Exploring the trends in the tokenization of Real Estate
What is real estate tokenization:
Tokenization of real estate is a growing trend that has gained significant traction in recent years. It refers to the creation of digital tokens that symbolize ownership or stakes in real estate properties. These tokens are commonly constructed using blockchain technology, which enhances transparency, security, and liquidity in real estate investments. This process allows for the division of ownership in real estate assets into fractions, and even facilitates fundraising through security token offerings conducted on decentralized cryptocurrency exchanges to trade these tokens. This mechanism also has the potential to eliminate intermediaries, heavy paperwork, associated costs, and the risk of fraud within the real estate sector.
How tokenization can benefit the real estate industry:
- Increase Accessibility:
One of the primary benefits of tokenizing real estate is the increased accessibility it offers to a broader range of investors. Traditional real estate investments often require large capital commitments, making them inaccessible to smaller investors. Tokenization allows fractional ownership, enabling individuals to invest in a fraction of a property, lowering the entry barriers and democratizing access to real estate investment opportunities.
2. Liquidity and Fractional Ownership:
Tokenization brings enhanced liquidity to the real estate market. By dividing properties into digital tokens, investors can buy and sell these tokens on secondary marketplaces, enabling them to exit investments more easily than in traditional real estate transactions. Fractional ownership allows investors to diversify their portfolios by investing in multiple properties with smaller amounts of capital, thereby reducing risk.
3. Global Investment Opportunities:
Tokenization of real estate opens up investment opportunities in international markets. Blockchain technology facilitates cross-border transactions by streamlining the process of transferring ownership and eliminating the need for intermediaries. Investors can access real estate assets in different geographical locations without the usual complexities associated with international investments.
4. Enhanced Transparency and Security:
Blockchain technology provides a transparent and secure environment for real estate transactions. Property details, ownership records, and transaction history can be stored on the blockchain, ensuring immutability and reducing the potential for fraud. Smart contracts, coded into the blockchain, automate and enforce terms and conditions, reducing the need for intermediaries and enhancing trust between parties.
5. Fractional Ownership and Shared Economy:
Tokenization aligns with the growing trend of the shared economy. By dividing real estate assets into tokens, multiple investors can share ownership and benefits, such as rental income or capital appreciation. This shared ownership model not only enhances liquidity but also promotes a more inclusive and cooperative approach to real estate investment.
6. Potential for Increased Real Estate Market Efficiency:
Tokenization has the potential to increase market efficiency by streamlining the entire real estate lifecycle. From property listing and fundraising to purchasing, selling, and managing assets, blockchain-based platforms can automate and digitize these processes, reducing paperwork, minimizing costs, and improving overall operational efficiency.
7. Regulatory Considerations:
The tokenization of real estate also presents regulatory challenges and considerations. Different jurisdictions have varying regulations regarding securities, property rights, and investor protection. Regulators are working to establish frameworks to govern tokenized assets and ensure compliance with existing laws. As the technology evolves, legal and regulatory frameworks will likely adapt to accommodate the tokenization of real estate.
The US market:
The US has led the charge of tokenization in real estate for the last few years, with frontrunner companies such as Roofstock raising $240m at a $1.9B valuation back in March 2022.
We have highlighted 4 leading US companies in this sector that are currently hiring for multiple roles.
Founded in 2015, Roofstock is a San Francisco-based real estate investment marketplace with a mission to make real estate investing radically accessible, cost-effective, and simple. With $5 billion in transactions since its launch. This puts Roofstock in a strong position to become the world’s leading real estate investment marketplace. Roofstock is currently hiring for multiple roles in the US across Engineering, Business Development, Property Management and Legal Counsel.
HoneyBricks offers investors a unique opportunity to gain exposure to the commercial real estate market in a new and exciting way. Through its platform, it allows investors to tokenize investments in approved projects, thus providing fractional ownership of assets backed by the Ethereum blockchain. HoneyBricks is currently hiring for multiple roles in the US and Canada across engineering, investor relations, marketing, product and operations.
Arrived is out to revolutionize the way we invest in rental homes and vacation rentals. The company seeks to make wealth-building through real estate more accessible through its streamlined and intuitive platform. Arrived is currently hiring in the US for product design and operations roles.
RealT is a fractional and frictionless real estate investment platform reinventing ownership. Investors around the globe can buy into the US real estate market through fully-compliant, fractional, tokenized ownership. RealT is currently hiring for 2 Full Stack Developers in the US.
The UK and European market outlook:
If we take take a look at real estate tokenization in Europe and the UK, there is a growing trend across the UK, Switzerland and Liechtenstein, with the latter being the first nation in the world to come up with a comprehensive tokenization law. The revolution is being led by blockchain firms that release security tokens supported by tangible property assets. Similar to stocks, these tokens symbolize ownership rights. Although cryptocurrencies remain largely unregulated in the UK, real estate security tokens are subject to regulation and are categorized as investment instruments.
We have highlighted 3 companies in the UK and Europe to keep an eye on.
Definder, is a leading innovator in the tokenization of Real Estate sector in the UK. Their Smartlands platform enables investors to participate in institutional-grade deals with a much lower buy-in threshold than investing directly through the same sponsors. Investors can position themselves alongside experienced asset managers and benefit from risk-adjusted returns.
Bricktrade is the UK’s first construction financing platform accepting cryptocurrencies for property investments. Bricktrade connects property developers with investors on a blockchain-powered real estate marketplace, allowing everyone to own a part of a property without any loans, deposits, and the standard paperwork.
Algae is a mobile application that makes it easy to invest in real estate investment projects through blockchain technology from as little as 10€. Their mission to democratize real estate investment at your fingertips. Algae is looking for a Co-founder COO to join their team. You can view the role on our platform here
Find the latest job opportunities in the PropTech industry on our website. We combine new technologies and human expertise to provide our clients and candidates with the best quality of services.
Artificial Intelligence (AI) in Real Estate
What is Artificial Intelligence (AI) in Real Estate?
AI technology refers to sophisticated algorithms and data analytics to make accurate predictions about future scenarios. What makes the use of this technology beneficial is the ability of a given piece of software to analyse and interpret that data to the point where it can then automate processes in more intelligent, creative and flexible ways. In the property market, this kind of advancement has yet to fully take place. However, artificial intelligence will re-design the property industry in the near future. In fact, numerous changes are currently underway: residential real estate agencies have now shifted to electronic platforms, artificial process optimisation and robotics are becoming increasingly important in the construction sector, while smart buildings with advanced building control are now prevalent in the field of facility management (Hajnal, 2020).
The real estate AI business is growing with new companies entering the industry at a high pace - from American Bracelet & Skyline AI to German Architrave GmbH and English LandTech. With more startups emerging in the sector, it is worth exploring new career opportunities being created, which we will discuss in more detail later in the article.
How is AI changing the Real Estate industry?
The real estate industry is experiencing a digital revolution that is affecting not only its nature in terms of the markets and work environments but is also influencing its progress. This tech disruption is closely linked with the emergence of a phenomenon known as PropTech. According to Siniak et al (2020), « PropTech is characterised by the massive implementation of emerging technology such as home matching tools, drones, virtual reality, building information modelling (BIM), data analytics tools, artificial intelligence (AI), Internet of Things (IoT) and blockchain, smart contracts, crowdfunding in the real estate sector, fintech related to real estate, smart cities, regions, smart homes and shared economy ». The utilisation of these technologies will not only improve the efficiency of operational tasks but also change decision-making processes. By recognising relationships and patterns in large data sets, the effects of possible future scenarios can be examined more closely.
By means of so-called Smart Contracts, relevant information from contracts and documents can be extracted and used meaningfully. This will increase the transaction speed and reduce the search and sorting effort. Accordingly, algorithms can check virtual data rooms for completeness or, in the case of a sufficiently solid database, identify suitable investment targets according to the portfolio matrix. In asset management, the possible use of artificial intelligence ranges from personalised customer contracts through contract management to intelligent building services management. In addition, property valuation, property management and facility management will increasingly change. Possible applications in these areas include simplified collaboration, peer-to-peer transactions, supply chain management and data management (PwC, 2018).
Types of AI innovation in Real Estate
- Advanced property analysis
AI-powered software can be a solution for improving the ability of a real estate business to provide accurate, comprehensive information about property to clients.
Skyline AI uses proprietary AI to collect data points from a variety of sources and analyses past transactions to help get a sense of which neighbourhoods are up-and-coming and which are heading for a potential downturn. By analysing property owner behaviour, this tool can also help commercial real estate investors find distressed properties, off-market deals, and opportunities for value creation.
2. Real estate brokerage
The residential real estate market is the field where AI has made the most spectacular progress. This section of the real estate market simply moved to virtual reality and numerous sites are increasingly replacing real estate agents’ jobs by structuring, filtering and introducing supply in a variety of ways. Machine-learning interfaces and chatbots are already benefiting a lot of businesses by collecting customer data and helping with improving lead generation and content marketing (Hajnal, 2020).
Springbok AI help organisations of all kinds and sizes get the most out of Artificial Intelligence by optimising their processes and/or exploring new growth opportunities with them. Whether organisations have no prior knowledge of the technology or already have resources dedicated to it, Springbok can help at every step of a company’s journey with AI.
3. Property valuation
The spreading of so-called non-traditional methods has been a feature of property valuation’s evolution over the last decade. Some of these methods include hedonic valuation, the use of nervous system networks and contingent valuation. Since AI has the ability to analyse patterns in vast amounts of data, it can be used to make reasonable predictions of the future value of a property. The methodologies, often described as «mass appraisal», are focused on the systematic and automatic analysis of broad databases, with self-learning models supporting them. The number of property attributes or market data points can exceed tens of thousands, which is definitely a kind of analysis no human analyst or market research is capable of conducting (Hajnal, 2020).
Enodo is an automated underwriting platform for multifamily real estate. Its machine learning capabilities can help clients calculate market rents, find comparable properties, and identify lucrative investment opportunities. For those considering doing renovations, it can also help estimate the future value of any added amenities.
4. Property Management
Real estate businesses can track rental and property listings, requests for maintenance, tenant applications, and other information with AI software. These results of the tracking can help to identify the most common maintenance issues, tenant characteristics and preferences, price trends in certain areas, and seasonal availability.
Proportunity offers a service similar to that of Skyline AI for those in the residential real estate industry. Operating in 50 markets, this tool gathers property value data, crime rates, transportation data, and school district ratings to fuel its automated valuation model and predict which properties and neighbourhoods will give you the highest returns.
Impact of AI on real estate recruitment
Although digital transformation in the real estate sector is still in the early adoption stage, the industry is nonetheless facing seismic shift (Piazolo et al, 2020). The implementation of technologies such as data analytics, artificial intelligence, machine learning and robotics are changing operations. Highly administrative roles and tasks that need a human effort (property agents for example) are becoming largely obsolete. This statement underlines that a task-based approach demonstrates how high the percentage of jobs is concerned: almost one in two jobs in the property sector.
However, thanks to the emergence of new technologies, new jobs will be created in the real estate sector as well. For example, the real estate industry has reaped tremendous benefits and development from data analytics and photo capturing technologies. As mentioned, digitisation is also driving employment and many new jobs will emerge as a result.
Some of the AI real estate companies currently recruiting are:
- LandTech, the UK’s fastest-growing Proptech company. Simplifying planning research and giving planners and architects all the information they need on a single platform. LandTech is currently looking for a Senior Software Engineer, who will be working in a cross-functional product development team, reporting to the Head Of Engineering.
- Architrave GmbH leads the digital transformation in Real Estate Management. They use high-level automation through Artificial Intelligence, efficient workflows and data-based decisions that significantly increase productivity with a fast ROI. Advantages other industries are now also benefiting from. Architrave is currently looking for a Senior JavaScript Engineer as well as a Customer Support Agent.
- Wayhome offers a completely new way for people to get on the housing ladder without needing to take out a mortgage. Homeowners get capital to buy a home worth up to eight times their income with only a 5% deposit. The open positions are in Tech (e.g. Senior Frontend developer) and Engineering (e.g. Senior Devops/Secops Engineer).
- Unity Technologies is the world’s leading platform for creating and operating real-time 3D (RT3D) content. Unity’s platform provides a comprehensive set of software solutions to create, run and monetise interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices. Unity is currently looking for Senior Data Scientist, Software Engineer…
- Beyond Pricing is the #1 Revenue Management Platform for short-term rental owners and managers to acquire, keep, and grow revenue. Beyond Pricing are always on the lookout for talented developers and engineers.
- Localize is the world’s first real estate marketplace designed to level the playing field for homebuyers and renters — arming them with information once reserved only for savvy real estate pros. Localize is now hiring for Senior Data Scientist, Backend Engineer, Senior Business Analyst, and Client Success Manager.
It is important to mention that the IT positions require substantial previous experience, companies expect candidates to demonstrate varied knowledge of programming languages and a relatively impressive record of projects. On the Business Development side, positions mainly target senior-level professionals as the startups are expanding and therefore are seeking experienced leaders who would take the business to the new level, this is particularly true for the companies going global. Finance-related positions are quite rare in the sector with nearly all the positions centred around companies focused on financial solutions for homeowners.
Find the latest job opportunities in the PropTech industry on our website. We combine new technologies and human expertise to provide our clients and candidates with the best quality of services.