Real Estate Tokenization as a Portfolio Diversification Tool: Technological Frameworks, Market Potential and Regulatory Barriers (with a Focus on Bulgaria)

Abstract

This article proposes a contemporary and innovative approach to portfolio efficiency, aiming to approximate a state of antifragility during periods of heightened geopolitical uncertainty and accelerated technological transformation. The multidisciplinary analysis draws on academic literature, European regulatory frameworks (such as MiCA), reports from international institutions including the World Economic Forum and the International Monetary Fund, as well as conceptual and technical documentation developed by leading platforms in the Web3 ecosystem. In preparing for the transition into a new technological era, the authors present a framework for real estate tokenization through converting property ownership into NFTs and using these tokens as collateral for lending in digital currencies. This approach addresses the problem of low real-estate liquidity and creates conditions for democratizing investment by enabling a low entry threshold and fractional ownership. The model’s antifragility is demonstrated through quantitative analysis, including an evaluation of portfolio volatility and efficiency based on Markowitz theory and the Sharpe ratio, with the results confirming the logic of Taleb’s barbell strategy. The study supports the potential for Bulgaria to position itself as an innovative regional hub for the development of Web3 and the tokenization of real-world assets.