For some time there has been a discussion about the potential of the blockchain for real estate sales. According to a story in Forbes by Kamran Rosen, a real estate expert, the sale of the Villa AnnA in Paris has made history by “becoming the first ever European property to be sold entirely via a blockchain transaction.”
Sold at a price of €6.5 million, the luxury property is located in Paris’ Boulogne-Billancourt district. The buyers were two French real estate companies and the process involved “first transferring ownership of the building to a joint-stock company (SAPEB AnnA), then dividing the company into 100 tokens to be distributed to the owners respectively.” Rosen also explains that each token can be further broken down into 100,000 units, meaning individual shares of the building can be bought and sold for as little as €6.50.
French blockchain investment platform Equisafe managed the deal based on the ethereum blockchain, and as Rosen remarks, it is the latest of a number of property transactions worldwide using blockchain technology. Rosen reports: “Last year, a $30 million Manhattan property was also tokenized on Ethereum, and in January of this year, a luxury resort in Aspen, Colorado raised $18 million through a security token offering.”
Fractional ownership
What this Paris deal and the others illustrate is the potential of the blockchain for supporting fractional ownership. It allows the public to participate in buying small shares I luxury real estate and the property could be traded in the same way as other exchange-based securities.
Furthermore, Rosen’s research revealed that several real estate tokens are already trading on the secondary market.
Tokenising property and using the blockchain revolutionises the old-fashioned property buying and selling process. With the sale of Villa AnnA, much of the “cumbersome legal documentation involved with selling property (such as notarized deeds and proof of identity), was all encrypted and recorded on the blockchain,” Rosen states.
What we need to look at scaling the blockchain to handle real estate transactions so that the time taken and money paid that goes into the current process is greatly reduced. Rosen says, “Equisafe is going as far as to claim individuals will be able to create investor profiles and access offers in less than half an hour.” If that is true, it could have an extraordinary effect on the real estate markets globally.
The sale of the Villa AnnA is likely to be only the first of many in Europe that we’ll see!