Global real estate industry is approximately $230 trillion worth. How can this open an opportunity to Blockchain?
Blockchain real estate has been an ongoing trend for quite some time. Several businesses are already making their moves by creating applications that integrate blockchain with the world’s largest asset class.
As the real estate business will continue to play a huge role in the long-term global economy, it is of utmost importance to facilitate its evolution as much as possible.
Like most traditional industries, the real estate business is severely affected by tremendous pain points. With blockchain, this can be improved effectively.
Fractional Ownership
Through blockchain tokenization, investors can take advantage of fractional ownership. Basically, the idea is that multiple people can buy tokens that represent ownership of a single property and co-own it.
This makes investing in properties more affordable, allowing the middle-class and even the lower income class to invest in real estate. Furthermore, real estate tokens can be listed directly on exchanges that run 24/7 with no downtime. This increases the liquidity of the global real estate market.
Third-party Elimination
With blockchain technology, real estate transactions can become peer-to-peer. Most intermediaries can be rendered nearly useless with the power of smart contracts, an extension of the blockchain.
Smart contracts are self-enforcing contracts that execute when certain conditions are made. They have specific instructions in their code managed by a blockchain. Through smart contracts, real estate transactions can execute automatically without the need for a broker or other third party.
This makes it easier to invest in international properties by removing fees and regulation barriers. With the intermediaries out of the way, an investor can save a small fortune. Moreover, since the blockchain is an immutable database, no documents can be forged or manipulated, hence, there will be less fraud.
How would it work?
If a person wants to sell his condo unit for €100,000, instead of looking for one buyer who would buy the whole property, he can sell it in fractions to 10 people who would pay €10,000 each, making it a lot easier to liquidate.
On top of that, he will receive more of the earnings since there are less intermediaries involved such as banks, notaries or even brokers if individual is willing to search for a buyer on its own.
After all the buyers purchase the property, they all enter into a multi-signature smart contract regarding the object, which makes sure that all present and future property changes have to be approved by the majority of co-owners. Therefore, intermediaries are not necessary even after the purchase.
Blockchain technology offers huge benefits to the real estate industry. It’s only right that we should take advantage of this. Through fractional ownership and third-party elimination, real estate businesses can become more affordable, liquid, and fair.
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