Investing in Real Estate with Blockchain
Real estate is one of the oldest and most reliable forms of investing, representing $280T (CAD) of investments globally each year...
In Canada, real estate investing shows no sign of slowing down - representing almost $5T invested and key economic indicators point towards a growth of over +10% in 2021. As real estate is a typically low-liquidity investment that is expensive and often difficult to trade, tokenization of these assets can make these investments much more liquid. The World Economic Forum expects 10% of global GDP to be tokenized by 2025 and estimates the total worth of bitcoin in the blockchain to currently be at around $20B, or about 0.025% of global GDP of around $80T.
What is tokenization & blockchain?
Tokenization is the process of exchanging sensitive data for unique identification data called "tokens" that can be used in a database or internal system without bringing it into scope. Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. These assets can either be tangible or intangible, therefore almost anything of value can be tracked and traded on a blockchain network, thus reducing risk and cutting costs for all involved. Blockchain is perfect for delivering information because it provides immediate, shared and entirely transparent information stored on an immutable ledger that can be accessed only by network members with permission. A blockchain network can track orders, payments, accounts, production and real estate assets.
How is Blockchain used in Real Estate?
Blockchain introduces new ways to trade real estate by embedding smart contracts in traditional real estate assets that enable trading platforms and online marketplaces to support real estate transactions in a seamless manner.
What’s a Smart Contract?
A Smart Contract is a computer protocol, enabled through Blockchain, intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract without the need for third parties. This technology enables automated transactions of real estate ownership as it simplifies the transmission of data and reduces the time between the signing of a purchase agreement and the actual transfer of title often formalized by a legal registration (title & security). It creates transparency and it eliminates the need for various intermediaries where brokers, advisors, lawyers and bankers have historically steered the transfer of interests in the real estate sector. If you’ve invested in real estate projects before, think of it as a digital footprint tied to your Limited Partnership or Share Certificate.
Liquidity Creating Accessibility
The real estate market is one of the oldest and most reliable forms of investing, however, this market is especially illiquid. Liquidity refers to how quickly an asset can be bought or sold on the market for a price that reflects its value at the time of the transaction. The ability to purchase or sell an asset defines its liquidity. Certain investments or investment strategies will have different windows to purchase or sell and an investor needs to be comfortable with the liquidity terms of a specific investment. In addition to the liquidity question, real estate’s higher price point and compliance costs have historically hindered small investors from investing into high yielding sizeable projects.
Disruptive, Responsive Technology
Even if this seems a bit far away, we are at the verge of a transformation of the entire financial system and are already seeing it materialize. It will soon be the norm for the real estate industry - much sooner than one might have thought. The new generation of investors are more digital, and demand more flexibility and data transparency. Blockchain is one of the tools with which the fintech and real estate market can adapt to respond to these fundamental changes. Parvis is seizing this opportunity and effectively implementing this new technology in real estate investments.
Parvis is building the next generation of real estate investing. Our digital platform democratizes access by bringing quality real estate opportunities to more individuals. Through exclusive access to diverse, high quality investment projects on the North American market and a user-focused, state-of-the-art platform, Parvis is becoming the go-to marketplace for real estate investing. We are bridging the gap between traditional and digital finance by offering a marketplace that automates compliance tasks, providing in-depth analytics.
Need more information? Are you interested in a demo? Reach out via email at firstname.lastname@example.org.