Exploring NFT Marketplaces in Real Estate: Platforms for Buying, Selling, and Trading Digital Properties

The revolutionary concept of converting real estate properties to NFT has raised in popularity over the past couple of years. Generally speaking, the blockchain and its applications are transforming the landscape of many industries including the real estate sector. The real estate sector has always been an attractive market for investors. However, good properties cost a fortune that is out of most investors’ capability. Now, imagine that small-scale investors become able to fractionally invest in a property in Dubai by paying as little as USD 1000 or even less. In that case, investors would not only enjoy the property growth in value over time, but also become entitled to receive the rental income on a prorata basis. This is exactly what real estate NFT is doing right now. Let’s dive deeper and see how it works.

How Real Estate NFT works

Basically the Real Estate NFT refers to converting a real estate property into multiple non fungible tokens in a blockchain network. Each token represents a share of the property in the blockchain. The process of tokenizing a property is complicated and needs a lot of technical and legal knowledge and efforts. For your better understanding, assume that a AED 5 million apartment in Dubai is converted to 1000 NFT, where each token represents 1/1000 of that property. Owning an NFT makes the owner entitled to receiving rental income based on the number of NFT they have. Besides, as the property value appreciates over time, so does the NFT price. All data and information such as terms and conditions, NFT ownership and authenticity is stored in a blockchain ledger that is immutable and reasonably secure. Owners are able to sell their NFTs in the NFT marketplace to other interested investors.

Real Estate NFT Pros and Cons

Advantages

Tokenized properties divide a property into multiple shares. That makes fractional ownership possible. As such, new investors with limited money in hand who are interested in the real estate sector are able to invest fractionally in a property. That improves the real estate sector’s liquidity. Besides, as the whole procedure of money exchange and ownership transfer is done by smart contracts, intermediaries like attorneys, brokers and insurance companies are eliminated. As such, there is no need for investors to pay for such services anymore, when investing in real estate NFT. Furthermore, the blockchain network is immutable, so data about the ownership and authenticity can not be changed or replicated. Hence, investing in real estate NFT is reasonably safe. On top of that, the NFT marketplace is open 24/365 and it is borderless. People from all around the world can trade NFTs instantly.

Disadvantages

Blockchain applications like cryptocurrencies and NFTs are not regulated in most countries. That is the major risk associated with real estate NFTs, as in case of a fraudulent activity or scam project, there is no robust legal system to safeguard investors’ money. Beside, the discrepancies between countries’ taxation law, can cause taxation complications for cross-border transactions. More importantly, even though the blockchain is reasonably safe, they have been hacked before. Hence, the cyber-security concerns are still viable for ownership across the blockchain network. Lastly, the majority of people around the globe are not quite familiar with NFT yet. That makes the investors at risk of not being able to sell their NFTs right away. In other words, most people still prefer to buy a tangible asset rather than a token! Hence, It is highly recommended to fully understand what  to consider when investing in asset-backed tokens.   

NFT Real Estate Marketplaces

Real estate tokenization is a new concept that is rising in popularity all around the world. However, due to several reasons, an NFT marketplace that focuses on tokens that are linked to a physical asset like a property in Dubai is not made yet. There are several marketplaces for metaverse NFTs such as Decentraland, where users can buy virtual lands or property. However, there is no such a platform for physical asset tokens as yet. Homecubes is planning to make a platform in which users become able to mint real estate NFTs, hold or trade them within the blockchain network. Our first and most important priority is to build the platform in full compliance with UAE regulations on asset tokenization. We are working closely with the UAE government to build our platform as soon as possible and make interested investors to securely invest fractionally in the Dubai real estate market.