Fractional real estate NFTs provide shared ownership of a real estate property. Kow how fractional NFTs can transform the real estate sector.
Non-fungible tokens (NFTs) are unique digital identifiers that you cannot copy or substitute. Moreover, they can be anything from digital artworks to non-digital collectibles. Now, NFT development services are enabling business enthusiasts to extend their presence in the real estate sector. People can use them for virtual as well as real land. However, not every individual can buy NFTs associated with real estate properties due to high costs. To address this problem, sellers created fractional real estate NFTs. Read on to know more about this topic.
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, Read | NFT Smart Contracts | Applications You Must Know
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.
Below are the three steps that will give you an understanding of how these tokens work:
Tokenization in real estate is the process of transforming the ownership rights of a property into a token. Moreover, this blockchain-based process lets users easily trace all the ownership details and history of the property. Developers use the process of tokenization to create fractional NFTs.
Many people opt for joint ownership of a property by pooling their money. Moreover, they get ownership when people buy fractionalized NFTs.
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
Following are some of the benefits associated with fractional real estate NFT:
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.
An investor needs a high amount of capital to buy properties in real estate. Now, with fractional real estate NFT, 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. It will help in the growth of the real estate industry.
The digital economy seeks to encourage real-world and Web3 integration. An example of this integration is a fractional real estate NFT. Success in this area will pave the way for the digitization of additional tangible assets. It will strengthen the position of NFTs as a practical application of technology in the global economy.
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.
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)
Fractional real estate NFT is an emerging concept and might transform the way people invest in real estate. It provides a unique strategy to acquire real estate without high prices. So, many people are opting for it. Businesses can enter this lucrative market by 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.
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