The real estate market is one of the most highly regulated markets in the world. From strict property transfer processes to restrictions on property construction and rentals, all these can be very tasking to a prospective property owner. This makes it difficult for some people to invest in the property market. More so, the legal framework is even stricter in high-end markets which provide investors with a compelling return on investment.
In addition, the fact that most properties retail at exorbitantly high prices – up to millions of dollars – makes it difficult for the less wealthy to engage in one of the most attractive markets in the world. Real estate can be used as both an avenue for regular income or a long-term investment, making it perfect for retirement investing, but now, even the younger generation wants a share in the cake.
However, the tasking and the extremely expensive process of property transfer and construction alongside the overall inflated cost of purchase can make things complicated. This means that the real estate market is no place for ordinary investors.
Ordinary Investors Have Found it Hard to Access High Traffic Property Markets
If one is looking to invest in properties that will fetch high returns, then they would have to target high-end markets like San Francisco, New York, Las Vegas, etc.
These are high traffic markets, but for an investor to get a share of the cake, they will have to part with a significant amount as well. Take, for instance, the ever attractive Las Vegas luxury housing market, which continues to be boosted by the growing tourism industry. It has been breaking tourism records for the last three consecutive years and this has caught the eye of blockchain companies looking to democratise the high traffic market, with the likes of Etherty, launched in February this year, interested.
Most properties, including condominiums, retail at a price of $1m upwards. Some interested property buyers would be put off by this price the first time they see the quotation. As such, these types of investments have been left for the rich to capitalise on the high-traffic markets like Las Vegas.
In retrospect, this has made the real estate market, in general, less liquid compared to normal stock investing. Most retail investors have been restricted to investing via REITs (Real Estate Investment Trusts) and mutual funds.
Blockchain Technology Could Help Democratise Real Estate
However, blockchain technology could change that as cryptocurrency investors aim to democratise real estate, making it more accessible to retail investors, and most importantly, more affordable through tokenisation.
The disruptive force of blockchain technology continues to impact different markets and real estate with its numerous challenges next in line. Companies across the world are weighing up options that they can use to disrupt the market with some like ATLANT.io opting for the ultimate tokenisation of the $217trn global real estate market, whereas others have chosen to work together with government authorities and land registry bodies to bring the real estate market to the blockchain.
By using blockchain technology, companies will be able to digitally store all the documentation involved in property registration and transfer as well as keep a record of previous ownership that can be accessed by everyone on the blockchain platform that a property is registered.
Diversified Real Estate Investment Portfolio in One Wallet
Now, through tokenisation, it means that interested retail investors will be able to invest in various real estate properties, including those in Las Vegas, San Francisco, and New York, among others in tokens. Essentially, this implies that for a small amount, an investor could be able to invest a portion of it in a condominium in Las Vegas, another portion in an office block in Manhattan, NY, and another in a residential house in San Francisco, CA, to create a perfectly balanced portfolio of tokenised real estate investments.
This will also provide the market with liquidity, which in return will attract more retail investors. Furthermore, by bringing the real estate market to the cryptocurrency market, this will essentially remove international boundaries created by different regulations for property ownership. One could be able to invest in a tokenised property located in China and another one in South Africa without having to fill out different documentation for both.
In the end, this could help in adding the $217trn real estate market to the blockchain. This could also boost the overall cryptocurrency market as more assets continue to be added, thereby providing it with genuine income-driven value. Just like is the case with several asset-backed altcoins, real estate-backed altcoin prices will be based on real property valuations, thereby attracting more investors to the growing cryptocurrency market.
In summary, cryptocurrency investors are evaluating ways that they can use to democratise the real estate market. This will not only help to bring liquidity to the market but also create opportunities for retail investors that would otherwise not be able to afford to invest in a specific property worth millions of dollars. Therefore, bringing the property market to the blockchain could create another vibrant wing of the more than $200trn real estate market.
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