How NFTs Will Shape the Future of Real Estate
By Amr Samaha, Co-Founder of Tykes
Upon first glance, the real estate industry and the NFT (non-fungible token) market could not appear more different. Real estate is one of the oldest, most stable industries in history, whereas the NFTs originated less than a decade ago and are riddled with scams, hacking, theft, and volatility.
While bridging the gap between the world of NFTs and real estate may seem far off and strange now, it has already begun. If web3 can better protect its investors from hackers and scammers, NFTs have the power to make the real estate industry more transparent, lucrative, and inclusive over time.
Currently, a major inconvenience in the real estate investment world is a lack of transparency and speed in attempted syndications. Analyzing real estate deals can be time consuming and frustrating with current technology, but blockchains are bringing a transparency to the inner workings of real estate deals that is unprecedented.
For example, if an apartment building is syndicated and put on a blockchain as a dynamic NFT by a group of investors, the performance of that building will be tracked on the blockchain. This will give potential investors an inside look into the building’s cash flow, valuations, and liquidity, so they can more quickly and accurately decide if the return on investment they are hoping for is viable. Not only will this benefit those looking to invest in real estate, but with time it will also provide the investors with a detailed portfolio, increasing their credibility in the real estate space.
Ease of Transactions
NFT transactions are also much simpler and more efficient than traditional real estate transactions. One will be able to immediately transact from any cryptocurrency and purchase an NFT contract, giving that individual a specific right to a building that cash flows an amount visible on the blockchain. This will provide huge amounts of liquidity around real estate, while also speeding up transaction times from weeks and months to practically becoming instantaneous.
Distributing Wealth
Real estate and NFTs will truly have a mutually beneficial relationship. In addition to bringing more transparency and efficiency to the real estate investment space, NFTs will encourage the distribution of some of the massive amounts of wealth that have been created in the crypto space that have yet to be deployed into physical products. Securing hard assets against the gains investors made in crypto will become very lucrative for those willing to hedge their bet. As more and more currently volatile crypto assets get tied to real estate, the less volatile both markets will become.
Building Real Estate Communities
While all these technical benefits of NFTs and real estate coming together are great, there is more to NFTs than just the technology.
Depending on the project, some NFTs provide people with micro-communities that are very tight knit. These communities consist of groups of individuals from all over the world who communicate with one another online and even at in-person events and meet-ups. NFT communities such as these will help fractionalize real estate and bring smaller investors together that could not normally take on large real estate projects on their own.
These communities will have huge purchasing power when individuals pool their capital together, and with the right leadership, they can bring significant returns to the community. Individuals in the communities will be able to amass more wealth while also providing liquidity into real estate projects that otherwise would have sat on the market for a significant period, bringing more beauty and inhabitable spaces to markets around the world.
NFTs provide an efficiency and transparency that the real estate space has been in desperate need of for years. Blockchain technologies and the incredibly lucrative and driven communities that back them have the potential to provide real estate investors of all levels of experience with tools to make more informed decisions about deals, generate more wealth, and continue to invest in properties.
On the other hand, real estate provides web3 with the credibility and stability it needs to be seriously utilized by the mainstream and no longer be seen as just a passing fad. The increased capital that will be deployed into web3 through real estate can be utilized to secure web3 systems and protect its investors from hackers and scammers. With the gap closing between web3 and real estate, both sides will benefit tremendously as they generate more wealth and create new opportunities that will change the way people do business around the world.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.