How NFTs could Revolutionize Fractional or Co-ownership of Real-Estates

2022-08-02, 03:05

[TL: DR]

Michael Arrington of TechCrunch made history In 2021 when he sold his Kyiv property in the first ever Real Estate NFT sale. The auction, which culminated in a 36 ETH final sale, was handled by prop-tech company Propy with the title of the property transferred to the new owner as an NFT. Such NFTs are created through tokenization, a process that involves encoding the ownership rights of a piece of Real Estate into an NFT on the blockchain.

Although this flagship event happened in Ukraine, Propy took the step further by launching real estate-backed NFTs in the US. The first sale occurred in Florida, USA, and the prop-tech platform has not looked back.

True to the spirit of innovation surrounding the marriage of a real-world asset and a digital one, the subject of fractional ownership came up.
This article discusses how NFTs can revolutionize fractional ownership in Real Estate. Read on for more details.

Keywords; Real estate NFTs, Fractional NFTs, Fractional Real estate NFTs, Michael Arrington, Non-Fungible tokens.

Introduction

Fractional or co-ownership would mean breaking down real estate ownership into several pieces, which different entities can own as NFTs.
This idea can potentially revolutionize co-ownership of Real Estate for good.

If it succeeds, it could open real estate investment to a larger class of investors as fractions of an expensive piece of Real Estate can be split among multiple owners with little capital. It could reduce the time and effort involved in Real Estate acquisition to the click of a few buttons. Added to that are the ease of access and exchange that comes with digital assets, and the security of blockchain technology, among other things.

Already, some platforms are launching fractional real Estate NFTs to this effect. A few among them are AqarChain and Ekta.

Keywords; Real estate NFTs, Fractional NFTs, Fractional Real estate NFTs, Michael Arrington, Non-Fungible tokens.

NFTs in Real Estate

Source: acropreneur.com

Simply put, Non-Fungible Tokens are one-of-a-kind digital assets that can be traded and exchanged for value. These are different from regular crypto coins because they are unique tokens bearing information that makes them incapable of substitution.

Since the advent of NFTs as a digital asset and its widespread adoption in the crypto community, developers and entrepreneurs have devised many use cases for its unique technology. A recent example of such is a decentralized and stress-free way to transfer property ownership.
The first ever application of this usage was to TechCrunch Founder Michael Arrington's property in Kyiv, Ukraine, which he sold as an NFT in 2021. The transaction was handled by Propy, a prop-tech firm that performed the same feat in Florida with a property that sold for $650 thousand.

Real estate NFTs come into being through tokenization, where the title or ownership info about a piece of Real Estate in the real world is recorded on a Non-Fungible Token. Through this NFT, ownership rights to a property can be transferred.

Fractional Ownership Via NFTs.

Source: U.Today

The Chronoly Story.

The idea of fractional ownership through NFTs is not unheard of in the world of virtual assets. Chronoly, a Luxury Watch NFT sales platform, sells NFTs representing fractions of the value of real-life luxury wristwatches. Investors could own parts of the assets through tokens issued to them. These tokens could serve as collateral and could be exchanged and traded for cryptocurrencies or fiat money. It was a strategy that enabled the startup to broaden its reach and open its assets to a market that would otherwise be out of its reach. i.e., the digital economy and small-scale investors.

Even in the present crypto winter market, Chronoly's token has rallied 660% since its presale went live, even as most NFTs experienced a drop. It has proven that fractionalizing tangible assets through NFTs are viable investment idea.

How NFTs can facilitate Fractional or Co-ownership of Real Estate.

Source: aqarchain.io

So far, since the first successful NFT real estate sale in 2021, several platforms have appeared on the scene offering Fractional NFT real estate ownership. Some examples include Ekta, Futurent, RealT, and Aqar Chain. These networks offer Fractionalized NFTs of Real Estate such that for as low as $500, an investor can own a part of a property and generate passive income from it with just a few clicks online.

How Fractionalized Real-estate NFTs Work.

1. Tokenization: First things first, for the deed of a property to be minted as an NFT, it is tokenized. In other words, the ownership rights of the property get encoded into the tokens based on the blockchain, where it is traceable and tamperproof.

2. Investment Pool: Multiple investors pool money to pay for the property and have joint ownership. This joint ownership happens when entities purchase the Fractionalized NFTs from real estate platforms offering the service.

3. Returns: Rent and other revenue accruing to the property, including appreciation, gets distributed according to each NFT holder's investment percentage.

How NFTs Can Revolutionize Fractional Real Estate Ownership.

Lower Point of Entry for Investors: One of the biggest problems facing real estate investment is the large capital needed to own properties. Fractional NFTs enable investors with lower capital to enter real estate investment. This single benefit can potentially expand the real estate market as more small-scale investors can now enter the market through fractional NFTs.

Stress-Relieving: This model is unlike owning real Estate the old-fashioned way, which involves dealing with go-betweens, physically going around to examine properties, dealing with rent collection, and all the hassle associated with it.

Decentralization: Platforms like Futurent are decentralized. The token Holders are DAO members and can therefore be involved in the governance of the platforms where they hold tokens.

Web 3.0 and Real-life Integration: Fractional real Estate backed NFTs are an example of the real-world/web3 integration scenarios the digital economy seeks to foster. Success in this area will pave the way for more physical assets to go digital, which will secure the place of NFTs in the global economy as a strong use case for the technology.

Security: The blockchain is a public digital ledger that makes anything saved on it traceable and tamperproof. It will lend a level of security to fractional NFT holders as there can be no dispute over ownership rights since they are all recorded on the blockchain.

Easy Transfer of ownership: one only has to sell their NFTs to transfer ownership, saving much legal hassle.

Conclusion.

Fractional NFTs make it easy, safe, and stress-free for investors to co-own real Estate. They provide a way for small-time investors to own property with little capital without stress.

Author: Gate.io Observer: M. Olatunji
Disclaimer:
* This article represents only the views of the observers and does not constitute any investment suggestions.
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