With the advent of tokenization, the real estate market, which has traditionally always been seen as highly exclusive and illiquid, is being transformed into a more flexible asset class that anyone can get involved in.
Startups like Blocksquare are turning the realities of real estate investment on their head, opening up the industry to millions of retail investors, who can now get involved with as little as $150.
Historically, investing in real estate has always meant buying a property, and that generally requires tens of thousands of dollars. As such, only the richest investors could afford to dabble in real estate investments. REITs tried to change that, making it possible for investors to participate in certain investments, but they came at the expense of personal agency and have only ever had a limited market reach.
Tokenization changes that, enabling everyone to participate in any kind of investment property on the market, ranging from holiday homes to coliving spaces and luxury hotels. Blocksquare, creator of a dynamic framework that legitimizes digital assets and enables community decision-making, is leading the way forward in the real-world asset industry with its cutting edge Oceanpoint marketplace.
Blocksquare’s aim is to give investors full visibility into the real estate assets they own, as well as the tools required to properly evaluate any property. To that end, it has created a proprietary risk assessment framework within Oceanpoint that provides critical insights into the performance and potential of tokenized properties, so investors can understand their value and their potential. To list an asset on Oceanpoint, owners must provide extensive data across six risk categories, which is then verified and optimized for investors.
An historic milestone
In a proof of concept, Blocksquare solidified its status as a pioneer in real estate tokenization when it successfully tokenized and notarized its first property, a small parking space in the Slovenian capital Ljubljana, and registered it with the that country’s official Land Registry.
The parking space, which is located in Technology Park Ljubljana, was notarized and registered extremely swiftly, with the entire process being completed in just 16 days in 2018. A local real estate management firm called NDP owns the actual title of the property, and having taken possession it moved to tokenize the parking space and distribute BSPT tokens representing a share of its ownership to 19 investors across eight countries.
With its lease contracts, which range from six months to a year, the parking space generates $90 in monthly revenue, which is distributed to token holders each month. It’s an enticing investment opportunity, with token holders earning an annual percentage yield of between 4.5% and 5.5%,
Blocksquare’s landmark achievement set the stage for the company to accelerate its real estate tokenization efforts across Slovenia and the EU, and is set to become a milestone in the history of real estate investment
Oceanpoint opens the floodgates
Blocksquare’s Oceanpoint marketplace is the nexus of its tokenization efforts. It’s a platform that enables secondary market trading of tokenized real estate properties, including Blocksquare’s own tokenized assets. With Oceanpoint, property owners can tokenizes their properties and then list a predetermined number of tokens for sale, which can be purchased by anyone who wants to. The company’s Blocksquare Property Tokens or BSP are based on Ethereum’s ERC-20 standard and legitimized by standardized corporate resolutions.
As a dynamic marketplace, Oceanpoint provides a wealth of functionality for investors and real estate owners, including the possibility of staking BSPT tokens to earn rewards in the same tokens, or simply buying tokens to earn the rental income associated with the underlying property. They can buy and sell their tokens in a peer-to-peer way through Oceanpoint’s secondary marketplace. Revenue is distributed as DAI, a popular stablecoin on Ethereum.
Oceanpoint also provides tools for property owners and others to create their very own, third-party marketplaces with the same features and functionality as the original Oceanpoint marketplace.
Funding through Marketplace Pools
With the launch of Oceanpoint v.0.5 earlier this year, Blocksquare introduced a new feature called Marketplace Pools, which is essentially a kind of launchpad for new projects focused on delivering real estate investment opportunities to the masses. Marketplace Pools enables projects to attract funding and support from the Blocksquare community.
The way it works is, operators create a proposal that is then presented to the community, detailing their business plans and key performance indicators. The community members then decide if they want to back the project or not by committing sBST tokens. Each new project must reach at least 100,000 sBST to gain full community support and enhanced APY incentives.
Marketplace Pools employs innovations such as flexible contribution limits, starting at just 500 sBST, and a dual-lock mechanism that’s designed to protect investors. The capital pledged to each project will only be unlocked in stages, when predetermined milestones are reached, to ensure the money pledged is used efficiently. As an incentive, those who support the projects stand to earn higher APY rewards from the marketplaces they support.
The first ever Marketplace Pool was launched by the coliving project Portio Capital and achieved its funding goal in just 36 hours, far faster than the 29-day campaign it had planned.
Blocksquare is now gearing up for its second Marketplace Pool, involving a company called Pieme that has developed a blockchain platform for hotel investments. It’s aiming to be the first in the world to bring fractional ownership into the hotel industry.
Through the Pieme platform, investors will be able to browse through various hotel investment opportunities, monitor their bookings, oversee stays and engage in governance. Pieme will oversee all of the operational, management and marketing activities required to keep the hotel up and running.
Pieme is getting the ball rolling with the listing of its first hotel in Kampala, Uganda, to coincide with its Marketplace Pool funding campaign, and investors can participate in that project with as little as $150. If it goes well, Pieme plans to acquire and tokenize many more hotels across some of Africa’s biggest cities, seeing enormous growth potential in emerging markets.
A radical change in real estate investing
What Blocksquare is doing is tremendously exciting, as it promises to lead us into a future where investing in real estate is made accessible to every single person. Moreover, it intends to make sure those investors are fully educated and informed, so they can make the best possible strategic decisions as they build out their investing portfolios.
It’s for these reasons that Blocksquare stands out as one of the leading pioneers in real estate tokenization, which is expected to change the way people and institutions invest in properties forever.
All images are generated by Eray Eliaçık/Bing
