Lots of people want to have exposure to real estate because history proves it is one of the best asset classes for long-term wealth generation. Real estate is also pushed onto us (especially in the UK) by parents, grandparents, aunties and uncles. You are told that you should, as early as you can, have exposure to it - getting on the ladder with your own property or, if you travel regularly, having a rental property in a cheaper city. As for investment income, real estate is the easiest thing for us to grasp. The income is tangible, it's understandable: somebody pays you to live in your asset.

Another thing: investment in real estate is rarely short-term. Most people who do it have a horizon of 10-25 years before they plan to sell or do anything with a real estate asset.

The difficulty with other products is people may not understand them. The yield is not clear, it is highly variable or could be volatile. In most cases Real estate is a long-term hold rather than something short-term. It's easier for people to have a guess at a specific area or city or even country with a long-term horizon of 20 years, rather than trying to predict the price of something they don't understand over a much shorter period. The margin of error here is typically far less with a long-term horizon.

Obviously many people do buy properties in cash, but they are exceptionally privileged in doing so and from an investment thesis this typically does not make sense. So what happens is most people will have a down payment and they will look to borrow the rest - usually because the quality of assets they require to meet their goal, if an investor, is going to be on the expensive side.

When you take a relatively modest property in the UK, for example, at £300,000 value, you are likely to need at least a 25% deposit. Then you will need to pay stamp duty (a one-off tax), plus your lawyer fees, your loan fees and any other fees on top of that. The barrier is extremely high for someone to make their money work for them.

When you look at the average age of house buyers or average age of investment property buyers, they are always much older because they have to have accumulated wealth in other ways to have the ability to buy these second, third, fourth properties for wealth creation or for continuation of wealth. When you play that back to people who are trying to create wealth or a steady stream of income or wish to think about things 25 years' time, that barrier is extremely high for someone in their early-to-mid-twenties, for example.

Leverage in that example allows that person to buy that property which is otherwise out of reach for them. It will allow them to acquire the whole property. They will pay interest on the leverage (mortgage) and - typically if the loan is on interest-only - the rental income will often exceed the payment. That gives a small amount of annual income. And then the aim is for capital appreciation during their investment horizon, as we say, 10-25 years.

In monetary terms, that person needs to have £75,000 or $100,000 to make that a reality. As I say, lots of people trying to create wealth do not have that. So this is where fractionalization comes in. Someone can now go out with as little as a few hundred bucks and buy just a fraction of the property. They do not need to jump through hoops for lending, they do not need to worry about consistently refinancing that debt. They can simply go out and buy a fraction of a property, which works. Now their £75,000 is in a portion of a property, let's say 20%, and it earns them 20% of the rental income, which on the face of things looks great. It's reduced the barriers for these people to be able to buy property. Even further than that, if you haven't got £75,000 and you only have £5,000 or £10,000 (sometimes even less), you still have the ability to get some access to real estate, which was never available before. You can still invest on your long-term horizon of 25 years. The barrier to do so has been reduced dramatically, which is the power of fractionalization.

Now, when we go back to understanding that real estate is a leveraged asset class: if you have your £75,000 and you have the ability to get access to that one rental property, if that rental property is valued at £300,000 and it increases by 100% over a 20-year period, what then happens is your £75,000 becomes £150,000. And you've received your annual rental income along the way minus the cost of your loan. So in 20 years' time you have made 100%, which is obviously good.

If you now think about leverage, how this changes it, and how fractional property comes into play: you could take that £75,000 and you could put £7,500 across 10 properties, spreading risk. Then what you could do is actually double your holding by borrowing at a relatively low risk, 50% loan-to-value. So now your £75,000 has actual exposure of £150,000, but across 10 different properties, owning £15,000 apiece.

Applying the same numbers, let's say in 20 years' time those properties have all doubled - yours would have gone up 100%. All of a sudden your £75,000 which would have given you £150,000 has doubled to £300,000, but you only owe £75,000 worth of lending (assuming Interest Only payments). Your £75,000 has returned £225,000 or £150,000 profit - essentially double what it would have been without leverage.

The point I am making is that if we talk about trying to create generational wealth or lower barriers to real estate, it's not all about the reduction of barriers and yield, it's about treating it the same as you would a wholly owned investment property, which means leverage.

Now the aim is for younger people, the tech-savvy to lower the barriers to real estate, to be able to, let's say, work their way up to a wholly owned property or work their way to allow their children to buy a wholly owned property. Leverage dramatically accelerates that timeline and enables entirely new ownership pathways that weren't possible before - it gives you low risk but bigger exposure to property. The barriers are still much lower, the entry requirement is lower. You don't have to manage the properties because the companies will manage the properties for you, but the returns are far greater with leverage than they are without.

I don't believe you can get leverage - not somewhere legitimate and trustworthy where you could comfortably forget about that debt for 15, 20, 25 years. The only thing I have seen is perhaps peer-to-peer lending in DeFi protocols, where my concerns (in most) really are about the actual ownership of the underlying asset, let alone the ownership of the company that's provided the debt against it. And I think you could dig deeper into where that asset sit, who owns it, has your token been deposited in a legitimate protocol?

So arguably the odd platform might allow you to borrow against your fractional real estate, but there are huge question marks over the legitimacy and the ability to park it there and leave it for 20 years like you would do if it was tokenized by a highly credible company and the loan was provided by an established company, like a bank for example. This is the infrastructure gap that needs solving. Fractionalization has lowered barriers dramatically - you can now own exposure to real estate for a few hundred pounds instead of £75,000. Reputable platforms have created genuine access to an asset class that was previously out of reach.

But without leverage, wealth creation happens slowly. Those fractional shares will appreciate and generate rental income - they absolutely build wealth. But they do it at 3-5% annual returns, the same as if you'd bought the whole property in cash.

Digital shares become significantly more powerful as wealth-building tools when you can borrow against them the same way you would a wholly owned property - for decades, at competitive rates, with institutions that will still exist when the loan matures. That's when the 20-year return goes from 100% to considerably more and when fractionalization becomes truly transformative for wealth creation.