Introduction

In recent years, blockchain technology has garnered increasing attention, particularly in the financial sector. Decentralized Finance (DeFi) has emerged as one of the most innovative tools reshaping traditional lending models. Within this context, the potential use of blockchain in real estate financing is now being actively explored.

FinTech and blockchain-based solutions have started to reconfigure the relationship between developers, investors, and end-buyers through concepts such as tokenized mortgages and decentralized lending platforms. This has sparked wide-ranging debates over their feasibility across different markets. The distinction is important: FinTech seeks to improve the existing financial system, whereas DeFi aims to replace it entirely.

According to a report by Roots Analysis, the global FinTech market was valued at $222 billion in 2024, and is expected to grow to $1.8 trillion by 2035, underscoring its rapid expansion and transformative impact.

Tokenization of Real Estate Assets

Among the innovative models gaining momentum in the real estate sector is the concept of asset tokenization a mechanism redefining ownership and financing. The idea involves converting a property into digital tokens that can be traded on blockchain-based platforms, either in full or in fractional shares, similar to how stocks are traded on financial markets.

This model provides developers with an efficient alternative to raise liquidity without relying on traditional loans. At the same time, it allows individual investors to enter the property market with smaller investments, thereby broadening participation and enhancing market efficiency.

The transparency and traceability enabled by blockchain technology further strengthen this model, as all transactions are recorded immutably, reducing the risk of fraud and boosting investor confidence. Moreover, tokenization significantly increases the liquidity of real estate traditionally a highly illiquid asset class by enabling the buying and selling of shares at any time and from anywhere, without cumbersome legal procedures or multiple intermediaries.

On a broader scale, tokenization opens pathways for cross-border real estate investment, allowing an investor in one country to seamlessly purchase tokens representing a share in a property project located elsewhere. Thus, tokenization is not only an alternative financing tool but also a step toward democratizing real estate investment, in line with global trends toward financial inclusion and digital transformation.

According to Custom Market Insights, the real estate tokenization market was valued at $3.5 billion in 2024, with forecasts projecting growth to $19.4 billion by 2033, at an annual compound growth rate of about 21%.

Decentralized Finance (DeFi)

Decentralized Finance (DeFi) refers to a digital financial ecosystem built on blockchain networks, enabling transactions without the need for traditional intermediaries such as banks or finance companies. DeFi relies on smart contracts to execute transactions automatically and securely, providing an open, transparent, and flexible environment for activities such as borrowing, lending, and asset trading.

According to Precedence Research, the DeFi market was valued at approximately $21 billion in 2024, with projections to reach $1.01 trillion by 2033.

In real estate, DeFi paves the way for digital mortgage lending backed by tokenized assets, eliminating the need for banks and conventional financial intermediaries. It also enables fractional ownership and cross-border investment, where investors worldwide can participate in real estate projects by purchasing tokens that represent property shares and freely trading them on decentralized platforms.

By integrating DeFi with real estate tokenization, the industry could create a more liquid and inclusive digital property market that lowers entry barriers related to cost, legal complexity, and geography. Despite ongoing regulatory challenges, embedding DeFi in real estate financing represents a strategic step toward building a more efficient and flexible system aligned with global digital transformation.

The Impact of DeFi on Banks and Traditional Finance Institutions

As DeFi evolves, banks and traditional financing institutions increasingly recognize that this is not merely a technological innovation but a structural shift that could redefine their role in the financial ecosystem.

By leveraging blockchain and smart contracts, DeFi eliminates the need for intermediaries, directly challenging business models based on transaction fees, commissions, and the monopoly of banks over mortgage lending. This has given rise to CeDeFi (Centralized Decentralized Finance) a hybrid model combining decentralization with regulatory oversight.

One notable example is RealT, a U.S.-based platform that integrates DeFi with centralized regulatory compliance in the real estate sector. RealT enables users to purchase fractional shares of U.S. properties through legally backed digital tokens, while also requiring KYC (Know Your Customer) and adherence to compliance frameworks. Investors receive regular rental income automatically distributed via smart contracts, blending the transparency and liquidity of blockchain with the legal safeguards of traditional finance. RealT thus represents a pioneering CeDeFi model that successfully bridges innovation and real-world property investment.

Opportunities for DeFi in the Egyptian Market

In Egypt, blockchain applications in real estate financing remain at an early stage. According to Precedence Research, North America currently dominates the global DeFi market with over 33% share as of 2024, followed by Asia-Pacific with around 30%, Europe with 24%, and Latin America with 8%. The Middle East and Africa combined account for less than 3% of the global market, reflecting the region’s limited role to date.

Nevertheless, Egypt’s ongoing digital transformation, especially in new cities and large-scale national projects, provides opportunities to explore models such as real estate tokenization as alternative financing mechanisms. However, this also raises critical questions about the country’s regulatory and technical readiness to adopt such solutions in the near term.