Editor’s Note:

This article is part of Entralon Hub’s Leadership View series, where senior contributors examine the structural forces reshaping access, participation, and long-term stability in global housing markets.

In this feature, Dr Farid Zadeh Bagheri, CEO & Founder at Open Estate, examines what tokenised infrastructure means specifically for rental real estate markets. Not as a technological disruption, but as a structural reconfiguration of how ownership circulates, how liquidity is coordinated, and how capital efficiency is shaped over time.

The Illusion of Stability in Rental Markets

Real estate is often described as stable, durable, and predictable. That characterization is partially accurate but incomplete.

Rental markets function reliably at the surface level. Tenants sign leases. Owners collect income. Transactions clear. Capital enters and exits.

Yet beneath that apparent stability lies a structural reality:
capital moves slowly, information is fragmented, and liquidity is episodic rather than continuous.

These characteristics are not anomalies. They are systemic.

Traditional rental markets conceal inefficiencies within operational layers: intermediaries, documentation processes, fee structures, settlement cycles, and ownership transfer mechanics. Because these frictions are normalized, they are rarely examined critically.

Tokenisation does not introduce instability into this system.
It simply makes its inefficiencies visible.

Illiquidity Is a Design Constraint, Not a Natural Law

Real estate is frequently described as inherently illiquid. This framing deserves scrutiny.

Buildings are durable physical assets. What creates illiquidity is not the building itself, but the structure governing ownership and transfer.

In conventional markets:

  • Ownership is indivisible at scale.
  • Transfers require layered legal verification.
  • Capital deployment is binary: full entry or full exit.
  • Settlement cycles are elongated.

These constraints compress the buyer pool and slow capital turnover. Illiquidity, in this context, is an infrastructural outcome.

Tokenised ownership frameworks introduce fractionalisation and programmable transfer logic. The physical asset remains unchanged. What changes is the mechanism by which capital interacts with it.

Participation thresholds decline.
Transferability improves.
Settlement logic can be synchronised with ownership updates.

Liquidity becomes a function of system architecture rather than market sentiment alone.

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The Cost of Opacity

Opacity in rental markets does not appear as a headline risk. It manifests as inefficiency.

Performance reporting standards vary.
Fee layers are dispersed across service providers.
Transaction histories are not uniformly observable.

This fragmentation increases due diligence costs and pricing uncertainty. Negotiation cycles extend. Risk premiums rise to compensate for information asymmetry.

Digital asset infrastructure introduces structured transparency:

  • Standardised ownership registries
  • Traceable transaction histories
  • Automated distribution mechanisms
  • Real-time capital table visibility

Transparency does not generate demand.
It reduces friction in capital allocation.

When price discovery improves and performance metrics become observable, negotiation intensity declines and capital velocity increases.

The improvement is incremental but compounding.

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Capital Efficiency and the Rental Equity Trap

In traditional rental ownership models, capital is typically locked until a full asset disposal event occurs.