Blockchain enables asset tokenization and ownership claims, and along with Web3, it creates countless growth opportunities for the real estate space. Web 3.0 will remove the hectic documentation and legal work involved in the current real estate businesses and makes the process smooth and hassle-free. In short, Web3 technology will undoubtedly simplify and enhance all the operations of the real estate industry.
According to Redfin, a leading real estate broker, more than one-tenth of first-home buyers are paying their deposit using cryptocurrency.
This fact concludes that the amalgamation of Web3 and blockchain technology will attract million of property buyers and sellers to indulge in virtual real estate across the globe.
This article summarizes the revolutionizing benefits of Web3 for modern real estate and the realm of opportunities it has to offer for the niche are summarized.
Web3 is a decentralized open internet that gives power to the people by enabling them to manage the decentralized web instead of allowing big tech firms or Governments to govern the ecosystem. It allows users to manage and own their data & content and help them progress as a community.
Web3 automates the real estate processes using smart contracts that eliminate the need for intermediaries. It saves the cost and time of property traders and improves trust and transparency.
Web3 and blockchain applications like NFT, cryptocurrency, metaverse, etc., streamline the real estate workflow. It also improves transparency, security, and trust.
Further, the readily accessible and immutable nature of blockchain enables users to verify asset ownership and asset tokenization protocols.
Just like shopping on Amazon has scaled, virtual real estate can be scaled - allowing a person to own a home with a couple of clicks on the front end connected to the smart contract.
Consecutively, Web 3.0 internet optimizes the real estate niche beyond its current limit with a multitude of services.
So, the application of Web 3.0 in the real estate sector is indispensable, and it is undoubtedly the breakthrough for the niche.
The incorporation of Web3 in real estate prevents the need for intermediaries like bankers, brokers, and realtors and avoids their associated costs. It removes the need for tedious paperwork and possible human error. Smart contracts automate all tasks without any adjustment or negotiation.
Let’s explore some industrial benefits of using Web3 for real estate!
Web 3.0 utilizes blockchain-powered Smart contracts (self-executing contracts) to automate and streamline real estate operations without supervision. A smart contract is a pre-coded algorithm that executes complex tasks when the buyer and seller meet the specified condition.
For instance, registration of the sale agreement, issuance of the offer sheet and letter of intent, legal documentation, etc., can be automated based on the terms and conditions specified in the smart contract.
Fractional or partial ownership of real estate properties is possible with NFTs. The tokenized real estate asset has many use cases like ownership claims, income opportunities, tradable, etc.
Tokenization of real estate assets allows users to trade them on a secondary marketplace without the involvement of a third party. All the transaction details and associated documents are stored on a distributed ledger in a tamper-proof manner. Fractional ownership also removes the entry-trade barrier for low-budget investors.
Web 3.0 enables real estate properties to be listed on a decentralized server, enabling users to cross-check essential information. Instead of subscribing to a private real estate company, users can use these secure and accessible databases for optimized investment without paying massive fees.
Blockchain-based servers will increase transparency and prevents fraudulent activities. In addition, Defi-based services allow users to engage in fair lending and borrowing and maintain all the transaction details in an immutable and secure distributed ledger.
Web 3.0 enables an interested person to venture into the virtual real estate business without massive capital and ample funds, thanks to blockchain technology and asset tokenization.
Asset tokenization enables many investors to buy and co-own a tokenized real estate property. It increases the liquidity of the digitized asset allowing the investors to exchange their ownership (sell the digital tokens) for fiat or virtual currencies in an online platform like NFT marketplaces.
Blockchain technology makes trade transparent, and with Web 3.0, buying and selling real estate properties are completely online, more efficient, and automated with few or no middlemen.
The practical applications and use cases of Web3 for the real estate niche are unlimited, and covering everything will require a separate article. Some stellar use cases of Web3 in the real estate business are:
Blockchain-based protocols like KYC (Know Your Customer) and AML (Anti-Money Laundering) are gaining traction among many industries, including real estate.
These procedures are part of the Web 3.0 real estate ecosystem which verifies and validates every individual and tenant to minimize risk and amplify security. These features enable mutual trust among individuals and allow them to validate asset ownership.
Web 3.0 will remove the complexity of current real estate operations and positively transform the niche with the above-specified use cases.
Web 3.0 enables complete or micro property ownership once the assets have been tokenized as NFTs. Property ownership through NFTs is relatively easy and can be processed in the same way as crowdfunding.
Web3-based NFT real estate is predicted as the future of the commercial real estate. Real estate investors can buy the interested number of shares in the form of NFTs which represent asset ownership. Asset owners can readily sell their shares in NFT or other secondary marketplaces.
Data sharing is one of the main benefits of Web 3.0 technology that provide detailed analytics to make better decisions. It helps large asset management groups to keep track of their global portfolio, global and local transactions, etc., for effective asset management.
It simplifies and optimizes real estate operations by enabling streamlined rental collection, timely remittances, etc. It saves considerable cost and time, and blockchain technology provides insights into real-time payment, secures data, and simplifies asset transfer.
Pen and Paper based loan and mortgage securitization practices in the current real estate business is susceptible to data & info manipulation and security concern. A small error or outdated data on the legal document can negatively impact asset ownership, cash reconciliation, and remittance.
Web 3.0 facilitates the digitization of loans and mortgages, where ownership and debt payment transaction are verified & validated with accurate data. Smart contracts allow lenders & buyers to lend & borrow based on the specified protocols without an intermediary. It also updates the regulators with new data based on real-time transaction and collects & distribute the re-payment to lenders.
Further, Defi-based protocols are pushing their boundaries to offer down payment loans and mortgages for crypto holders like XBTO, Helio, etc.
It is an expensive and lengthy process to buy or transfer properties with the existing paper-based real-estate protocol. In addition, the manipulation of paper-based real estate documents is easy.
Web3 and blockchain technology resolve these concerns with immutability, transparency, and decentralization. Further, asset tokenization enables users to complete asset transfer & registration quickly without any hassle and troublesome paperwork.
Asset tokenization is the conversion of physical or virtual assets into digital tokens, making them tradable on the Internet. For instance, in real estate, properties can be tokenized into virtual real estate tokens and traded across a virtual marketplace.
Read more: Real estate tokenization
Here listed below are some advantages of asset tokenization in web3 based real estate platform:
(I) Increased liquidity (Owners can sell digital tokens and convert them into equivalent fiat or cryptocurrency in an online exchange).
(ii) Improved tradability of real estate assets.
(iii) Claim ownership, earn interest, etc.
(iv) Less investment due to fractionalization
(v) Automated and standardized transaction
(vi) Global trade & investment opportunities
Metaverse real estate is a virtual real estate that offers virtual lands that can be bought, sold, or rented like traditional real estate assets. The incorporation of web3 in metaverse real estate makes it completely decentralized and transparent. Here real estate users can complete all the procedures online with fewer clicks from the comfort of their homes.
It can be purchased for cryptocurrencies in a popular platform like Decentraland, Sandbox, etc., and rented on Metavesal to conduct virtual meetings, training, etc.
According to Technavio, the real estate metaverse market will reach $ 5.37 billion in 2026 at an expected CAGR of 61.74%. It explains the growing demand and popularity of this new trend.
The metaverse also enables the owners to customize it for their use or to rent it out to others. It is grabbing the attention of tech investors and corporates, and its demand and popularity will increase over time.
Metaverse real estate will be the game-changer of the real estate sector and undoubtedly reforms the entire real estate operation. It is an innovative concept that will become mainstream soon and shift the real estate niche to Web 3.0 forever.
About $14.3 billion worth of real estate assets were tokenized, in 2021, as per reports from ButterlflyMX.
The above stats indicate the demand for Web 3.0 real estate that will surge in the upcoming days.
Web 3.0 resolves the current hurdles in the real estate sector and eliminates the need for an intermediary. It enables efficient transaction, reduces cost & time, removes the entry barrier for traders, and increase security, transparency, liquidity, and asset tradability.
Instead of giving power to large corporations or wealthy groups, Web 3.0 allow common people to govern, benefit and contribute to virtual real estate.
Smart contract automates complex tasks like legal documentation, registration, asset transfer, asset listing, remittance, etc. Web3 will simplify and automate real estate activities and unlock an array of investment & trading opportunities as the technology advances.
Are you a small-scale real estate investor or a large-scale asset management firm that wants to include Web3 tech in your real estate project for optimized efficiency and maximum ROI?
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