UPRETS Insight | Digitalized Real Estate Has Not Lived Up to the Hype
The real estate digitalization arrived with a lot of expectations. It seemed like a new era of real estate has begun. However, it has failed to gain a huge momentum due to many questions that are lingering in the mind of people. The question comes about the viability of digital real estate in the future. With the halving of bitcoins, Ethereum 2.0, the marketers question the real estate digitalization. One of the famous real estate companies has stated that it is slow to embrace the blockchain technology in real estate though it sounds to be the game-changer before.
The first property that was digitalized was in 2017, where the property worth of USD 6, 00,000 was purchased by the TechCrunch founder Michael Arrington, with the help of Ether through the Propy platform. Kiev sold the apartment in Ukraine capital. The momentum improved till Aspen Coin, where the digitalization happened up to USD 18 million, where people purchased fractional ownership in the five-star resort, which has 179 rooms. It is the first-ever real estate digitalization that happened globally.
Lacking presence in the secondary market
There is a lavish condo development that was announced in Manhattan for sale through digitalization, which is done through two different firms, i.e., Fluidity and Propellr. However, the project was scarped in the succeeding year for these companies due to a lack of appetite for the offering. There is no presence of the secondary market to digitalize the assets, which caused hindrance to the sector. The Aspen coin is listed on the obscure templum market. There are a lot of efforts that are put by the Overstock to introduce the alternative trading system for digitalization in the form of TZERO. The lawsuits are filed against the Overstock and the executives. The blockchain has not made a huge impact on the real estate industry. There are many computational resources and legislative apparatus that are required to bring momentum in this sector. It is tough to believe whether or not one can use blockchain in the real estate world. Though digitalized real estate assets have not lived up to the expectations of the people, there is constant progress. The Overstock has gained up to USD 2 million by doing the digitalization and with the launch of Aspen coins, which is later changed to ASPEN.
Here are a few challenges that are leading the digitalization of real estate down：
Regulatory structure
The biggest challenge in the world of real estate digitalization is not regulated things properly across the globe. Though there is no middle person or any financial institution involved in the transaction, there is a dire need for the regulatory compliance structure.
Licensed platforms
Various licensed platforms are available in the market. To make the digitalization of real estate work, you must thoroughly manage the digitalization process. It is a convoluted process that is based on the trial and error method and is not growing completely functional.
Security
Though the blockchain platform is found to be safe and secure, the security of the digitalization is not so great. If the digitalized assets are stolen or hacked, the consequences of it could not be high. No one can change this one. So, there is a lack of proper security measures in the digitalization of real estate properties.
Tax implications
The digitalization is opening doors for the global real estate investors to invest in the property globally. However, no tax regime is defined for the digitalization of assets in any of the countries. It makes the tax structure complicated as it differs from country to country.
There is still some hope: as the property digitalization platform, i.e., the RealT has done the digitalization for 16 different offerings, which would represent the ownership of the properties that are based out of Michigan and has pending to do the digitalization of two of the properties. The one is the expensive house that is in Florida. There are around nine properties that are digitalized and are getting traded on the RealT secondary market, which would generate a huge volume of profits, i.e., up to USD 90,000.
The German-based company with the name, Black Manta capital, has launched around USD 12 million of digitalization properties where the fractional ownership is given to the people wherein each one would get 2000 square meters in the apartments that are located in Berlin. Also, there is a lot of progress that is made by the Dubai government in digitalizing the assets. They have come up with the Dubai Land Department Real Estate Blockchain (DLDRE) in the last few months. The analysts in the market have anticipated that the era of real estate digitalization could start. There is a lot of capital in the real estate sector is eyeing for digitalization.
Conclusion
It’s true that digitalized real estate hasn’t lived up to the hype since it has been facing some challenges. But, there are platforms like UPRETS that are making every effort to overcome all the challenges and help in the digitalization the real estate properties. Its aim is to make it possible for people from across the globe to invest in any of the properties using digital securities.
About UPRETS:
UPRETS is a platform focused on simplifying investment in real estate by advising on and digitalizing assets and securities.
We are dedicated to providing a convenient, legally compliant and advanced real estate digital securitization platform for property developers, asset owners and investors globally.
By utilizing our UPRETS platform, real estate developers and assets owners can create digital securities for their properties, providing investors with various low-barrier, secure and convenient forms of investments.
Backed by a publicly listed real estate conglomerate (NYSE:XIN) and our award-winning, patented blockchain technology, Xbolt, we bring a network, experience and luxury assets to the platform.
For more information about UPRETS,
visit https://www.uprets.io
LinkedIn: https://www.inkedin.com/company/uprets2019
Medium：https://medium.com/uprets
Twitter: https://twitter.com/uprets_io
Facebook: fb.me/uprets2019
