September 11, 2023

Taiji Capital Launches Hong Kong’s First Crypto-Based Real Estate STO

Published: September 11, 2023 at 1:44 am Updated: September 11, 2023 at 2:36 am

Edited and fact-checked: September 11, 2023 at 1:44 am

In Brief

Taiji Capital launches Hong Kong’s first real estate STO, PRINCE, aiming to raise HK$100 million for the development of this area.

Taiji Capital Group has initiated a notable shift in Hong Kong’s real estate market by introducing its first Security Token Offering (STO) via its subsidiary, Pioneer Asset Management.

The STO, known as PRINCE, targets professional investors and has a fundraising goal of approximately HK$100 million, suggesting a potential shift in conventional real estate financing and investment approaches.

How Does PRINCE Token Benefit the Industry?

The PRINCE token introduces a different approach to capital investment in the real estate sector. It functions as a closed-end fund with the specific goal of purchasing five retail stores on Prince Edward Road West in Kowloon.

Unlike traditional real estate funds, PRINCE utilizes blockchain technology. Subject to receiving the necessary regulatory approvals, the tokens are planned to be traded on the HKbitEX virtual asset platform, which could increase their liquidity.

According to Zhang Zhongyu, the Vice President of Capital Markets and Asset Management Business at Taiji Capital, STOs present a compelling case for reducing the cost of financing for real estate developers and owners. Traditional funding methods like bank loans often come with high-interest rates, sometimes reaching 5%.

STOs could significantly mitigate this, potentially reducing funding costs by up to a third. Furthermore, STOs expedite the fundraising process. While conventional funding methods such as IPOs and REIT listings involve an elaborate and time-consuming setup involving multiple parties like investment banks, lawyers, and accountants, the STO route could slash this time to just three months.

.Tykhe Capital Group will launch “Prince Token”, available only to professional investors. Subject to regulatory approval, the token will list on HKbitEX.https://t.co/9olKef5DOA
— Regulation Asia (@RegulationAsia) September 11, 2023

The Investor’s Perspective for PRINCE

Traditionally, investing in private real estate funds would require a substantial upfront commitment, sometimes as high as US$1 million (approximately HK$7.8 million). The PRINCE token dramatically lowers this barrier to entry, with an initial investment requirement of just $1,000 US dollars.

Once listed on a virtual trading platform, these tokens will be tradable around the clock, offering unmatched flexibility. Blockchain networks like Ethereum will securely store ownership and transaction records, ensuring complete transparency.

The PRINCE token promises multiple revenue streams for investors, including rental income from the associated stores. With current rental yields for similar properties ranging from 2-3%, the token offers comparable returns.

In addition, the fund aims to capitalize on the potential rise in rents due to increasing local and mainland traffic. However, it’s crucial to note that like any investment, STOs do come with risks—specifically, network security risks. Taiji Capital assures that it will guarantee compensation for any loss from token theft, in accordance with regulatory guidelines.

Regulatory and Future Outlook

As it stands, the fund is only open to professional investors due to its specialized, single-property focus. However, Taiji Capital’s Liang Weijing sees a future where more diverse STO-based products could be accessible to retail investors, similar to currently available REITs on the Hong Kong Stock Exchange.

Moreover, future projects from Taiji Capital may focus on various sectors beyond real estate, including artificial intelligence, food service, and big data, all underpinned by mainland China’s burgeoning tech industry.

Taiji Capital’s initial foray into the STO space, which echoes efforts by industry players like Tzero, represents a noteworthy advancement in making real estate investment more accessible and efficient in capital allocation.

In its early stages and still awaiting regulatory approval, the PRINCE token could potentially establish a new standard by integrating blockchain technology with traditional real estate investments for stable returns. What is becoming increasingly evident is that STOs are emerging as a credible and forward-looking form of investment.

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About The Author

Nik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master's degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.

Nik Asti