Blockchain & Real Estate
Greetings Learn2Earn DAO community!
Today, we will be overviewing Blockchain Technology and its applications within the broader global Real Estate ecosystem. Although Blockchain/Crypto utilization is still in its infancy within this sector of the economy, the technology is capable of revolutionizing the global real estate market for decades to come.
Major applications of blockchain in Real Estate include instant land transfers, reduced legal complexity, and democratization of ownership through crowdfunding, to name a few. Below, we will outline a few notable use cases, along with some blockchain real estate projects who are taking advantage of this cutting edge industry transformation.
1. Transactions Processing & Record Keeping:
Revolutionizing online payments and the remittance sector was among the first and most prominent use cases for blockchain and real estate. This translates perfectly to real estate, where blockchain’s core strengths could be utilized for handling the billions of dollars changing hands on commercial and residential property markets every day.
The technology’s trustless nature allows for direct transactions between sellers and buyers, without the need of an overseeing institution verifying the validity of those transactions. The process can be further bolstered by implementing smart contracts, which ensure that a seller-buyer transaction will only take place if certain conditions are met
2. Token Securitization:
Tokenization in real estate offers the ability to unlock investment opportunities for individuals and organizations, while lowering the amount of fees and costs typically associated with real-estate transactions. An individual might want to invest in real estate but not have sufficient capital or desire to purchase and manage a house or commercial building. While there are real estate investment vehicles available to investors such as REITs – they do not offer the specificity that many investors might want.
Instead of a set of distant properties collected in a basket, an investor might want to invest in a single property or in a set of buildings in a specific area known to them. Doing either investment currently, however, is problematic in that the overhead and marketplace to secure portions of properties takes significant time, expense, and mindshare. Token securitization of properties via blockchain, along with token-enabled marketplaces and exchanges, however, can make these types of investments possible.
3. Land Registries:
The land registries in most countries and regional authorities are historically
challenging to access, as most of the information is kept offline. Blockchain
registries have the potential to shorten a normally lengthy process of recording
and transferring titles while offering transparency and eliminating the need to
trust a centralized party.
For example, Ethereum's running ledger of transactions provides transparency of asset ownership and control, mitigating the significant problems with titling and land-ownership claims which can plague development projects in many countries. Titles certainly need to be verified prior to being included within a blockchain registry, but once there, there is greater assurances of ownership based on the immutable transaction record. Many state governments and countries are already looking to move their land registries into blockchain networks, and thus provide ways to store and easily access historical title records.
4. Token-Enabled Marketplaces:
Tokenization can do more than represent properties and allow for distribution of revenue streams. It can also facilitate the creation of more liquid and transparent commercial real estate exchanges. Such exchanges would allow for improved trading capabilities, perfection of ownership, and management of the properties and portfolios.
For investors who have invested in smaller, yet still significant stakes in a property, it is not easy to liquidate these assets. By implementing Blockchain technology this problem can be solved, as the process to liquidate a token is much easier and cheaper. A regulated marketplace created for secondary offerings could allow accredited investors to more easily trade their shares (i.e. tokens) amongst each other.
5. Standardized Property Data:
Today’s global ecosystem consists of many isolated and disparate real estate networks with little to no interoperability between them or other systems. Even though access to property data is the basis of the sale, lease, and price - it is a struggle for agents and firms to get exposure for their property listings via the range of systems used internally, as well as external services locally, regionally, nationally and internationally.
Without good data to work from, few offerings or deals can take place. Blockchain networks and technologies provide a foundation to process, exchange, and control the downstream flow of data in a way that allows independent, unaligned, and even competing stakeholders to share with one another, without ever giving up ownership or control of their data to a central operator and its interests.
Notable Blockchain Real Estate Projects (Non-Virtual):
- Propy is a decentralized real estate platform that enables the buying and selling of properties across borders. The platform uses blockchain technology for registry property deeds and stores other relevant information (owner data, mortgage information, and more). Propy also allows for the easy execution of real estate transactions through its smart contracts functionality.
- Propy has processed $4bn in transactions for consumers and agents from Compass, eXp, The Agency, Redfin, KW, Remax, Realty Austin, ACME, and others. They are automating the closing process for all real estate purchase participants to make closing faster, easier and more secure.
- Make/accept offers, and pay your down payment via Propy Online Payment in dollars, and close a transaction with their integrated tech-driven escrow and title company.
- Make/accept offers in crypto via Propy, pay via Propy Crypto Exchange in cryptocurrency, and close a transaction with a crypto-friendly escrow and title company on the platform.
- You can list a property as an NFT as well as on MLS. When you buy a property NFT, there’s no need for 30 days closing.
2. City DAO:
- The DAO for decentralized asset ownership
- CityDAO is exploring making assets and governance digitally legible to unleash accessibility, interoperability, and opportunity. What Nakamoto and Buterin did for value and computation, they propose to do for the physical world.
- It aims to build a network of assets on-chain, starting with a single parcel of land in Wyoming. Each parcel of land is an NFT that can be owned collectively by the DAO collectively or by individuals. It is a DAO, or Decentralized Autonomous Organization, meaning it is managed by the community.
- As part of the DAO, you can help vote and execute on what happens with the land.
- In terms of participation, members may help with legal, development, marketing, and land use initiatives.
- Creating a collection of vacation properties in locations that rank in the 80th percentile in terms of pricing, occupancy, and amenities. From the beach to the mountains, to the links, and beyond, they’re tokenizing vacation rental properties and maximizing profit potential.
- The indaod.io members plan to establish a legally viable organization, a DAO, to "tokenize" the fractional ownership of real estate and real assets in the Vacation and Leisure rental market.
- Membership in indaod.io is offered through an NFT purchase which grants the owner "Founder Membership" in indaod.io and contains the right to contribute to key decisions to be hardcoded via indaod.io smart contracts throughout the DAO lifecycle including Property Selection, Buy / No-Buy Criteria, and Sale Criteria.
Real Estate assets, predictable income, secondary market liquidity, blockchain governance, automated efficiency, and bragging rights.
- Use of Funds:
Scouting/due diligence, operations management, DAO formation, special purpose entity formation, legal/accounting/engineering, and community building/marketing.
Beachfront/waterfront, golf course/resort, hiking/fishing, and unique landmarks.
- SIGI aims to build a residential and commercial real estate portfolio in strategic markets around the United States. By leveraging the latest Proptech 2.0 and blockchain technologies, SIGI can assist token purchasers with maximizing their crypto portfolio by way of real property ownership.
- Crypto tokens issued by Sigillum DAO LLC (SIGI) represent a physical component of a real estate project. The portfolio currently consists of approximately $6M dollars worth of revenue generating residential and commercial real estate, and the token issuance program allows them to raise money to expand their portfolio without the use of traditional lending institutions.
- You can trade or sell your digital tokens at any time on several popular marketplaces. You will also be able to generate income through annual yields available via their staking programs.
In the real estate market - the advice, knowledge, and know-how of real estate professionals will remain crucial to commercial buyers. However, the processing of securities, liability management, document processing, and accounting will inevitably change for the best with the added leverage of Blockchain technology.
Although a majority of the previous hype and activity was around digital real estate projects (Decentraland, Sandbox, etc.), there are many quality Real Estate projects focusing on physical applications of Blockchain tech. It will be quite interesting to see where the virtual and physical worlds collide in the real estate market in the coming years, and our team is excited to participate in its growth!
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