Housing as a service: The opportunities offered by real estate tokenization
Beyond its pure investment-focused aspect, the tokenization of real estate opens the door to the separation of a property’s investment from usage, resulting in better usage optimization. In this article, we will explore the opportunities that will eventually come from real estate tokenization - a big part of our long-term vision for BlocHome.
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The classical route to property ownership traditionally takes a lot of effort for middle-class families when it comes to purchasing their first property. They then usually move to larger and larger properties as they grow their family, and usage needs change. While doing so, they get contractually chained to multi-decade loan repayments in an illiquid asset that may hinder their options when it comes to life choices like a job switch requiring a move.
Paying off a family home requires long-term commitment and life sacrifices. However, by the time the home is paid off, the family may realize it no longer fit their needs, as their children move out of the house. They are then left with a half-empty house with maintenance costs surpassing their current housing needs. While unoccupied square meters remain unused, the new generation of homebuyers struggle to find affordable land as it becomes increasingly scarce.
These kinds of inefficiencies are currently accepted as a normal part of the housing market and few viable solutions have been proposed up until now. However, we strongly believe that tokenization of real estate can solve many of them. This idea has been a key inspiration for us to launch BlocHome. Although today, in our early days, we are gearing our offering more towards an investment vehicle to finance our first properties, our long-term vision is to use all the optimisation opportunities offered by tokenization technology and bring true societal change. In the future, BlocHomers will have the liberty to switch their dwellings easily through their tokens representing ownership in the BlocHome portfolio for minimal transfer costs. They will also be able to rent out their owned surface they no longer need. In other words, property ownership and usage will become modulable. Let’s imagine a few scenarios to illustrate the kind of optimisation mechanisms that will result from making traditionally illiquid properties liquid:
Scenario 1:
After their children move out of their big family house, a retired couple decides they would like to go more often on holiday and for longer periods of time. They can easily switch to a smaller apartment with minimal transfer costs, and either sell or rent our surface proportional to their token holdings they no longer need. The extra income can finance their trips and liveable space is optimized.
Scenario 2:
A couple with a large family home decide they want to get a divorce. Instead of having the question of who should keep the house be a challenge, the couple can simply switch their house ownership into two equitable apartments.
Scenario 3:
A person has a professional opportunity abroad. Instead of being chained to the location of their home, they can simply switch to another property in the BlocHome portfolio in the location they need to live in.
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Of course, these scenarios illustrate the benefits of real estate modularity for the users themselves. But the impact is wider. By ensuring users can adapt the size, location and specs of their dwelling according to their needs, and be rewarded for making unused space available through rental income or token sale purchases, means the overall dwelling space is much better utilized, easing the land scarcity issues for other people and having a positive impact on each BlocHomer’s carbon footprint.