How Blockchain is Revolutionizing the Real Estate Sector

The technology behind cryptocurrencies is capable of making big changes to several sectors and industries including real estate. Blockchain as an emerging technology and the building block of cryptocurrencies and NFT has been growing in popularity. However, there are several other pros associated with blockchain that are expected to become the booming industry in the near future.

Blockchain specific advantages for the real estate sector are emerging. As such, it is worth becoming familiar with how blockchain affects the Dubai real estate market, particularly if you are a small scale investor.

Let’s see how blockchain works in real estate

How does blockchain work in the real estate market?

Blockchain creates the ecosystem for coins and tokens to be created, issued and distributed. Blockchain is basically a wide network of advanced computers that act as a ledger to securely record, store and track all data and transactions. Besides, users are able to exchange cryptocurrencies securely when they need to do so. Through its outstanding capabilities and high level of security, blockchain makes interested people able to convert their properties into tokens to become a tokenized tangible asset and put it up for sale across the blockchain network. Assume that an owner of a property comes to an agreement with a buyer, so the smart contracts will be created accordingly. The seller asks for a cryptocurrency in exchange for transferring the ownership of their tokenized property to the buyer. All these transactions must be verified and approved by nodes, which are basically the computers of the blockchain.

Once the cryptocurrency is approved to be received by the buyer, the ownership of the tokenized asset will be transferred to the buyer all automatically through smart contracts.

Traditional real estate investment risk and concerns

Investment in the real estate sector has always been popular across the globe. Making investment by buying a tangible property makes investors feel secure and comfortable and enjoy the capital growth over time as well as generating passive income by renting out the property. However, real estate investment is considered to be illiquid. In other words, it takes time for the investor to sell their property due to several reasons. The first reason which is an entry barrier for investors is that a large amount of money is needed to buy a property. Besides, in most cases the market is limited to the surrounding areas where the property is located, so the chance is even lower to find a buyer with enough money nearby. Furthermore, there are considerable fees and expenses, when you want to buy a property. The intermediaries like brokers, banks, lawyers, etc. charge both parties for their services, so the process is costly.

Blockchain revolutionizes the real estate sector by mitigating the risks

Here is how blockchain makes the real estate market more efficient by mitigating risks associated with traditional ways of investment in the real estate sector.

• Blockchain improves real estate liquidity

Blockchain is borderless. People from all around the world are able to trade tokenized assets in the blockchain network. Hence, the market is not limited to local investors who live nearby. Besides, the blockchain is open 24/365, so no limitation for buying and selling tokens.

• Blockchain makes fractional ownership possible

One of the most important benefits of blockchain real estate is making fractional ownership easy and secure. A property can be converted to multiple tokens with equal portions of ownership. For instance, the price of a AED 10,000,000 apartment in Dubai Downtown, when converted to 1000 tokens will come down to AED 10,000 for each token. Such a big opportunity for small scale investors to enter into the market and become a fractional owner of a luxurious apartment in Dubai. It goes without saying that more investors in the market leads to better liquidity.

• Blockchain makes cost-efficiency by eliminating intermediaries

Smart contracts within the blockchain network take care of all needed action for buying or selling a property-backed token. This includes, but not limited to agreement terms, money transfer, contract settlement and ownership transfer. All data about  transactions will be securely stored in the blockchain ledger and can not be changed or replicated.

There are several other benefits with tokenized real estate, but in our opinion, the most important benefit is making fractional property ownership quite easy and secure. For further information on how to fractionally invest in Dubai real estate market, you may follow the link.

Bottomline

Blockchain has brought lots of benefits to the real estate market in general and the Dubai market in particular. The industry is growing significantly and the Dubai government has shown full support for such an emerging market. If you are interested in investing in the Dubai real estate market, but you haven’t made it so far due to lack of cash in hand, it’s now your turn.

Make yourself fully familiar with what to consider when buying asset-backed tokens and act with care and confidence. Good luck!