Magnolia Quality Development and two other high-end Thai developers are selling down their stakes in downtown condominiums and Phuket beach resorts. The developers’ combined hard assets are worth $4.62 million.
Fraction — a Hong Kong-based start-up — will use blockchain to slice up the prices of the assets to a cost of less than an iPhone each. The blockchain offering targets both offshore and Thai investors, and is slated for the first quarter of 2022.
The Chearavanont family of the Charoen Pokphand Group conglomerate owns Magnolia Quality Development. The other two developers include Charn Issara (Phuket’s Baba Beach Club) and Nirvana Daii (Bangkok’s Nirvana@Work).
Emerging Fintech trend
Securitization of real estate in Thailand — especially using blockchain tokens — is an emerging trend in the Fintech world.
But few are willing to jump into the bandwagon, for now. Blockchain token holders are eligible for revenue streams, dividends, and income generated from real assets. Tokens also represent ownership interests.
Ekapak Nirapathponporn, CEO and co-founder of Fraction, says blockchain tokens help Fraction to offer direct digital assets ownership to investors. Instead of owning the tokens through investing in the stock of a company, which complicates matters a lot.
He argues that compared to traditional company stocks, blockchain tokens make it easier for investors to pick and choose which project they prefer. That’s because they represent real estate units and floors.
Digital tokens tearing down high barriers to investing
Through tearing down real estate chunky assets into smaller, fractional digital tokens, blockchain can bring down the barriers of investing.
For example, blockchain can make accessing private equity funds easier, which is only accessible to high-end investors with a minimum of $5 million.
The fraction was granted an ICO portal license from the Thai securities regulator last month. That means the firm can now officially launch an STO (or security token offering).
Fraction currently plans to launch an STO with a backing of hard assets worth $462 million belonging to the three Thai developers. Magnolia will include the 30-story building Mulberry Grove into the CTO, which boasts a total of 287 apartments.
Ekapak said investors interested in the offering will buy blockchain tokens for about $150. One token will enable the investors to dividends with backing from rental income collected from these high-end properties.
Although the CTO covers completed properties only, even under-construction properties will be included in the offering as well. Investors are unaware of the cash flow implications likely to occur with such an arrangement. Fortunately for them, they can still trade the digital tokens through a Thai licensed asset broker.
