Opportunities in Real Estate
Real estate is one of the prime fields with vast investment opportunities. Although it represents an antiquated system of trade with plenty of roadblocks, it still has a huge following worldwide. The complexity of home ownership and enfolding transactions further aggravate the industry.
Technological advancement, massive marketing and ownership options have greatly aided the industry. Blockchain, in particular, has led to a paradigm shift within the crypto real estate industry. It has alienated existing major problems within the crypto sphere.
Miami’s first real estate Bitcoin purchase created a massive buzz in 2017. The blockchain revolution cannot come at a better time in an industry that’s more than ripe for disruption. In 2016, Goldman-Sachs projected savings of between $2 to 4 billion in title insurance costs when blockchain technology is applied to title examinations.
What is blockchain?
In simple terms, Blockchain is the rail under which digital currencies such as bitcoin run on. This database makes it possible for industry players who have little trust or knowledge of each other to share financial time stamped and verified records. Through cryptography, trust is built via transparent records. This process permits accuracy of information.
Commercial real estate transactions are slowly adopting this peer-to-peer cryptographic process through blockchain. The acquisition of property through cryptocurrency has also become a reality. The city of Vermont, for example, has signed into law limited liability companies based on the blockchain, and it is at the forefront of digitizing land titles via blockchain.
Lantmateriet, the Swedish government authority on land has premiered in setting the standards. It is currently registering property and land through blockchain, with the aim of drastically reducing the time spent on the signing of contracts and registering of sales from months to hours.
Blockchain revolution in real estate
Real estate is a very high-cost business. Millennials though are not impressed by monikers such as “million dollar homes.” They would rather have access to technology that enables them to save their hard earned cash.
Blockchain technology is reified as the answer to a monopolistic system; the overly complicated and bureaucratic world of real estate that increases prices and slows down transactions. Platforms such as SMARTRealty, for instance, enable property owners to list assets for rent or sale and ensure that this information is adequately distributed on rental and real estate sites across the globe.
The International Blockchain Real Estate Association (IBREA) is going a long way in preluding collaborations and mainstreaming crypto blockchain technology. Its main goal is to assist in the creation of global platforms that are not only non-profit and open source but scalable and secure. With a membership of over 5,000 members, IBREA organizes meetups and conferences around the world.
Prior to making a large purchase like a home, it is vital to dedicate countless hours of rigor and research to uncover all potential pitfalls. According to a report by National Association of Realtors, at least 34% of new home buyers today are ‘Gen Yers’. The 2008 economic downturn made them very risk-averse. They are tech savvy and finicky and want technological answers to age-old problems. They crave for data aggregation resources like Carfax, and desire such a resource in the property market as well.
Blockchain has continued to fill this gap by improving buyer confidence which in turn limits foreclosures occasioned by unforeseen costs. The future lies in platforms such as Propy. Miguel Prados Rodriguez from Seville, Spain is remembered as the first property seller in the EU to enjoy blockchain’s ability to simplify the complexity of real estate selling through the platform.
The platform is user-friendly and accords users with peace of mind that is needed to enhance the safety of the entire transaction. This sale utilized cryptocurrency (ETH-ETH), through Propy’s platform and all parties involved enjoyed the fastest transaction speeds ever seen in cross-border real estate transactions.
Ubitquity is another blockchain firm that records and tracks real estate transactions, streamlining the otherwise complicated property title process. The platform works in parallel to the paper trail system, reducing future title search times and thereby increasing buyer confidence.
A $30 million 12 unit luxury condo development in Manhattan has become the most significant tokenized asset on Ethereum of late. Blockchain tokenization is taking over traditional real estate financing thus eliminating the cumbersome traditional bank financing.
Tokenization as a process avails real-world assets as digital representations on the blockchain. It creates a more fluid market, thanks to blockchain’s ability to enable a transparent financial environment. With home prices steadily rising, tokenized properties will appeal more to conscious buyers who can purchase stakes in terms of coins that suit their budgets. These stakes can be transferred easily thereby decreasing the vast amount of fees that build up with real estate transactions.
At the forefront of the tokenized property wave are firms like Brickblock, that provide a seamless platform that connects cryptocurrencies to physical assets. This ensures that cryptocurrency owners can invest in real-world assets. Hot on their heels is Atlant, Deedcoin, and Meridio who create fractional ownership through real estate tokenization.
In 2016, crowdfunding was valued at $3.5 billion. This value is expected to keep ballooning, as more millennials jump into the fray. With crowdfunding, anyone can share in the fruits of investment at a fraction of the investment’s cost. Blockchain technology is the answer to a seamless crowdfunded real estate investment project easing decision making and improving sharing of records.
Blockimmo, for example, enables the sharing of property ownership and investments on the Ethereum blockchain. Swinca, on the other hand, is not only a vehicle for tokenization of properties, but it also enables instant investment opportunities in real estate. Through Swinca you can receive income rent and capital gain without the consequent management hurdles.
While most of blockchain’s forays into the real estate world are still in their development stages, they are the catalyst the industry needs to make global real estate investment opportunities available. And while they may not solve all real estate challenges, they have started disrupting this archaic industry positively for the benefit of all.
Featured image via BigStock.
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Author: Grace Muthoni
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