A recent case from Nigeria demonstrates how blockchain technology could change international real estate investment, highlighting weaknesses in traditional pension fund strategies that affect both emerging and developed markets.
Edward Nwokedi, founder of RedSwan Digital Real Estate, recently visited the Lagos-based pension fund that manages $40 billion for Nigerian government employees. His findings reveal a major flaw in how institutional investors approach geographic diversification—one that blockchain technology may be able to solve.
The Diversification Crisis
Over the past four years, Nigeria’s government pension fund has lost nearly 30% of its value, primarily due to an overconcentration in domestic assets. “Their investments were really focused on domestic opportunities, like treasuries from the Nigerian treasury, or from companies that are producing Naira, their currency,” Nwokedi said. This focus on local investments, combined with the severe devaluation of the Naira, led to significant losses for pensioners.
This situation illustrates a widespread problem for institutional investors worldwide: achieving effective geographic diversification is often difficult and expensive. Traditional cross-border real estate investing involves multiple intermediaries, high currency conversion costs, and complex regulations, making true diversification out of reach for many funds.
The Blockchain Solution
Tokenization offers a practical alternative. “Now, with blockchain technology, they can actually invest in US assets that are dollar denominated and that will help stabilize their pension funds,” Nwokedi said. By allowing direct investment in foreign real estate assets without traditional intermediaries, blockchain reduces both costs and complexity.
For the Nigerian fund, the main appeal was not higher returns but the ability to preserve capital by diversifying into dollar-denominated assets. Nwokedi described the fund’s reaction as “very excited to be able to invest in US quality dollar denominated assets, because now it’s stabilizing that pension fund account from falling dramatically like it has in the past.”
Global Implications
The Nigerian example shows that blockchain technology can give institutional investors in countries with volatile currencies or limited local opportunities direct access to stable, dollar-based real estate markets. This could reshape global capital flows, as pension funds, insurance companies, and sovereign wealth funds use tokenized real estate platforms to bypass traditional investment channels.
If widely adopted, this approach could redirect billions in institutional capital toward tokenized real estate, reducing reliance on costly intermediaries and opening up new markets for both investors and property owners.
The Technology Infrastructure
RedSwan’s platform uses Hedera and Stellar blockchains to minimize transaction costs for international investors. “We want to make sure their cost is minimal, because they might only have to spend 50 to $100 to buy into a security. And if $50 is eaten up by $25 worth of gas fees, then their net investment is only $25 instead of $50,” Nwokedi explained.
This cost efficiency is especially important for smaller institutional investors or those making frequent, smaller investments. Traditional cross-border real estate deals often have high minimums, but tokenization can support investments as small as $50 while remaining economically viable.
Market Validation
This approach is gaining traction with major institutions. Nwokedi pointed out that BlackRock CEO Larry Fink has committed to tokenizing all $13 trillion in assets under management. “Whenever I go in front of a large institution or a large property owner and let them know what we’re doing, we can always bring up the fact that the largest asset manager in the world is actually doing exactly what we’re proposing.”
The Nigerian pension fund’s experience highlights growing demand among institutional investors for tokenized real estate solutions that address currency risk and limited domestic investment options. As more institutions seek efficient ways to diversify globally, blockchain-enabled platforms may become a central tool for future real estate investment.
