Blockchain and the real estate market

In our last article, we explained the difference between ICO (Initial Coin Offering) and STO (Security Token Offering), and how the latter gives the investor increased security, and allows him to hold a tangible asset (for example, equity interests in a company).

In this same desire to demonstrate the benefits of the STO, we focus today on the example of real estate. Indeed, on June 25, Equisafe made the first Tokenisation of a private mansion in Europe, an event that revolutionized the real estate investment market.

The STO revolution in real estate

Currently, in the real estate market, there is a problem of immobility to invest in an asset of this ecosystem : the financial outlook is correct for a well located asset, but on the other hand liquidity is generally low.

However, the STO will make this type of asset more liquid, in the sense that this transaction will offer a lower entry ticket than traditional stone funds or SCIs.

For example: You can invest in shares of a building at a percentage share worth 300 euros.

It is important to note that the STO is inseparable from the Blockchain* because this operation can only be work with this technology. In this way, the STO is taking over the advantages resulting from this network. Indeed, the transfer of a digitised part of this asset (or token) will be much faster than paper base because the administrative formalities will be greatly simplified. The Blockchain will provide access to a database of thousands of investors whose identities have already been verified and certified. Communication with buyers will be facilitated as they will be able to find all the information on an internet platform linked directly to the Blockchain.

The Blockchain will also simplify actions related to resale.

Indeed, the registration of property titles in a Blockchain register (whose information will be verified by notaries, digitized, unforgeable and permanently accessible) will open the door to a faster exchange of information, an exchange that will allow an asset’s documents to be monitored from its creation to its sale.

It is undeniable that the Blockchain will bring a lot of simplicity and fluidity to the most complex transactions; in the case of real estate, individuals or companies will be able to access the entire real estate chain with a single click.

Finally, all real estate sectors will be affected:

  • For SCPIs/OPCIs, the Blockchain will facilitate the issuance and subscription processes.
  • For investment funds and family offices, Blockchain registries will provide access to a wider choice of investments and investors.
  • For institutional investors, the Blockchain will make it easier to manage their real estate assets via smart contracts.
  • Finally, for landowners, the Blockchain will be an effective fundraising tool, but can also be used as a tool for recording and collecting rents.

Summary of the benefits offered by the STO

  • Offers regulated and controlled by regulators for investor safety;
  • Projects for STOs are generally more thoughtful and reliable than those from ICOs;
  • STOs are growing significantly as the number of ICOs declines;
  • Less speculation and market manipulation;
  • Speed because it reduces the usual administrative formalities;
  • Simplification of actions related to resale by allowing the tracking of asset documents from creation to sale;
  • Simplicity and fluidity in complex investment transactions;
  • All real estate sectors are concerned.

Future of the STO

In the end, market experts have great confidence in STOs and estimate that market capitalization will reach more than $10 trillion by 2020. ICOs may have dominated the equity financing market in 2017, but since 2018, the STO concept has been growing rapidly, offering investors secure investment opportunities. Many believe that this could be THE popular solution for participatory financing in the market.

Tokenization in the service of Equisafe

The major innovation proposed by Equisafe is to open up investment in financial assets that are accessible to as many people as possible. Equisafe is aimed at both issuers of securities and investors.

To do this, Equisafe uses the Tokenization process, which corresponds to the creation of the digital representation of an asset on a Blockchain. In details, Tokenization refers to the registration of an asset and its rights on a Token in order to allow its management and peer-to-peer exchange on a Blockchain, in an instant and secure way.

The investment operations carried out by Equisafe are based on a public Blockchain, Ethereum. On this network, although the transactions are public and therefore transparent, it is possible to privatise certain information to make it available only to certain investors.

Concerning the value of the Token, this corresponds to a number which is itself backed by a percentage of the property purchased by the investor.

As an example:

- If you bought 2 shares of 1 euro from a company that is worth 100 shares of 1 euro, then you own 2% of the company and therefore 2 euros;

- If you bought 2 Tokens from a company divided into 100 Tokens where one token represents 1 euro, then you also own 2% and therefore 2 euros.

Regarding the purchase of Tokens by investors, the process is very simple:

1) You must go to the Equisafe platform (http://equisafe.io)

2) Pass the identity check : the KYC (identity card, photo, proof of residence, nationality)

3) Using your credit card, then you make a classic transaction in euros to buy the Tokens that will grant you shares in return for your investment.

Operation AnnA: the first Tokenization of a private mansion in Europe!

Equisafe has revolutionized real estate investment with the AnnA transaction.

Indeed, this is the first sale and purchase of a building that was entirely carried out via the Blockchain in Europe on 25 June 2019. A private mansion could be split into Tokens and this in a totally secure way.

You will find more details on this operation on the following links:

- https://www.capital.fr/immobilier/premiere-vente-immobiliere-via-blockchain-en-france-1342764?

- https://www.cfnewsimmo.net/L-actualite/Transactions/Premiere-tokenisation-en-immobilier

- https://www.journaldunet.com/economie/immobilier/1439550-a-boulogne-billancourt-un-immeuble-sitot-achete-sitot-tokenise/

With the success of Operation Anna, Equisafe has demonstrated its ambition to democratize intangible assets and make them accessible to as many people as possible through the Blockchain. Equisafe does not intend to stop at the real estate sector and plans to expand its areas of intervention, such as financial securities or film production.

Stay tuned !

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Equisafe is an agent of Lemon Way payment service provider under registration number 85392 on the registry of REGAFI.