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Tokenized real estate: what is it and Everything you need to know about tokenized real estate

Nowadays you can store your real estate as a token on the blockchain. This is real estate tokenization. Real estate is stored as NFT, which makes it unique and distinguishable from one another. It offers many possibilities for different people. This will make it easier to invest in real estate. This is great for a real estate developer, but also for people who like to invest their money in stones and do not have a large budget for this. In this article we explain why more and more real estate is stored on the blockchain, how this works and which projects make the most important contribution to this. Before you read on, watch this video below.

Why is blockchain an interesting technology for the real estate sector?

There are several reasons why blockchain is an interesting technology for the real estate sector. This is mainly because data is stored decentrally. As a result, people are more in control of their possessions and data. No intermediaries are needed to store and manage this data. Users can do this completely themselves.

NFTs, which stand for non-fungible tokens, are probably the most important technology that blockchains have to offer. These are tokens that are unique and can be separated from each other.

For example, different data can be stored in an NFT. For example, think of a house. This could be stored as NFT on the blockchain. Each NFT could represent a portion of the house, after which these NFTs could be traded on special marketplaces.

Suppose someone wants to build a house. He could then divide the house in advance into 10 NFTs, each of which represents a value of 10%. Buying 1 NFT costs 30,000 euros, and when you own an NFT, you officially own 10% of the house. In this way, a project developer can obtain money for the development of a building. In this way, investors can easily acquire ownership of a building.

Should the building be rented out, the proceeds will be divided among the investors. After the rent is received, the smart contract will automatically divide the amount among all people who own an NFT See below what the structure looks like.

What can blockchain mean within the real estate sector?

First of all, it’s interesting to mention that real estate is often considered one of the most archaic sectors in the world. The 2nd to be exact, just after farming. Another important fact that characterizes the sector is its heaviness from an economic point of view. The value of real estate assets in the world is estimated at more than 200,000 billion euros.

Blockchain is of particular importance to the industry due to its aspects of certification, time stamping and splitting of tangible or intangible assets. Many of the aspects of this technology are actually very promising for different sides of real estate.

Blockchain can make transactions easier

The real estate transaction is the first aspect that can be involved by the contribution of blockchain to the real estate sector. Indeed, a real estate transaction requires the presence of many actors (think of the buyer, seller, platform, broker, notary, bank, insurance company, real estate expert, land registry), leading to what is commonly described in the sector as “information asymmetry”.

In addition, the presence of the intermediaries mentioned above (there may be more in certain cases not mentioned: project developers, lawyers, planners, etc.) entails additional costs for both the buyer and the seller. These amount to 10% on the buyer and seller side. That can be very expensive, while you still have to pay for the real estate.

This problem of information asymmetry arises even in the more “classic” contractual phases associated with construction. After all, it is not uncommon for a contract (architect, project management, etc. ) to have to be revised several times and it is not possible to remember which version was validated two years ago. That also entails a lot of costs.

Another idea, which is more in terms of “vision”, would be to use blockchain from the beginning of the transaction process. The blockchain could provide transparency and reliably track the progress of a file through timestamps and certification of sent elements. This would allow the intermediaries to focus only on tasks with a high added value.

Investing with small amounts

One of the great advantages of blockchain is the possibility to digitally and securely register rights and obligations in the field of possession. In the example earlier in this article, we talked about people being able to invest as little as $30,000 in a project. In the end, it should be even easier. The idea is to make it possible to invest in real estate in the long term from a capital of only 1 euro. Today, it takes much more money to invest in real estate. Then there is not even the transparency that the blockchain can offer.

In concrete terms: on June 25, 2019, the first real estate transaction via blockchain took place in France, thanks to the start-up Equisafe. A mansion worth 6.5 million euros was bought in just 30 minutes for 150 euros in additional costs. In the future, this hotel could be split into several units, so that tokens can already be bought for less than 100 euros.

There are other concrete examples of use, most notably to enable home ownership for people who are theoretically not creditworthy to banks (freelancers). Masteos’ RENT Token operation is a prime example. The latter enabled a freelancer to (partially) access home ownership and a flat owner to partially sell it to develop his real estate portfolio (leverage effect).

Certified management by the blockchain

Elements related to a participation, a property, renovations, appraisals, diagnoses, sales and purchase prices, can be stored on a blockchain to guarantee the validity of the information in case of sale, rental, transfer, transfer or other.

A concrete example of blockchain in real estate management is the startup Syment. The Syment team has identified multiple absences from general meetings and the cost of sending certified letters are two major issues associated with co-ownership management.

Thus, Syment’s solution makes it possible to manage the votes of the general meeting by recording the results of these votes in a blockchain. In this way the problem of absenteeism and the creation of registered letters can be put to an end. Both of these normally add up to very high costs.

Syment is also developing a smart contract for co-ownership managers. The latter would make it possible to automate and certify various aspects of co-ownership management (works, renovations, etc.).

Another interesting example of management is that of Olarchie. This startup has created a proof of concept for professional leasing. Olarchy has used a smart contract that allows the classic professional contract to live with market changes. A lease is therefore not definitively signed when it is signed, but evolves during its lifetime. In addition, the startup is studying the possibility of automating payments in cryptocurrencies, as is already operational for traditional currencies.

Joining the technological convergence

Let’s be honest. The blockchain in itself is not a panacea. However, it is the combination of blockchain and other technologies that creates magic. In the field of vision, many examples can be cited, whether they are institutional or not.

We can also talk about a very concrete project, which, unlike the two other examples mentioned above, is not in beta phase: this is Immiris. Immiris is an autonomous management service for displaying building permits. Whenever a building permit is obtained, a descriptive panel of that permit must be placed on the public road on the site of the future construction for a period of two months (at least).

In order to certify the posting of the said permit, the project owners, builders or private individuals must call on a bailiff to certify.

This concerns the first posting (to start the so-called “purge period”), the continuous posting (generally a report is made in the middle of the period, ie one month after the start of the purge), the end of the screen (allows the end of the “purge” period).

However, the arrival of the bailiff for these three punctual stages does not really guarantee the continuity of the placards (they can only be drawn up when the bailiff is present for the report and then removed, they can also be replaced, etc.) a minor incident (partial panel twisting) or a major incident (panel overturning, vandalism, displacement) occur without the knowledge of the promoter/builder/contractor/individual.

If discovered during the final inspection, the signage would have to be re-installed from scratch, which would delay the start of work by at least two months.

In short, Immiris makes it possible to carry out an official report of the provision of a building permit yourself and to certify this in the blockchain. In the same way, each Immiris panel is connected and can detect all types of incidents thanks to a GPS chip and a motion detector. In short, this is a very technical but at the same time very concrete example of the convergence of blockchain with other technologies.

Finally, there is the project Cities ABC, which aims to digitize cities to create a global classification of cities based on different criteria related to: education, health, traffic, pollution, etc. This project uses 3 ‘ deep’ technologies to create a global classification of cities. This project uses 3 technologies (called DeepTech): blockchain, Artificial Intelligence (AI) and the Internet of Things (IoT).

Is the end of the notary and broker in sight due to the rise of the blockchain?

It is interesting to ask the following question: will blockchain make the work of the notary, broker and other professions disappear? Of course we don’t know the answer to that, although we can make a guess.

At the moment it costs a lot of money to invest in real estate, as we indicated earlier. There are a lot of intermediaries that have to be paid before a house can be bought. Nobody likes to pay such costs. That is why more and more people will look for an alternative, which they will probably find in projects that run on the blockchain.

The blockchain has virtually no costs. This is because the network is managed in a decentralized manner. The only costs you will always pay are the network costs. Depending on the blockchain, these costs are often not high. This can sometimes be a few euros, although the transaction costs on the Ethereum network sometimes run up to several hundred euros.

However, it will be a long time before people actually start using blockchain projects more often than traditional services, such as the notary or broker. This is because blockchain technology is still under development. Often it does not yet work properly, or people simply do not yet have enough confidence in the technology to make use of it.

We think that professions such as real estate agents and civil-law notaries will not disappear completely, but that their way of working will look different. For example, there will have to be a party that draws up a smart contract and ensures that the parties involved are connected to each other.

What other crypto projects are in the real estate sector?

In this article we have already mentioned a number of projects that are bringing the real estate sector to the blockchain as an example. However, these weren’t the only projects to do that. More and more companies decide to develop a project that will bring the blockchain world together with the real estate sector. Below you can see an overview of the most important crypto projects that deal with real estate.

Imbrex

Imbrex is a project that claims to be at the forefront of the convergence of blockchain and real estate. This project runs on the Ethereum blockchain, and aims to ensure that property owners gain complete control over their assets. According to Imbrex, this is not yet the case, and that is why something should change soon.

They solve this by means of a special marketplace, which uses the InterPlanetary File System, abbreviated IPFS. This is a system that ensures the security of data and transactions. It also ensures that property owners are completely in control of their assets.

Users do not have to spend a lot of money to use Imbrex. They only pay the transaction costs for the Ethereum network. This ensures that many projects want to use Imbrex. There are more than 2,200 projects on the waiting list.

SYB Coin

SYB Coin has its own cryptocurrency, called the SYBC token, and is a project that has a unique purpose. It wants to ensure that pieces of land that seem very unattractive are sold to place buildings on it. With the SYBC token, anyone can invest in these types of construction projects, or to claim part of the ownership.

SYB Coin’s platform already allows people to swap SYBC tokens with Bitcoin , Tether, and Ethereum. This same platform is already full of different projects that you could invest in. This eliminates intermediaries, and as a private individual you can invest directly in various real estate projects, in order to earn income.

LABS Group

LABS Group has developed a project to tokenize real estate. This means that property ownership can be stored in special tokens. This also makes it easier to resell real estate.

According to LABS Group, it is possible for individuals to buy real estate for at least 100 US dollars. This is not talk of the future, by the way, because there are already projects that participate in LABS. For example, the Indonesian ‘Kunang Kunang Glamping Resort’ is one of the projects participating in LABS. Investors could contribute to this project, in order to earn money on the investments they have made.

Here too, intermediaries are eliminated. Individuals can invest in a crypto project directly through LABS’s platform, and their participation will be stored in a dedicated NFT. In combination with the low entry fee, it is possible for everyone to invest in new real estate projects.

ATLANT

ATLANT’s platform offers people the opportunity to tokenize real estate, and then offer it on this platform. Previously, ATLANT has set up a platform for exchanging tokens called Uvas.com. It offers a high level of security to its users. The team behind this project knows the dangers of the real estate market, especially when it is moved to the blockchain.

That is why they decided to also develop a platform that focuses on trading real estate tokens. This platform is called Redot, and it can already be used by anyone who wants it. With this, ATLANT contributes to the growing real estate market on the blockchain.

Propy PRO

Propy is a platform that works a little differently than most of the platforms we have discussed and are going to discuss here. It is an automated real estate platform, and must ensure that the wishes of the users are fulfilled as well as possible. This is done by means of smart contracts, which all run automatically.

Propy’s token is called PRO, and it allows users to invest in real estate offered on the Propy platform. Property owners can list their buildings on the platform by storing it as an NFT. Investments are then automatically completed by the smart contract, so that property owners do not have to do anything themselves after they have placed their property on the Propy platform.

United

United’s goal is to build the world’s crypto city from scratch. That’s a big goal that you can’t just achieve. Fortunately, United have a well thought-out plan that they believe will succeed.

United’s platform is called U-Cube which can be reached at www.u-land.com, and this removes the difficulties of investing in real estate. For example, it is possible to start a crowdfunding on U-Cube, and it ensures an increase in liquidity.

Not long ago, 300 more apartments were launched on the U-Cube platform. People could then invest in one of these projects, through the UTED token. This is United’s token, which allows users to invest in all projects offered on the platform. It is also possible to invest with Bitcoins, because the platform also accepts this cryptocurrency.

etherland

Etherland goes a little further. The platform they have developed is very similar to Funda. Property owners can upload all kinds of data about the property they own here. Think of photos, documents, characteristics and other data that you can also enter on a website such as Funda. This can all be done on the Etherland website, but also through the mobile application. This makes it very simple to use the Etherland platform.

After entering all the data, the property owners can issue NFTs. The NFTs that are created contain the data entered by the users. This makes it possible to move real estate to the blockchain.

Etherland has its own token called ELAND. You could buy this token on exchanges like Uniswap , Pancakeswap and Bilaxy if you are very confident in how this project works. With these tokens it is possible to search in the Estatepedia. This is a database that contains all data of the buildings that are stored on it.

One of the most important features of Etherland is that it is possible to store a lot of different data in the NFT. This makes it very easy to search for different types of real estate, anywhere in the world.

IHT Real Estate Protocol

Like several other projects mentioned above, IHT Real Estate Protocol is a platform where many different types of real estate tokens are offered. In this way, this project aims to contribute to providing enough liquidity within the real estate-based projects.

Conclusion

The blockchain can therefore play an important role in the real estate world. And it probably will. This combination provides a lot of possibilities. The characteristics of the blockchain make it possible for users to store their real estate as NFT on the blockchain.

They can then easily subdivide and trade their real estate. This can all be automated through smart contracts. In addition, more and more countries see real estate tokenization as a legal means. This will also make it easier to invest in foreign real estate projects, without having to travel to the relevant place.

There are currently many projects underway in this sector. There is a good chance that the number of projects will increase considerably in the coming years. After all, more and more people want to invest their money, and real estate has long been one of the most sought-after financial products to invest in. The blockchain will only make it easier to do that.

 

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