Fractional Real Estate NFTs: The Next Wave of NFTs

Non-fungible tokens (NFTs) are unique digital identifiers you cannot copy or substitute. Moreover, they can be anything from digital artworks to non-digital collectibles. But did you know? NFT development services are enabling business enthusiasts to extend their presence in the real estate sector. People can now use them for virtual as well as real land. 

However, due to high costs, not every individual can buy NFTs associated with real estate properties. To address this problem, sellers created fractional real estate NFTs. Read on to learn more about this topic.

What is Fractional Real Estate NFT?

Fractional NFT in real estate represents shared fractional ownership of a real estate property. In simple terms, a developer can divide the ownership of a property into smaller fractions. It allows individuals to hold a part of that property and share its usage rights.

After the success of the first real estate NFT sale in 2021, many platforms started offering fractional real estate NFT ownership. Examples of such platforms include Aqar Chain, Futurent, Ekta, etc. 

Also, adopting Non-Fungible Tokens (NFTs) and Fractionalized NFTs (F-NFTs) in real estate transactions can offer speed and efficiency by replacing intermediaries with smart contracts, ensuring instant ownership transfer and simplifying the overall process.

Also, Read | NFT Smart Contracts | Applications You Must Know

What is the Need for Fractional NFT in Real Estate? 

Real estate NFT is becoming increasingly expensive. Consequently, not every person can afford it. Hence, developers introduced the concept of fractional NFT in real estate. It distributes the asset ownership cost among various buyers, giving people the opportunity to own a part of a larger asset. 

For instance, individuals may not buy a big commercial building or apartment complex, but they can own a smaller fraction of it (flat). These portions can still give owners passive income from rent. 

Fractional Real Estate NFT Mechanism 

Below are the three steps that will give you an understanding of how these tokens work:

Tokenization

Tokenization or data tokenization in real estate is the process of transforming a property's ownership rights into a token. This blockchain-based process lets users easily trace the property's ownership details and history. Developers use tokenization to create fractional NFTs.

Investment Pool

Many people opt for joint ownership of a property by pooling their money. Moreover, they get ownership when people buy fractionalized NFTs.

Returns

Every fractional real estate NFT owner will receive property revenue such as home appreciation, rent, etc. The distribution of the revenue will be according to the investment percentage by each token holder.

Read More: Most Resourceful Blockchains for NFT Development

Benefits of Fractional Real Estate NFT

Following are some of the benefits associated with fractional real estate NFT:

Security

Blockchain is a public digital ledger that stores information in an immutable manner. This decentralized ledger is traceable and tamperproof. So, it will give a level of security to fractional NFT holders as there are no chances of disputes over ownership rights since there is a record of every transaction on the blockchain.

Lower Point of Entry for Investors

An investor needs a large amount of capital to buy real estate properties. Now, with fractional real estate NFTs, individuals with less capital can also participate in real estate investing. Consequently, more small-scale investors can now access the real estate market through fractional NFTs, which will help grow the real estate industry. 

Web 3.0 and Real-life Integration

The digital economy seeks to encourage real-world and Web3 integration. A fractional real estate NFT is an example of this integration. Success in this area will pave the way for the digitization of additional tangible assets and strengthen NFTs' position as practical applications of technology in the global economy.

Stress-Relieving

The concept of fractional NFTs differs from traditional real estate ownership, which entails interacting with middlemen, physically visiting properties to inspect them, dealing with rent collection, and all the related hassles. So, fractional NFTs in real estate can be stress-relieving for most investors. 

Decentralization

There are many fractional real estate NFT platforms with decentralization features. Token holders of these platforms are members of the decentralized autonomous organization (DAO). So they can participate in the administration of their respective platforms.

Also, Read | Revamping the Supply Chain Industry with NFT (Non-Fungible Tokens)

Conclusion

Fractional real estate NFT is an emerging concept that might transform how people invest in real estate. It provides a unique strategy for acquiring real estate without high prices, and many people are opting for it. 

As this concept gains traction, businesses can explore opportunities in this burgeoning market, leveraging professional assistance for token development and trading platforms. Fractional Real Estate NFTs represent a promising evolution in real estate investment, driven by innovation and accessibility in the digital economy. 

Businesses can enter this lucrative market by just launching fractional NFTs for real estate.  However, the development of such tokens requires professional assistance. You can get expertise from our NFT and blockchain developers for developing a fractional NFT trading platform. Connect with our expert team for more information.