Real estate on the blockchain has been a hot topic for at least a year now. The real estate industry sees the writing on the wall that their outdated ways to buy and sell real estate won’t last forever. The blockchain provides a perfect launching pad to streamline the industry for investors, owing to its transparency and ability to get multiple parties on the same page. In addition, blockchains are inherently global, and as much as real estate is local, the investors today especially in top cities in the world are from around the globe.
However, this whole blockchain real estate needs to be done right if it is to succeed.
REITs and Property Backed Tokens
Global REIT is taking an interesting approach here, which is from the get go creating a REIT-like instrument for the tokens that it sells. Essentially, it isn’t a platform play but really a real-estate backed crypto token here. So if you like the team and investments, it makes sense to consider the token. The tokens are based by real estate assets in specific locations and verticals, and accrue cash flow accordingly.
Cash flow of course is the name of the game when it comes to real estate. Using Ethereum based tokens, it is easy to track ownership and changes of ownership over time. This makes the accounting easier. The big win is for global investors. For example, Global REIT is buying its first property in UAE. How many, say Australian investors have exposure to real estate in the middle east? Now it is possible through their tokens.
Of course the UAE property is the first step. The company has plans to expand to other markets including the UK. Crypto payments make it easier to go through the paperwork and compliance for ownership and transfer of these rights. The company intends to pay dividends on these tokens in Tether, backed by the cash flows of the actual properties on the ground.
Real Estate Tokens
There are two tokens at play here – the GREM and GRET tokens. These will be sold in an initial crowdsale to investors, very similar to an ICO. The GREM token pays out a 2% AUM (assets under management) that decreases to 1.25% in 0.25% increments over time but never below 1.25%. The GRET token pays out a stable 8% per annum dividend on the first acquired asset, which is the UAE property for Global REIT. Each property will have its own GRET token and contract.
More numbers for you. The company plans to start with $75 million in AUM and reach $2 billion in AUM in 3 years. Yes, that’s a highly ambitious goal, but could provide some real diversification to real estate investors if they succeed.
The team isn’t limiting its investments to a geography or asset type. Its roadmap has everything from a hotel in UK to a shopping mall in UAE. But since GRET tokens are different for each property, investors can build their own collection of real estate tokens if they so wish. Otherwise, they can just invest in GRAM tokens as described above.
If you’re a real estate and/or crypto enthusiast and want to learn more, check out their website and whitepaper. Be very careful if you invest any money in the tokens, since it is a risky investment and you can lose all your money. Do your due diligence and never invest more than you can lose.
Photo Credit: michaela loheit