Singapore [27 June 2025] — Fractional real estate investment platforms could bridge the gap between private investors and direct real estate ownership, ULI members in Singapore heard, however regulatory support and investor education will be necessary for them to thrive. A seminar organized by the ULI Singapore Next Committee brought together an expert panel of experts in real estate, fractionalization and capital markets to discuss the potential for this approach to real estate ownership.

Tokenization, where units of a real estate investment are made investable and tradeable via a digital platform, is not new, however it remains a niche avenue for real estate investing, particularly in Asia Pacific. Singapore hosts a small number of platforms and a handful can be found in other markets too.

Discussing this topic were Seat Moey Eng, a consultant to law firm Allen & Gledhill and a former Group Head of Capital Markets at DBS Bank; Samuel Lee, CEO and Executive Director of Fraxtor, a Singapore-based fractional real estate investment platform; Melvin Chay, Senior Director at broker Knight Frank and moderator Cheryl Seet, Head of Wealth Markets at global real asset manager CapitaLand Investment.

Seet carried out a straw poll of attendees to discover if they were familiar with tokenization of real estate and was surprised to find that few considered themselves knowledgeable.

The attraction of fractional real estate investment lies in its ability to address four key challenges often faced by private investors. It lowers the barrier to entry by reducing the capital outlay typically required to acquire real estate, while also providing access to vetted investment opportunities that might otherwise be difficult to source. In addition, it removes the burden of active asset management, which can be both time-consuming and complex. Finally, it offers enhanced liquidity compared to traditional real estate ownership, making the investment more flexible and accessible.

Fraxtor, said Lee, is licensed by the Monetary Authority of Singapore (MAS) and uses blockchain to tokenize real estate assets. “The investor owns tokens which represent an economic interest in the underlying asset, which could be a private equity real estate investment in the form of a fund or a direct real estate investment.”

Platforms such as Fraxtor allow investors direct access to assets, unlike real estate investment trusts (REITs) or developer shares, where the investment is in a portfolio or a listed vehicle which offers indirect exposure. They also avoid the volatility of stock markets. The minimum investment is higher than that required by REITs, but lower than private equity funds. For Fraxtor, the minimum investment size is S$25,000 (US$19,500) but the typical commitment size across its projects is approximately S$200,000 (US$155,500).

This investment size means such platforms tend to target wealthier investors and family offices. Eng confirmed that during her time at DBS she saw plenty of appetite for such investments from high net-worth investors who wanted to spread risk across multiple direct real estate assets. And so far, investment in Singapore is limited to accredited investors, with personal assets above $2 million (US$1.55 million), financial assets above S$1 million (US$800,000) or annual income not less than S$300,000 (US$233,250).

However, Eng added: “With support from regulators I hope we could see tokenized real estate investments made available to retail investors too. I think the good news is that the regulators are very supportive of this move to allow retail access to the private market space. They will help to build the infrastructure to allow trading of tokens.”

Knight Frank’s Chay emphasized the need for careful evaluation, encouraging investors in tokenized real estate to do their homework. “What do you look for when you look at REITs? There are two things for me. One is the REIT manager and two is the portfolio, the assets. I think there’s no difference when you look at fractional investment.”

Seet was interested to know what sort of real estate assets could be tokenized and where investors were keen to allocate capital. While all sorts of asset types in many locations can be tokenized, Fraxtor’s investors tend to prefer developed markets such as Singapore, Australia, the UK and Japan, said Lee.

Investing into residential development is one of the most popular asset types, he said, which may be a reflection that Singaporean investors are more familiar with that sector. It is also a relatively more tax efficient way to invest into residential assets in their home market. Most of Fraxtor’s projects are in the value-add or opportunistic style of real estate investing, he added.

Tokenization can be also used to invest in a private equity real estate fund or a real estate debt investment. Chay suggested that investment managers could use tokenization to raise co-investment capital for individual projects or even for the funds themselves, as an adjunct to institutional capital-raising.

The two major challenges for real estate tokenization are liquidity and risk. For tokens to offer true liquidity, investors need a robust and secure platform on which to trade them. Then there are several types of risk: technological, manager risk and the underlying risks of the real estate itself. The panel agreed that more work by regulators and more investor education would be needed for tokenization to reach a wide retail investor audience.

Singapore’s regulator continues to work on tokenization, said Eng, aiming to: “make it more efficient, transparent, with very clear governance, clear legal ownership and a very active and robust trading platform. That is the objective”.

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