The history of real estate on the blockchain has yet to be told, and most of it has yet to be written.
Although it’s clear that we are moving towards greater adoption of blockchain tech for real estate, adoption has been slow growing. Part of the problem may come from its lack of a catchy name, like “DeFi” or “crypto.” It’s awkwardly called “real estate on the blockchain,” “real estate in blockchain,” or “the tokenization of real assets” — a far cry from the snappy “NFT”.
If naming the concept is difficult, then it’s no surprise that few people have a clear understanding of what’s happening in the space. Yet many things have happened since 2013. There’s been a spike in interest since the beginning of 2022. And the promise of bringing more liquidity into the market generates ever-growing chatter about real estate and the blockchain. So where is this all going and what’s the current state of this movement?
To predict the future of real estate, we need to know the past. So here it is, a brief and partial history of real estate on the blockchain.
It all began way back in June of 2013, two years before smart contracts…
The first Bitcoin-based, crowdfunded real estate investment platform is created. It’s called RealtyShares.
Bond New York, the Manhattan-based real estate brokerage firm, begins accepting transaction payments in Bitcoin.
RE/MAX London announces that it will accept Bitcoin, Litecoin, and Dogecoin.
Ethereum launches smart contracts.
Jalak Jobanputra, founding partner of Future/Perfect Ventures, an early-stage venture capital fund in New York City, publishes an on-point opinion piece for Coindesk: “How the Blockchain Can Unshackle the World.” He writes:
By using the blockchain to prove ownership, homeowners can transfer ownership without large fees. A home’s data could also be on the blockchain — all repairs, chain of ownership, history of electricity, etc. — providing an immutable record of ownership so that a potential buyer has all information related to that home… This transparency and efficient market can create value for both the seller and buyer and can also incentivize owners to take better care of assets.
The Dubai Land Department announces that it would record all local real estate contracts on a blockchain to build investor confidence and add conveniences for tenants. Their new land registry system is part of the Dubai Blockchain Strategy.
Alphapoint and Muirfield Investments announce their partnership to securitize property on the blockchain with a new token standard, complete with built-in compliance.
Token trading platform Templum Markets launches the sale of a token allowing accredited investors to buy shares in the St. Regis Aspen Resort in Colorado. They accept USD, Bitcoin and Eth in exchange for the tokens during the sale. Each token grants investors the economic interest equal to one common share of the Aspen Digital, Inc. single asset Real Estate Investment Trust (REIT), inclusive of voting rights and the REIT’s income distributions. One-fifth of the St. Regis Aspen Resort is sold for a total of $18M.
Inveniam Capital Partners (ICP) tokenizes $260 million in four private real estate and debt transactions, represented by ERC-20 tokens on the Ethereum blockchain:
Propy announces the sale of a $1.6 million San Francisco property owned by venture capital fund CrunchFund, co-founded by Michael Arrington. The transaction and deed were recorded on the blockchain.
Harbor, a security token platform, issues Ethereum tokens representing shares of four different real estate funds, totaling $100 million.
Meanwhile, a real estate startup called AssetBlock launches a new platform for trading commercial properties with tokens on the Algorand blockchain.
In a loss for blockchain real estate, a $20 million tokenized real estate joint venture between technology startup Fluidity and broker-dealer Propellr fails. A no-transfer clause that was written into the mortgage on the property was overlooked, and the holder of the senior debt, Minneapolis-based U.S. Bank, did not grant permission to transfer ownership.
In 2019, it’s clear that there is a chicken-and-egg problem: startups need capital to prove liquidity promises, but institutional investors want to see liquidity before investing.
Commercial real estate marketplace Red Swan tokenizes $2.2 billion in real estate in 16 different Class A commercial properties in Texas, New York, California, and Ontario through the security token platform Polymath.
Digital asset issuer Securitize launches a tokenized platform to encourage funding in under-invested real estate in rural Japan.
Tokensoft, a digital securities platform, partners with Signature Bank to launch a private label trading platform. Their platform includes FDIC-insured accounts, appraisal reports, and broker-dealer services for asset managers to attract real estate investors to tokenization.
Caruso Properties becomes the largest real estate manager to accept Bitcoin for rental payments. It allocates 1% of its treasury into Bitcoin.
Also in April, MakerDAO issues the first real estate loan with dollar-denominated deposits on the Ethereum blockchain and then lends them using smart contracts. MakerDAO creates and lends around $500,000 dai to fund “fix and flip” residential properties in the US.
Propy announces the world’s first real estate NFT. TechCrunch founder and crypto investor Michael Arrington sold an apartment in Kiev as a non-fungible token (NFT). It generated 43 bids and sold for 36 ETH, $93,429.72 at the time. Seen Haus conducted the bidding and Hello Lending provided financing.
In early 2022, we see increasing developments between crypto and real estate. It becomes possible to pay rent and buy homes with crypto as major real estate firms begin to accept the technology.
Propy sells its first US property, a house in Gulfport, Florida, as an NFT during an auction.
RE/MAX begins taking crypto payments.
Okada & Co lists an office building in New York City for $29 million as an NFT on OpenSea.
As of mid-2022, there are now so many instances of blockchain being used in real estate that it’s difficult to keep track of it all. Not convinced? Set a news alert and see for yourself. The real estate landscape is changing forever.