In this article, we take a look at the current and future states of the global real estate investment market, with insights into how technology is able to facilitate change within the real estate investment industry.
With real estate investing and business trying to enter the world, the emphasis is on the obstacles and barriers that small investors face when it comes to unnecessary pricing and new forms of liquidity for real estate owners, although it does provide Brixx how to address these challenges. An overview of what he will be able to do.
What is the current status of the real estate investment industry?
Before giving a glimpse into what the future of real estate investing can look like, it should highlight how the industry is built and how it deals with new technologies today.
Real estate is the largest asset class in the world, with a total value of 217Tr (Sales Report – Dollars and Cents worldwide). Of all these values, only 1% changes hands every year.
This value is unevenly distributed, where the most significant portion is 50 and 25% in the United States and Europe, respectively.
Although real estate is a popular investment category and even on a small scale is one of the most reliable ways for individuals to grow their personal wealth, real estate investing is complex, synthesized, and expensive. This makes it such a complex investment category in the analysis that no standard source of real estate valuation information has ever been found.
“The cool thing is that a third of the industry still runs in Microsoft Excel. Research shows that not only is innovation lacking, it also lacks understanding of what innovation is and its potential impact on the industry. “(Industry News, Real Estate)
Why is this a problem?
Well, if we consider that the global real estate market is worth billions of dollars and only 1% is being transferred and traded, most of the electrical assets are sitting on the balance sheets of corporations, investment companies or individuals.
Real estate has once again proven to be a successful long-term investment strategy. Owing to its clear nature and in line with the growing world population, real estate ownership is a safe and value-for-money asset, providing a stable and profitable return on investment for property owners around the world. In addition to appreciating the value, real estate owners are able to benefit from fixed income and monthly fixed income through rental income.
In addition to owning real estate, real estate trade, which means selling it, is a relatively safe form of investment. Both the short and long term value appreciation, capital growth and profit turn the real estate business into a viable and profitable investment option.
With only 1% of the world’s assets traded, however, relatively few people provide the ability to benefit from real estate business and investment.
What are the barriers to entry of so many people into investing in real estate?
First, the world of real estate investing is comprised of ever-higher ‘buy-in’ prices. Whether you are an individual or a company, whether you are looking for real estate buying or a business, large, centralized capital is required. Naturally, not every small-scale investor has access to it.
Second, if a person has the capital needed to invest in any part of real estate, the industry is created in such a way that many ‘good’ or ‘profitable’ investment opportunities become ‘locked in’ behind the scenes of high-profile investors in the network or ‘old boys’ club’. This is especially the case for investment opportunities that sit outside the immediate scope of a person (country, city or neighborhood), where they have no way of connecting or accessing potential investment opportunities.
Third, and arguably one of the most important barriers to entry for small investors in the real estate business world is liquidity. Due to the large, concentrated capital of real estate development in the form of brick-and-brick construction, investors’ money is often locked in for a few years, and capital is often referred to as’ illiquid ‘often in the time frame. As I’ve always wanted to say, “Profitable real estate developments can’t pay for a new BMW if you need it”.
The fourth major feature of the current real estate market is commission fees and middle class men. Current business practices and local regulations and laws require a lot of administrative hassle, which, together with a third-party agent or “middle-class man”, can greatly reduce your net profit on assets.
I would like to emphasize that the fifth and final barrier to entry is diversity.
As the current real estate market requires large-scale investment and capital injection, it becomes difficult for investors to diversify their portfolios. This is especially true for a large group of ‘small-scale’ investors who want to diversify their portfolios with real estate but are not able to afford it because of its almost insurmountable nature.
To summarize, various barriers to entry into the current global market for real estate business have been identified which will emphasize small investors as a result of limited access to investment opportunities for those looking for investment in real estate.
How will technology help you get away with it?
I imagine real estate will be digitalized in the future: recordings will be digital, works transferred through blockchain and real estate assets will be tokenized.
Despite its ultimate ‘overkill’ in the emerging technology scene, the principles of blockchain technology combined with ‘tokenization’ allow it to overcome the challenges outlined above.
For beginners, the advent of blockchain technology smart contracts can have a viable impact on the benefits of switching to a more equitable and accessible real estate industry.
A smart contract is an irreversible program stored on the blockchain, and is run by all its scattered nodes. This decentralized computing strategy allows negotiations between the parties to be expressed in the programming language and can be executed transparently without the need for trusted intermediaries.
Sensitive processes, from standard transactions to ownership transfers, are as exotic as smart contracts, creating a very high degree of transparency, trust and fairness.
This is where the concept of ‘tokenization’ comes in. This can be understood as a digital ‘token’ transformation of the property; Created, transferred and protected by irrevocable smart contract.
If real estate assets can be ‘tokenized’ so that investment opportunities are represented as their own digital tokens, investment deals and business opportunities can be easily facilitated through smart contracts as described above. It cuts off the hedging processes needed to ‘deal’ with real estate. In other words, the combination of smart contracts and ‘tokenization’ in the real estate business context while envisioning an inevitably ‘decentralized’ future enables us to move away from the dominant reliance on notarized documents, lawyers, surveyors and banks. In their place, we will have a less corrupt ecosystem of investment opportunities facilitated by a more secure, smarter deal.
The missing part of this equation is an exchange platform or ‘marketplace’ for tokenized real estate.
If a real estate exchange platform exists that can connect real estate owners seamlessly, regardless of investment potential and physical location, we will be several steps closer to a global real estate market that is not only transparent, but fundamentally accessible.
Enter Brixex, a real estate exchange platform that enables anyone to trade real estate assets in the same way.
We created BRICX with a drive to try to solve the challenges and barriers in the real estate market and to ensure that real estate does not lead to a ‘decentralized’ future.
Brixx is an open decentralized real estate marketplace that enables fractional real estate investment and trading through asset-backed tokens.
What is our purpose?
Creating transparency, accessibility and liquidity for every real estate owner and investor in the world.
We are addressing transparency and accessibility by creating a ‘future solution’ envisioned in the way I described above.
As an individual factor for our competitors, we are also addressing the uniqueness,
How does Brixx solve the issue of liquidity?
Liquidity of assets is understood as the ease with which assets are able to be sold and fully converted into ‘liquid’ cash.
‘Liquid Discount’ is a well-known phenomenon in real estate space. Basically, because some real estate investments require large numbers, the amount of buyers able to buy real estate (‘liquid’) is limited. For example, if a property is in the market for M 100M, only a small pool of potential investors can have the means to invest. This results in a ‘buyers’ market, whereby a real estate seller is forced to lower their prices (and give a discount), where there is limited liquidity in buying real estate.
How do we know that? Because the normal rental return on large pieces of real estate is usually between 12-14%, the return on low real estate property (about $ 1 million) sits at least between 7-8% in the United States and the EU.
The opportunity to invest with Brixx can be presented to a large number of investors through our fractional ownership model. As a result, more and more ‘liquid’ cash comes into the equation, as the required large capital funds are dispersed to a crowd of investors. As such, property dealers are able to sell at much higher prices, though investors are still equipped with very attractive returns. In other words, Brixex makes it possible that a real estate piece valued at $ 5 with a 12% rental return can be sold to investors for $ 129, with a return of 5%. For ‘small ticket’ investors, the rate of this return is still very appealing, though they deny the liquidity with larger assets. Instead of trying and selling the M 120M’s assets, they can simply sell their asset-backed tokens in real time on the Brixx exchange.
Fractional real estate and investor pools
BrickX is another way in which the challenges raised for small-scale real estate investors are overcome by the fractional real estate and investor pools. Where traditional investor pools are usually made up of a small number of individuals, each of whom has a large amount of money, Brixx contributes a small amount to each large group of individuals, such as $ 5.000 to $ 10.000. Through the fraction ownership model, large investor pools are easy to manage, easy to attract, and still satisfy with a return of 7 to 9%.
Tokenization
By tokenizing a real asset, it is much easier to transfer a fraction of its ownership to other investors. You do not need to sell the entire asset immediately by tokenizing it, but you can make some part of the asset liquid.
Tokenization facilitates liquidity by shortening the process of buying festival condos real estate. Furthermore, by conventionalizing real estate assets and distributing tokens among a large group of investors, a tradition of instant liquidity is fundamentally created for electrical assets. The token can be easily used to sell a small fraction of any real estate property. It is tradeable, easy to move and affordable.
Tokenization creates instant liquidity.
The conclusion
By applying the principles outlined above, Brixeaux is on a mission to help take the real estate industry into a new era: where it exploits the latest technological opportunities. More than that, we truly believe that real estate should be a much more readily available investment and business endeavor, enabling more and more people worldwide to benefit from the financial prosperity it can. This means moving away from traditional hedging practices and business as a regular method of real estate investment.
We want to get more people to join us on this journey.
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