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NFT Marketplaces for Real Estate Investing
Real Estate NFT Marketplaces
2021’s NFT explosion saw a gold rush in the form of digital assets, with plots of virtual land garnering six-figure price tags in metaverses such as Decentraland and The Sandbox.
Now that the dust has settled, the meta is rapidly pivoting to tokenizing real-world assets. In particular, tokenizing physical real estate has been the subject of intense interest from Web3 innovators.
Why Are Real Estate NFTs Being Created?
The $11T physical real estate industry is a slow moving monolith. Due to the chain of intermediaries involved in any property sale, transfer of ownership can take anywhere from a few days to several months. Between escrow, brokers, agents, and others, fees can stack up to a significant chunk of a home’s valuation.
A long and winding road
Observing the legacy mechanics entangling this vast industry in 2022, a new crop of projects have emerged to reimagine real estate exchange in the digital, decentralized realm of Web3.
RoofStock OnChain Real Estate NFTs
RoofStock OnChain (ROC) is a Web3 subsidiary of Roofstock, a tech-first US Real Estate investment platform that closed a Series E funding round at $1.94B led by Softbank in February.
ROC is offering property sales by tying ownership to a sole proprietorship LLC (Limited Liability Company). This LLC is then tokenized as an ERC-721 NFT, allowing for rapid transfer of ownership.
The real estate giant has partnered with Origin Protocol's NFT Market Solution to develop a bespoke marketplace for ROC’s offerings, with all prices fixed by sellers in USDC.
Advantages of Real Estate NFTs
NFTs, by design, go a long way toward mitigating the issues of slow transfer times and exorbitant fees currently plaguing real estate transactions. By tokenizing LLC ownership, as ROC has done, the need for escrow is eliminated and properties can be exchanged in real-time.
Further, by disintermediating the channels required in traditional property exchange, real estate transacting via NFTs can vastly reduce fees incurred for buyers and sellers.
Given that NFTs transactions are immutably recorded on the blockchain, this process becomes far more transparent than the industry’s traditional mechanisms.
Real Estate NFT Marketplaces: Where to Buy Real Estate NFTs
As with any budding innovation, disruption comes in many forms. The real estate industry is diverse and multifaceted, comprising various investment opportunities. Thus, projects have decided to hone in on specific sectors with varying utility.
Residential Real Estate NFTs
Residential real estate denotes any property used for residential purposes – think condos, single-family homes, duplexes, etc.
Firms like Propy have pioneered residential real estate NFTs, having sold a Kyiv apartment in the world’s first real estate NFT auction back in 2017.
Origin’s partnership with Roofstock offers fresh competition in the form of a bespoke NFT marketplace for transacting single-family residences.
Commercial Real Estate NFTs
Commercial real estate is another major sector of investment, comprising any properties designated for commercial purposes, such as grocery stores, office space, parking facilities, and shopping malls.
Given the scale and complexities involved in commercial real estate transacting, this sector remains largely untapped apart from fractionalized opportunities. However, firms like Stak have begun offering adjacent services, like capturing commercial properties using AI to create comprehensive tokenized blueprints and renders in the form of NFTs.
NFT Mortgage Notes
Mortgage notes form a key component of any real estate sale as a legally binding contract, detailing loans used to finance the purchase, as well as repayment structures.
Mortgage provider LoanSnap has focused on this niche by developing Bacon Protocol to offer NFT-based mortgage notes.
NFTs for Digital Real Estate
Digital real estate remains the most popular form of property transacting on the blockchain. Decentraland and The Sandbox segment their metaverses into plots of virtual land, offering creators space to build out their own communities and host experiences in these metaverses.
Bored Ape Yacht Club’s latest offering, Otherdeeds, represents another iteration of this structure, where collectors can purchase land with various attributes corresponding with regions in the project’s new metaverse, Otherside.
Given their ubiquity, virtual real estate NFTs can be found on all major NFT marketplaces.
NFTs for Fractional Real Estate Investments
Fractional NFTs have seen increasing popularity as a means to promote accessibility to high-end NFTs.
Fractionalization involves representing an NFT as a predetermined number of tokens, allowing individuals to benefit from value appreciation of the piece in question.
This makes fractionalised NFTs a perfect fit for shared real estate investment, allowing buyers to reap rewards without large capital outlay. Platforms like RealT and Uvas are leveraging this increasingly popular NFT ownership structure for physical real estate.
What Does The Future Hold for Real Estate NFTs?
Real estate is a market marked by universal necessity – everyone needs a roof over their heads. For investors, property also acts as a vital hedge against riskier assets, forming a significant portion of many large firms’ portfolios due to the generally stable returns.
NFTs are already proving their worth in streamlining and improving the processes involved in real estate transacting, while also greatly reducing fees by eliminating redundant intermediaries.
The wealth of innovation striving to tokenize this vast industry is incredibly impressive, given that this technology has only garnered mainstream attention over the past year.
Just as crypto as a whole is unrecognizable compared to its humble beginnings on obscure forums, the nascent NFT market is set to grow exponentially in coming years. And unlike many fungible tokens, the utility NFTs can provide for real-world asset transfer and ownership presents grounded, tangible benefits, even for those outside the space.
How are NFTs and real estate related?
Real estate can be represented as NFTs through a real estate NFT marketplace. In the case of Roofstock onChain, property is wrapped in an LLC and the LLC ownership is denoted by the non-fungible token owner.
Where can you buy real estate NFTs?
Roofstock onChain, a subsidiary of real estate unicorn Roofstock, works with Origin Protocol to sell real estate NFTs on their marketplace. You can purchase real estate NFTs on the platform after completing KYC on Roofstock onChain.