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Blockchain industry sector: Real Estate

 

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Andrew Carnegie, industrialist, business magnate and philanthropist once said-

 

“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.”

 

Despite this quote being decades old, it rings true to this day. Interestingly Andrew Carnegie was the third wealthiest man in modern history with a net worth of over $300 billion in today’s dollars, adjusted for inflation.

 

Traditionally, real estate investors build a sufficiently diverse portfolio of properties and earn cash flow, by renting them. One does not have to play the cards right, make deeply researched investment analysis or take a position in equities or stock. Further, real estate is also considered to be capital intensive but relatively low risk when compared to stocks or bonds.

 

Real estate market just like many other traditional industries, is poised to be impacted by blockchain technology and cryptocurrency. Implementing these technologies could bring down inefficiencies, rule out the need for brokers or middle-men, as for the first time, Blockchain provides the opportunity for individuals and businesses to make major transactions without an intermediary.

 

Blockchain can be used smartly to increase deal flow and access to deals, shorten closing time, verify and correct property title mistakes, reduce high fees and minimise frauds — all of which have been holding back the real estate industry.

 

One of the largest asset class in the common man’s portfolio, the sector has been late to the Blockchain party. Early advancements in this sector are expected in the near future. Some of these early advancements include:

  1. Improve the property search process
  2. Enable smarter decision-making
  3. Enable property due diligence
  4. Lower the costs of property title management
  5. Facilitate leasing and manage rents
  6. Create an efficient financing and payments process

 

Overall, Tokenization and Smart contracts are expected to kickstart a new phase in the real estate markets. Blockchain-based real estate applications now include start-ups dealing with foreign investments, property registration, property rentals and tokenization. Blockchain networks that tokenize real estate allow traditional investors and consumers to buy property shares and receive a return on rents or mortgages.

 

Polymath, Securitize and Harbor are the dominant blockchain networks that enable assets — such as commercial buildings — to be tokenized and turned into tradable securities.

 

InWara’s market intelligence platform and data driven analytics is conducive to understanding the changing market dynamics.Inwara has analyzed approx 20 STOs and over 100 ICOs in the real estate sector. Of the 120 ICOs, only 14 have failed in raising money.


ICO market, Real Estate, Blockchain
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Top 5 players in real estate industry in crypto space (in terms of Funds raised $MM)

ICO market, Real Estate, Blockchain
Source

 

These firms are all trying to integrate blockchain technology into their platform and aim to mitigate the inefficiencies in real estate industry. According to InWara’s data, Monaco estate emerges as the dominant player, with total funds raised at $54 million, almost 50% more than its nearest competitor.

 

Monaco estate

 

This Monte Carlo based startup successfully conducted an Initial Coin Offering and was able to raise $54 million. The company raised the funds issuing 100 million MEST tokens. Unsurprisingly only 73.4% of the total token supply was available during the crowd sale, around 20% of the remaining token is owned by the management team. Daniel Golding is the CEO of Monaco estate, he is an experienced entrepreneur and marketing specialist.

 

Monaco estate focuses on high-end rental properties within the independent city-state on France’s Mediterranean-Monaco. Interestingly the firm implements smart contracts to allow token holders to receive monthly profits in the form of Ethereum. Also monaco estate claims to be the only real estate firm that accepts payment in the form of cryptocurrencies (BTC/ETH).

 

Rentberry

 

This San Francisco based startup was able to raise $28 million funds through it’s successful ICO. 70% of its 400 million BERRY tokens were available during main-sale, 20% is stored as company reserves and 10% is under ownership of founders.

 

Alex Lubinsky is the CEO since 2015. He started his career as a business analyst at CISCO and later rose to an associate director at Raiffeisen investments. In 2012 he co-founded a company that lets users grow their network — the app version of their idea was very successful. 

 

Rentberry aims to be a decentralized home rental platform. The company claims it can provide seamless rental experience and offers co-signor technology by leveraging blockchain infrastructure. The firm has ambitious plans to eliminate the need for brokers from the industry by facilitating a peer to peer negotiations.

 

LAT foundation 

 

An Estonian firm aims to create a platform that allows trade of asset tokens. To secure funds for developing this project, the firm had conducted an ICO, through the sales of it’s 200 million LA token they were able to raise $20 million. A moderate 50% of the total supply of tokens was available for public purchase while 20% and 10% percent remain with the company and team management respectively. Another 20% of the tokens will be used to fuel growth.

 

Valentin Preobrazhenskiy is the CEO of the firm. He has 17 years of experience working in financial services industry. Valentin has served as director for several firms like Founder Institute, Spectrum Partners. Valentin has also founded a company AIB Zalogo, an AI Blockchain mortgage platform.

 

Investors be wary 

 

On November 15th, 2018 the suspect of the first USA ICO fraud case, Maksim Zaslavskiy pleaded guilty in court. He admitted to lying to investors, who funneled funds into two ICOs. REcoin and Diamond Reserve Coin. Supposedly these projects were backed by real estate and diamonds respectively. 

 

Bloomberg quotes Maksim Zaslavskiy in court saying “We had not yet purchased any real estate […] we had not purchased any diamonds.”

 

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 Disclaimer: This is not financial advice. To know full details visit t&c

 

 

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