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It is no secret that blockchain technology has already changed many industries, and real estate won’t be an exception. Long gone are the good old days when purchasing a piece of real estate required actual face-to-face engagements. However, with the introduction of smart contracts, assets like real estate can be tokenized and traded just like any other cryptocurrency.
Game-changing for the old folks
Sadly for brokers, banks, and other intermediaries, they are soon to be cut out by the global adoption of blockchain technology as it opens up new means for buyers and sellers to connect with one another. Not only will this make the process quicker, but it will also allow buyers and sellers to get more out of their money, as they save on commissions and fees charged by the middleman.
Fractional ownership in Real Estate
Another interesting aspect of blockchain is the fact that this technology could also help to codify the practice of fractional ownership of real estate. Historically, real estate investments would require significant money upfront in order to acquire property. However, with fractional ownership, literally anyone can invest in real estate without actually purchasing the whole property.
What is real estate tokenization?
Tokenization, as it pertains to real estate, is the process of creating a virtual token that represents ownership of a type of real estate asset. As physical assets back the tokens, the value of the tokens will fluctuate based on the performance of the asset. This is similar to traditional real estate investing but with the ease of transfer conferred by the utilization of blockchain technology.
Opportunities in Fractional ownership
No doubt there are business opportunities in this transitional period. The global commercial real estate market was already at $32.6 trillion dollars in 2020. We can only imagine the growth possibilities stemming from global access to investing in real estate through fractional ownership.
Some companies have already started pawing their way into this untapped market and created security tokens backed by real estate. For example, Coreestate, has already purchased a property with rental units and is planning to issue a security token that allows investors to become co-owners of the land, buildings, and profits. With extensive analysis, they believe that their token can grow up to 10% APY just through an increase in real estate prices. However, the most attractive part of this investment is the monthly dividends paid by tenants distributed to all token owners proportionately. It’s worth noting that this is one of the few projects in this space addressing all legal aspects before selling any tokens.
Blockchain technology allows the secure transfer of data from one party to another and it’s only a matter of time before it will massively change how traditional industries work. We all know that the world has a lot of problems that need to be fixed. Lack of transparency, a lot of uncertainty, a high level of fraud, you name it! Because of this, you will see many changes in the real estate industry, especially with real estate transactions. Just like Coreestate, there are many companies providing new ways to search for properties, to buy or sell them, and to pay for them. These are just a few examples, so take your time doing your own research and don’t miss out on a massive opportunity.
My name is Ieva Ernestovska, head of marketing at Coreestate and owner at SpurOn Media. Crypto and NFT enthusiast and investor. LinkedIn - https://www.linkedin.com/in/ievaernestovska
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.