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Navigating the terrain:
The real estate market unveiled

Real estate, as a market concept, spans across residential, commercial, industrial, and land categories, each uniquely contributing to this giant market.

This market, by the way – inherently diverse – reflects a complex interplay of supply and demand, influenced by A LOT of different factors, from local income levels and job availability to broader economic policies like interest rates and inflation. There is also speculation, cultural factors, and many more ingredients to this mixture.

Speaking of “multiple factors”, the convergence of rising inflation, shifting interest rates, and geopolitical uncertainties present a super complex challenge, specially in the commercial sector where the future of workspaces is being reimagined in the wake of hybrid work models.

Do you like big numbers?

According to Statista, by the end of this year, the Real Estate market worldwide is expected to reach a value of…

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US$637.80tn.

Yes, 637,800,000,000,000 – that’s a lot of zeroes 😄.

“But Diego, this number accounts for all the properties around the world, it’s not fair”

Fair point. However, even if we consider “only” the trading volume, we are still talking about trillions of US dollars. So yes, a lot of zeroes.

My point is: that it’s an insanely huge market – but as we saw above, there are many hurdles, or at the very least, many aspects that could be improved.

And right now, a great answer is RWAs Tokenization.

But what’s that? What does it eat? Where does it live?

Let’s continue our journey….

RWAs Tokenization: A quick review

Since we started The Wild West of Web3, one of my favorite editions is #21, titled “RWAs Tokenization: A teardown”.

Whenever you have the time, I highly recommend you take a look at it, but for now, here’s a quick review of what RWAs Tokenization is and why this is a topic you should keep on your radar.

Real-World Assets (RWAs) Tokenization is transforming the concepts of investment and ownership, merging the tangible with the digital in a seamless way, while opening up a lot of opportunities.

At its core, RWAs Tokenization is about converting physical assets into digital tokens. This process embeds the asset’s value into a digital token on the blockchain, making it easily transferable and divisible among investors/ownes.

In this humble pink beanie’s opinion, the beauty of tokenization lies in its ability to transcend geographical limitations, allowing people around the globe to tap into markets and assets previously out of reach, fostering a truly global investment ecosystem.

On top of that, allowing assets to be divided into tokens enables fractional ownership. This means you can own a piece of a real estate property or a rare piece of art without needing to buy it outright.

“And there’s more”: The blockchain’s transparency ensures every transaction and ownership change is recorded and verifiable, building a foundation of trust and security that traditional markets struggle to match.

So, to wrap up this review, here are the key takeaways to keep in mind:

Democratization of investment: Tokenization opens up high-value investment opportunities to a wider audience, breaking down the traditional barriers of wealth and access.

Global market participation: It allows investors from any corner of the globe to engage with and invest in assets worldwide, enhancing global economic integration.

Enhanced asset liquidity: By facilitating the trading of asset-backed tokens, tokenization injects liquidity into markets that were previously illiquid.

Security and Transparency: Leveraging the blockchain ensures that all transactions are secure, transparent, and immutable, fostering a new level of trust in investments.

Innovation in financial products: The tokenization of RWAs paves the way for innovative financial products and investment strategies, opening opportunities in this new era.

If you are more of a “a-picture-is-worth-a-thousand-words” person, here’s a nice summary:

Sauce: Beyond the hype of real-world assets Report (by Outlier Ventures)

And in this same report, there’s a quote from Jasper de Maere that I agree 100% with:

Jasper is a big brain leading several pieces of research inside Outlier Ventures, and someone I had the huge pleasure of becoming a partner in crime with.
He’s been doing a terrific job on RWAs, so he definitely knows what he’s talking about.

So now we have covered the current scenario and hurdles in the real estate sector and also reviewed the benefits brought by RWAs Tokenization.

Time to explore how these two things work together.

Transforming the concrete jungle: Tokenization’s impact on Real Estate

In edition #21, when we discussed RWAs Tokenization, different uses were covered: arts, investments, intellectual property, luxury goods, collectibles, and more.

When it comes to real estate tokenization, there are different approaches: these tokens can represent diverse rights, from outright ownership of a property or a share of it to stakes in an organization that owns real estate, or even claims to debt, interest, or profits generated from property management. There are also metaverse applications, with immersive experiences that are reshaping even the “visiting a house” concept.

Tokenization’s backbone, blockchain, ensures each transaction’s integrity, offering a “ledger” that is both immutable and transparent.

This transparency extends to the entire lifecycle of the token, from issuance to transfer, allowing for seamless verification of ownership and history. Such a system minimizes risks associated with intermediaries, reducing potential fraud and enhancing efficiency.

In other words, it’s easy and safe to verify who owns/owned the asset(s) linked to a given token.

Quick personal story: the paperwork for the house I currently live in was supposed to take “a few weeks”, but in the end, it took nearly 6 months to get ready.

This transition from traditional red tape to digital tokens streamlines processes, significantly cutting down transaction times and revolutionizing how transactions are conducted in the real estate sector.

However, the journey of real estate tokenization is not without its challenges. Like any other innovation, there are legal and technical frameworks in development. But hey, we got to start somewhere, right?

Looking ahead, I truly see a bright future for real estate tokenization – specially in real estate – with the promise of becoming a mainstream model for property ownership.

As the industry and regulatory bodies evolve to establish universal standards, tokenization stands to offer unparalleled advantages:

By breaking down ownership into tokens, real estate investment becomes accessible to a broader audience, democratizing access to high-value opportunities.

“Token-powered” transactions make real estate trading as simple and swift as trading cryptocurrencies, significantly boosting market liquidity.

Blockchain’s inherent features ensure that every transaction is transparent, secure, and immutable.

Minimizing intermediaries streamlines the ownership chain, reducing complexity and enhancing speed.

Let’s now explore some examples of how Tokenization can change the real estate sector, from the digital realm to the real world – and not only when it comes to “owning a house”.

Spotlight 1: PropX

If you have been following The Wild West of Web3 for a while, I’m sure you have noticed that “immersive experience” is a recurrent expression in here.

And believe me, it’s not just because it “sounds cool”. No… I honestly believe it’s a great way to enhance experiences at different levels.

And since we are talking about Real Estate, a great example of another-level experience is PropX.

At its core, PropX is a force transforming how we can interact with and envision real estate projects. Through its suite of 3D services, PropX allows developers to create digital twins of buildings and neighborhoods, offering a virtual reality glimpse into the future of urban development.

Imagine walking through a yet-to-be-constructed neighborhood or exploring the detailed interiors of a building before the first brick is laid. PropX makes this possible, blending a gamified experience and real estate to create engaging experiences that speak directly to a new generation of property buyers.

Speaking of the “new generation of property buyers”, here’s a nice quote from the company’s LinkedIn page:

The partnership with giants like Microsoft, NVIDIA, and UNREAL underscores PropX’s commitment to excellence and innovation – and to the “tap into their world” idea.

They also leverage the power of AI and multiplayer environments to offer an immersive experience, setting a new standard in the industry.

But beyond developers, architects and governments also stand to benefit from its technology, enabling them to visualize and share their visions in unparalleled clarity.

They have a whole set of products and solutions, but the video below can help you understand the overall idea behind what they are building:

Disclaimer: I have no affiliation with PropX, but since they are building something really interesting, I’m sharing their work here.

This segment is only available for BorgoAcademy members.

Spotlight 2: The St. Regis Aspen Resort Case

Here’s an interesting way to showcase how far RWAs tokenization can reach in the real estate sector:

If the previous example highlighted a “trending topic” (Metaverse), this one is about a historic property.

From a traditional Ritz-Carlton “regular” asset in Aspen, to a tokenized investment opportunity, that’s a story worth sharing.

Following a story of divisions and acquisitions, the owners considered…

If you want to learn more about BorgoAcademy, hit the button below.

WALKING THE TALK

I’ll share news about projects I am directly involved with and also information that I’m discussing with the suits in meetings with Fortune 500 brands, and where I invest my money and time.

No bullsh*t, no sugar coating. Real talk.

Exploring Virtual Frontiers:
The Districts Evolution

Districts is a project I’ve been following closely for a while now. I mentioned it in editions #17 and #21, so I invited you to go check those editions once you finish this one.

In short, think of it as a blend between the creativity of the digital era and the solid reality of bricks and mortar.

For a more detailed description, we can say that Districts is a decentralized ecosystem where the digital space and the real world meet, creating an environment for designers, architects, and investors (and you) can build and explore virtual spaces – and earn.

In the company’s own words:

Now, here’s where it gets juicy – Realio, the company behind Districts – has a whole multi-chain Web3 ecosystem focused on the issuance and management of digitally native real-world assets (RWAs).

In other words, the Realio Network allows for the creation of new assets in a secure decentralized process.

Besides other several features, this ecosystem is Web3 Compliant, offers a user-based governance system, and has its own Tokens($RIO and $RST) – the former being the multi-chain native gas and utility token of the Realio Network.

Since the last time we talked about Districts and Realio, some cool updates have been released:

1. Land Rush Preparations:

The “Land Rush” in Districts is scheduled for Q3 2024. This event will offer users the chance to secure virtual land parcels within their ecosystem.

The team is currently planning the last details, from plot availability to bidding mechanisms.

2. Building the Districts Marketplace:

In order to power the Land Rush, the Districts Marketplace is evolving and being designed to facilitate seamless transactions of virtual real estate.

From infrastructure development to user experience enhancements, they seem dedicated to creating a user-friendly platform where buyers and sellers can engage confidently.

3. Researching AI Integrations for the Build Phase:

Districts team is exploring how they can leverage AI’s potential in crafting innovative and enhanced versions of reality within their virtual world.

Leveraging AI technology can be seen as a way to empower creative professionals with advanced tools to reimagine and shape the cities of tomorrow.

4. Details for the Land Bank:

The Land Bank, a crucial aspect of Districts, is undergoing thorough planning to ensure fairness and sustainability.

They are working on transparent guidelines to manage it, aiming for inclusivity and empowerment within the virtual real estate market.

Besides my connection with the team behind Districts, I see it as one of the best examples of how the Real Estate sector can evolve and benefit from Web3.

It doesn’t hurt to invest some time in learning more about the project and also about the company running it (Realio).

And if you want to stay up-to-date with what they are creating, consider subscribing to their newsletter using the link below.

The Districts Digest

Subscribe

See you soon.

#LFGrow
Diego Borgo

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