NFT Real Estate – Another Feather in the Cap for Web3 Technology!

NFT Real Estate Development

Since non-fungible tokens (NFTs) have become mainstays in today’s world, they have been touted as the next big thing that can change the world forever. With the advent of NFTs for physical assets, Web3 experts are going wild on the prospect of NFT real estate. To be precise, NFT real estate is one of the hot topics in the current world as more people have started understanding the significance of NFTs in such real-world applications. This blog vividly explains NFT real estate and how the sector can impact how people perceive Web3 technology.

What is an NFT?

Non-fungible tokens (NFTs) are digital tokens that are entries on the blockchain, a digital distributed ledger. NFTs serves as proof of ownership and authenticity for assets (digital/physical) that they back. These have been immensely helpful for sections of people who previously had fewer or zero channels to make money. Digital artists are perfect examples of this case, as many have earned a lot of money after converting their artworks into NFTs. Other creators followed suit soon, with musicians and photographers optimizing what these virtual tokens had on offer. Even brands and gaming corporations integrated NFTs into their schemes for their advantages and to provide more immersive experiences to users.

What is Real Estate Tokenization?

Real estate tokenization is creating virtual tokens that back real-world plots of land. The tokens, in this case, can contain all the property details such as its borders, images, videos, location, description, ownership history, and documents. If everything is perfectly aligned and adopted, the tokenized real estate asset can be transferred from the seller to the buyer in exchange for cryptocurrency to finish the transaction, and the ownership is changed instantly. Yet, experts predict that such ease in tokenized real estate transactions will take some more time as the world is transitioning from Web2 to Web3.

Real Estate Tokenization Vs NFT Real Estate

Real Estate TokenizationNFT Real Estate
The process involves land properties in the real world.The process involves land properties in the virtual world.
The plot can be sold to anyone in the world without any restriction.The plot can be sold to anyone on the metaverse where it is located.
Tokens here can be offered as security tokens in the physical world.NFTs here can be offered as securities for businesses in the metaverse.
Real estate tokenization can bridge the gap between both worlds.NFT real estate can bring a new element to the virtual world through AR and VR.

What are Real Estate NFTs, and How Do They Work?

Real estate NFTs are digital tokens backing plots of land on virtual worlds or metaverses. Examples of popular metaverses in current times include Decentraland, the Sandbox, and Polkacity. These NFTs serve as the documents for the plot on the metaverse, as no paper documents are involved. These use smart contracts, which are lines of code written, which execute once both parties satisfy all the prerequisites provided.

A real estate NFT contains all the information about the plot, such as its location in the metaverse, dimensions, borders, graphical description, ownership history, price history, and other features. It is held in the holder’s crypto wallet, and if they speculate right and want to sell again, selling the real estate NFT is an easy process.

How to Convert Your Real Estate into NFTs?

  • Converting your real estate asset into an NFT begins with confirming the deal in the physical world. Factors such as the asset’s type, jurisdictions, types of shareholders, and other legal regulations are to be considered and followed.
  • Then, the legal structure for the transaction when there are many assets involved. One can use any one of the special purpose vehicles (SPV), project finance, real estate investment trust (REIT), or real estate fund to progress.
  • Now comes the step of choosing the necessary technology to be used in the creation of NFTs for real estate. Custodial solutions should be created so that investors can store them safely. These security tokens can then be distributed to investors through a separate platform or leading exchanges.
  • After the NFTs are created for real estate assets, distribution plans should be prepared according to the total supply. Accepting multiple payment methods helps in the quick sale of real estate NFTs. The platform where you sell the NFTs will show the real-time funds raised through token sales.

Is NFT a Good Investment for Real Estate?

As far as real estate NFTs are concerned, we must note that we are still in the process of understanding the difficulties associated with these assets and framing proper regulations. As an investment, real estate NFTs can be a good bet since physical assets are involved so that you at least have some physical property in hand if things do not go as planned. Digitizing the real estate sector on Web3 eliminates intermediaries and lengthy paperwork, which previously resulted in many loopholes being exploited.

Benefits of Real Estate NFTs

  • Real estate NFTs help achieve high-volume liquidity for your assets, as cashing on these NFTs is far easier than in physical real estate.
  • Real estate NFTs also enable fractional ownership as building fractional NFTs is easy using smart contracts. Facing challenges can become easier as many people own the plot through fractional NFT ownership.
  • These NFTs also help in the globalization of the real estate sector. Now, anyone can buy plots anywhere in the world without restrictions, and sellers can expand their market.
  • Obviously, NFTs in real estate reduces the involvement of third parties, which consumes time and money. NFT real estate trades will be carried out in a peer-to-peer manner without difficulties.
  • Forging information becomes impossible due to the immutable nature of blockchains, as recorded transactions cannot be tampered with in any way.
  • Transactions in NFT real estate are quick and efficient, as no paperwork is involved. People can buy land anywhere in the world from the comfort of their homes.
  • Fractionalization in real estate NFTs also helps reduce entry barriers as anyone can own at least a small plot of land. For people considering investments in real estate but are not wealthy enough, NFT real estate helps a lot.
  • Since blockchains are involved, power is distributed, and manipulation by individuals is hence rendered impossible. Private keys help people access their real estate NFTs.
  • Secondary sales can be managed easily by partnering with trusted third-party exchanges. Also, investors can become part of property governance by voting and earning their returns with time.

Future of Real Estate NFTs

As we had said earlier, real estate NFTs are still in their infancy, whether for physical land or metaverse land. A lot of understanding is required, and Web3 experts have been devising new pathways for real estate NFTs to become trustable. Although the disadvantage of the real estate sector being slow to adopt technology stands in the way, NFTs can be incorporated by proper awareness and education on Web3.

How can Blockchain App Factory Help You Develop Real Estate NFTs?

Blockchain App Factory has been a leader in Web3 development for a long time, and our experts have witnessed how real estate NFTs have evolved over time. We have also contributed our bit to the evolution by helping our global clients who wanted to develop real estate NFTs. The projects have been successful, and we strive daily to better ourselves in creating real estate NFTs. If you are interested in building real estate NFTs, chat with us now to begin a long journey of real estate in Web3.

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