Security Tokens Might Change Property Developers’ Take on Raising a Capital to Fund Projects, as per Report

Based on a report by the South China Morning Post, security token offerings (STOs) might be changed the perspective of developers on raising the capital to fund mega projects, which is a boost to the property markets of Hongkong and the Greater Bay Area.


(Photo : ANTHONY WALLACE/AFP via Getty Images)
TOPSHOT – This photo taken on September 8, 2017 shows The Centre skyscraper (centre L), located in the city’s bustling Central district of Hong Kong. A landmark skyscraper owned by Hong Kong’s richest man Li Ka-shing has sold for a record of more than 5 billion USD, according to a report on October 16, indicating that the city’s booming property sector shows no sign of slowing down.

Colliers Hong Kong Managing Director Lau Chun-Kong stated that Real estate STOs could revolutionize capital raising within the real-estate sector. Property investors and developers can utilize STOs as a fundraising means across the property life cycle, from greenfield projects, through the construction stage to stabilized income-generating assets.

As per the report, property STOs’ state will be good for the next few years since several developers will be needing to have alternative fundraising channels for the so-called mega projects in Hong Kong and bay areas such as Lantau Tomorrow Vission, Northern Metropolis, and the Julongwan.

This could also boost their user since the demand for premium offices are increasing since the Covid-19 pandemic happened. Lau added that more than 10% of compound annual growth is expected to increase by the developers in the next five years.

What are STOs?

This is a form of initial coin offering (supported by tangibles like assets or the profit/revenue of a company) provided through blockchain technology. This can also be used as an alternative fundraising channel inside the sector of the property, which allows the owners to access the illiquid assets to a much bigger base of investors. 

Also Read: Cryptocurrency Investors in Hong Kong Want to Restore ‘Crypto Hub’ Status of the City

Regulators Encourage STOs

Last month, regulators from Hong Kong set a meeting with the security token sector. This meeting aims for the country to be advertised as a safe destination for security token offerings, as reported by Ledger Insights.   

During these times, Hong Kong regulators were enlightened that ten issuers are interested in proceeding with the release of blockchain-based securities. 

This was initiated as several parties have agreed to a joint regulatory move, supported by the Hong Kong Treasury Department, the Securities and Futures Commission (SFC), and Invest Hong Kong (InvestHK). The report stated that SFC will be the one to engage other Fintechs who are interested to join and get to know more about security token offerings.

Financial Services and the Treasury Under Secretary Joseph Chan stated, “We support the sustainable development of STO business in Hong Kong that meets the relevant regulatory and compliance requirements, particularly on ensuring investor protection and addressing the risk on the anti-money laundering/combating of terrorist-financing aspect.”

Related Article: Hong Kong’s OneDegree Claims To Be First Asia-Firm Offering Crypto Insurance

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Written by Inno Flores

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