Democratizing the Real Estate Market
By tomas velasquez restrepo
Do you imagine you can democratize the real estate market to such a point of investing with less than 1000 dollars?Well, thanks to the tokenization, we can now invest in different properties for a few dollars!Technically, the tokenization of Real Estate is the process of representing physical real estate assets, through tokens in a blockchain. These tokens allow to fraction ownership, which facilitates trade and investment in root goods in a more affordable and efficient way. In this way, it gives the big advantage to investors to be able to invest for less money and, on the other hand, to property owners to generate more liquidity.
Real estate market growth:
When we talk about Real Estate, we are talking about a market that is one of the largest and important sectors of the global economy. The problem is that traditionally investment has been limited to large investors and people with high financial resources.By tokenizing some property, what we are doing is to generate more value to this market, because in this way we can fraction each property and consequently more liquidity will enter the market. This generates a win for both sides, investors and owners.As a result, there would be a growth in the real estate market, since in some countries such as Argentina where there is a recession and the sale of property decreased substantially due to exorbitant prices, it will allow access to thousands of people who had previously no possibility of participating.In addition, by marketing these tokens through web pages, it is easier to purchase them, making the purchase process extremely simple for the end user. Only by creating an account, adding some data and connecting a card or wallet, we can already purchase a portion of a property.
Advantages of Real Estate Tokenization
- Access to new markets and liquidity:
- Real Estate tokenization allows real estate assets to be marketed globally 24/7. This opens the door to new markets and for greater liquidity, as investors can buy, sell and exchange digital tokens without geographical or temporary restrictions.
- Fraction of assets and investment opportunities:
- By dividing the property into smaller Tokens, investors' participation of all sizes is facilitated, even those with limited resources. Investors can buy fractions of root goods, which provides greater diversification of their investments and reduces the risk associated with ownership of a complete asset.
- Democratization of real estate investment:
- Real Estate tokenization democratizes investment by eliminating intermediaries and allowing investors to directly access the real estate market. Opening opportunities for retail investors and creating a more inclusive and affordable market.
Examples of Real Tokenization Estate:
RealT:Platform that offers tokens of residential properties in the United States. Investors can acquire fractions of properties and receive proportional passive income to their investment, which was previously only available to large real estate investors.
Propy:It is a global platform that uses blockchain to streamline and ensure the purchase and sale of root goods. Real estate assets tokenization allows faster and more secure transactions, eliminating the need for costly and bureaucratic intermediaries.
BrickMark:focuses on tokenizing emblematic commercial buildings. Investors can acquire tokens supported by high-value real estate assets, which gives them access to a market previously reserved for large investment funds.
How do you tokenize?
In a few words, tokenize, is to cut the cake into more pieces. Historically, the real estate always split into a few pieces. But now, with the tokenization, the idea is to divide the cake into hundreds and thousands of pieces, giving it the opportunity for people to buy the pieces that are within their reach.If we are a company and want to to token some of our buildings, we have to follow a series of short steps:
First, we have to take a calculation of what the value of the property is. Let's say that the property leaves $1,000,000 (one million dollars) and at the same time, the property has 1,000 m2, therefore, we could say that each square meter has the value of 1000 USD. With this simple calculation, we can determine the Now, what we have to do is develop the smart contract of our token, so with the already created tokenomics, can create the 1000 ERC-20 or ERC-721 tokens (depends on our business model) and make a backup with the real square meters. Remember that when being Tokens, it is very easy to handle, if we create them in Ethereum for example, we can send them to Metamask, Trust Wallet, etc.Finally, it may be the hardest part of the project, but not difficult to do, difficult by the bureaucracy. This “backup” of the square meter value that is made to the token, is through a fideicomiso or a trust. The idea is to do this to add an additional layer of security and transparency to the process. Fideicomiso acts as an independent intermediary and responsible for the administration of assets and distribution of income generated by property. In addition, it provides a solution to address legal and regulatory issues related to property and investor rights.Conclusion
To conclude, the tokenization of Real Estate democratizes the real estate market, allowing to invest with minimal quantities and generate passive benefits. Examples such as RealT, Propy and BrickMark demonstrate their impact. It is a revolutionary breakthrough that creates a global and liquid market, facilitating the participation of retail investors.Do you want to validate this article?
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tomas velasquez restrepo
Hi, it's Tomas. Born in Colombia as a Colombian mother and father of Buenos Aires. I moved to Cordoba and finished my secondary studies there. As my Bachelor of Marketing started in 2018, at the same time I started getting into the blockchain ecosystem. I started my career as a Solidity programmer, but soon I left it for Project Manager. From 2020 to 2023 I have always been working in different software development companies in the blockchain area, I have had experience in multiple developments of all kinds, but without hesitation, my favorites are those that have to do with tokenization and the combination between physical and digital. Also for two years I have founded several projects, trying to undertake this. Always with tokenization themes, from real estate to fashion. I'm currently studying my last year of career.
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