The real estate market or at least its commercial real estate section — is marked by high entry costs and informational inequalities that benefit insiders. Its costs are considerable, the documentation is burdensome, and sometimes the deeds are incorrect, forged, or absent. Another way to describe that the market is illiquid is that it can take years for some homes to sell. All things considered, it is not unexpected that many people think this market is ready for upheaval, especially through tokenization offered by blockchain.
Tokenizing real estate is not a completely new idea. A 6.5 million euro property in Boulogne, outside of Paris, was tokenized in 2019. The first French property ever sold through a blockchain transaction was a million shares that were listed for sale on the Ethereum blockchain. A portion of the opulent property could have been bought for as low as 6.5 euros.
Will all real estate sales now be fractionalized?
“Web3 will be all about ownership, owning fractionalized shares,” says Bobby Singh, founder of the NiftySky DAO, “Imagine fractionalizing the Empire State Building into 2 billion shares.” For a few bucks, a person might purchase a piece of the Empire State Building.
Ownership creates its own momentum, Singh continued. “If you become a collector, an owner, you’re more likely to talk about it.” More owners mean more excitement. “The concept of title is very important.”
“Blockchain has the potential to transform real estate,” Lamont Black, associate professor in DePaul University’s department of finance and real estate. Real estate is all about records of ownership and how a property is financed, he explains, and “blockchain is ideally suited as a shared system of record-keeping for this type of application.”
Many of these principles are “already being applied to digital real estate in the metaverse,” adds Black, while the ideas behind Web3 — of which the metaverse is one part — “are very much rooted in ownership of digital assets, including basic things like personal data.”