The Retail Investors Impact on Real Estate
Retail investors have a history of going to market when given the opportunity. Now, the ‘Distributed Ledger Technology’ is changing the game for real estate investments.
Don’t believe the hype, trust history
World’s first stock exchange opened in 1602. However, it took over 400 years for the transactions to be moved online.
History show that asset trading become mainstream when regulation, competitive fees, and technology are in place.
India started slow
Retail investors entered the Indian stock market about 15 years later than in the EU and US as a result of retail- and international stock restrictions.
Why is this significant?
The idea of comparing stock trading accounts to cryptocurrency wallet holders originated from Claus Skaaning, and functions as a great proxy for predicting where we are in terms of mass adoption.
“We should predict a similar increase in real estate retail investments once people are aware of it, there are sufficient assets available, and trading is simple,” predicts the CEO of DigiShares — a white label platform for tokenizing assets — Claus Skaaning.
We look at history to predict the future
The internet is your go-to comparison for crypto user adoption — because the internet was for communication and information what crypto is for assets and settlement.
Although not technically prohibited, real estate investments have long been out of reach for the retail investor for a number of reasons:
- Investments products limited to Real Estate Investment Trusts, and not specific properties
- High unit value; expensive and time-consuming to fractionalize
- Lack of trading platforms with competitive pricing
This is changing now that real estate is being tokenized and listed on exchanges. Quite similar to how stocks, bonds and commodities shifted from being traded through or by brokers at stock markets into online trading through protocols.
How Saxo Bank became a billion-dollar-company by being first to market with software solutions
In the beginning of this century, Claus Nielsen was the Head of Markets and member of the Executive Management Group at Saxo Bank for a total of 15 years.
Today he is functioning as an angel investor in startups, fintech, healthtech and crypto, and in terms of the development of online asset trading, he might be your best source of information.
“When the internet took off around 1998 there were no trading platforms. Saxo Bank, a danish specialist in online trading and investment, came with the first retail platform in 1998. At first, online currency trading and in 2003–2005 more products like stocks and commodities were added. At this time it was only for institutional clients offered by the large banks in the US/UK. The spreads & fees were very high,”
Claus Nielsen pauses before drawing a connection between internet stock trading and the retail investor:
“After 2007/8 trading picked up with more platforms launching and the spreads came down. Banks and a lot of new brokers came live and started to focus on a whole new client segment: The retail investor.“
Currencies, commodities and stocks later followed, but in the beginning mainly the major and domestic trading.
How does this compare to real estate on blockchain?
“I would expect that real estate to pick up quite faster, assuming the liquidity-issues, the technology and regulatory frameworks will be solved. Real estate is the biggest asset class in the world, and quite well understood,”
Summary
Predict the future by looking at history: Tokenised real estate is a new asset class available for the retail investor — just like stocks, commodities and currencies became around 2000.
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