How Is Blockchain Helping The Real Estate Industry By Means Of Innovating Fractional Ownership
As we move towards the future, the global real estate market is still expected to make tremendous growth in the course of 2019 despite the volatility and uncertainty surrounding the economic outlook at the start of this year, according to a report by CBRE.
The global market has been estimated to reach a revenue of over US$4 trillion by the year 2025.
Economic development in developing countries, the rising increase in demand for real estate housing, and several other factors have steadily been contributing to the increase in the market revenue.
One major driver of the market is the rapid increase in rural-urban migration which has led to urbanization. This increase has spiked the demand for urban home spaces thus increasing real estate housing investment.
Also, investments in the global commercial retail market run into billions of dollars with real estate investors still actively exploring different countries and locations to invest.
Barriers to investing
However, despite the growth and the estimated forecast revenue, the real estate market is still plagued with a number of limitations that hinder more growth.
There are still barriers to investments in the sector especially for foreign investors, one of which is the complex process involved in buying real estate properties in foreign territories.
Foreign investors have to go through rigorous processes depending on what country or region they choose to invest in. Most have these investors go through agencies to purchases these properties which come at huge costs as the agencies will also have prices fixed for their services.
Also, the huge capital requirements involved in purchasing these properties abroad which then have to be held down for a number of months depending on country laws before realizing returns from the investment, discourage a substantial number of small investors who have access to no such funds.
The liquidity in the market is posing a major barrier to investors and as such should be effectively addressed for adequate growth to occur in the market.
How blockchain changes the ecosystem
Blockchain for years now has been disrupting several sectors and industries by totally revamping traditional business models and processes. Distributed ledger technology is designed to facilitate transparency, authenticity, security, and decentralization.
Having been leveraged in sectors like the financial, luxury, gaming and health sectors, it’s time the real estate sector took advantage of the technology and explore ways it can facilitate the market.
Fractional ownership of properties is a major boost to the real estate market, as small investors will now have access to real estate investments without restrictions of huge capital. Fractional ownership also means investors don’t have to wait for months or years to earn returns, trading, and transfer of rights can be done on the blockchain platform.
Blockchain technology proves the capacity to facilitate effective growth in the real estate sector. By making it possible to digitally represent properties on the platform, trading real estate properties will happen seamlessly without geographical restrictions.
The room created for small investors to participate in the market will certainly impact the overall revenue in the market.
The future of real estate investments disruption
Blockchain is creating a new future for business operations whilst giving equity and fairness to all players. With the new developments the technology brings to the market, smaller-scale investors will have unrestricted access to real estate investments.
The exciting factor here is investors can purchase real estate properties in foreign countries as if they were local — no complex documentation processes, no middlemen or agency hassles, all direct investments, thanks to blockchain technology.
In addition, the thrilling idea that properties will be bought in-fractions without having to purchase the whole is one that will boost growth and revenue in the market. Real estate ownership just got redefined.
The disruption of the market by blockchain is one that stands to boost investments and open more doors of opportunities to potential investors. Blockchain is redefining and democratizing the real estate sector for the better.
