously exclusive real estate market.
The issuance and trading of the DFAs will be overseen by the National Settlement Depository (NSD), which is one of the ten authorized operators mandated by the Bank of Russia to manage DFA issuance. Among the other operators are well-established financial entities such as Sberbank of Russia, Alfa Bank, Lighthouse, and St. Petersburg Exchange, as well as innovative Web 3 companies like Blockchain Hub.
Unlike traditional financial instruments like stocks or bonds, DFAs are blockchain-based digital rights recorded as program code on a distributed ledger. In the case of real estate DFAs, they represent tokenized versions of properties on a blockchain. While DFAs cannot be used as a means of payment according to Russian law, they offer unique advantages, such as the ability to divide the value of a security into multiple tokens and execute programmable transactions.
The introduction of real estate DFAs is expected to positively impact both builders and investors. Builders will be able to raise funds directly, in addition to conventional bank financing, providing them with alternative options for obtaining capital. Investors, on the other hand, will benefit from the lower entry threshold, allowing individuals with limited capital to engage in real estate investments.
The report indicates that several developers have already expressed interest in launching DFAs for real estate and are actively in discussions with the Moscow Stock Exchange to clarify the process. This enthusiasm suggests that these innovative financial instruments have the potential to attract both qualified and unqualified investors, providing opportunities for individuals to participate in the real estate market.
DFAs can serve as an effective hedge against inflation, offering investors the potential to save for future real estate purchases. In previous instances, Russia has issued DFAs for real estate assets with minimum return rates and additional profits linked to the rise in housing complex prices. These investment options were previously available to retail and unqualified investors.
By introducing a DFA specifically designed for real estate investments, the Moscow Stock Exchange is spearheading a transformation in the industry. The increased accessibility and benefits offered by these digital financial assets have the potential to reshape the real estate market, empowering a wider range of investors and creating new avenues for builders and developers. As the financial landscape continues to evolve, the introduction of innovative investment options like DFAs demonstrates the commitment of the Moscow Stock Exchange to drive progress and inclusivity in the world of finance.