Luxury hotel in Aspen, Colorado. In 2018 tokenized shares an Investors received “Aspen coins” to denote their partial ownership in the project. The crowdfunding campaign started on the 8th of August 2018 and ended on October the 1st, 2018, raising $18 million.
This tokenization of real estate opens up the market to investors that might not be able to afford a full property or even the high minimums of traditional real estate investment trusts (REITs).
For $21,000, you can now buy a fraction of a student residence building, The Hub, in South Carolina. In exchange for your investment, you’ll receive a digital token that represents your share of the building’s ownership fund.
However, only accredited U.S. investors were allowed to participate in the sale with a minimum investment of $10,000. “Accredited investors” are individuals with “earned income that exceeded $200,000 in each of the prior two years” or has a net worth of over $1 million.
Why Put Real Estate on the Blockchain?
The real estate industry experiences some massive problems.
Here are some of the biggest, according to a new report, Top Ten Issues Affecting Real Estate 2018-2019 from The Counselors of Real Estate (CRE):
- The increasing interest rate on housing mortgages and overall political uncertainties make purchasing a house less and less attractive.
- The new immigration laws and consequences of urban infrastructure are most likely to contribute to the further price increase of newly-built real estate objects.
- The boom of e-commerce makes it unviable for many retailers to run a brick-and-mortar business, so the demand for commercial real estate objects is going down.
Moreover, disruptive technologies are reshaping the industry altogether. As another research paper called Emerging Trends in Real Estate (for the U.S. and Canada in 2019) by PricewaterhouseCoopers points out, investing in real estate related technologies will accelerate drastically.
It reach $5.2 billion in 2018, which is significantly higher than $1.3 billion poured into the field in 2014. And blockchain technologies are named amongst the 13 real estate industry disruptors.
We’ve heard a lot of buzzes lately revolving around – Distributed Ledger Technology. If you’ve been tackling with cryptocurrencies and blockchain, you must’ve already heard about it. The distributed ledger implementation is unquestionably one of the ingenious inventions of all time.
Since then, the technology came a long way, evolved into something of much more value. By allowing distributions of information with greater transparency, DLT did indeed evolve the internet. Initially, this technology was only devised for transactions and digital currencies. But now tech community found many potential use cases that can change our lifestyle for good.
Distributed ledger technologies can potentially patch a lot of holes in the industry. Firstly, it will help create a fully-transparent real estate registry. Secondly creates buying opportunities for financially-limited investors, through fractional ownership.
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