Challenges in Traditional Real Estate Investments
The real estate industry, despite being one of the most lucrative asset classes, has long been plagued by several barriers to entry, limiting its accessibility to a select group of wealthy individuals or institutions. High capital requirements remain the most significant hurdle, as traditional property purchases necessitate substantial upfront investments. For many, this is a deterrent, as acquiring even a single property can require leveraging savings or taking on significant debt.
Beyond the financial burden, real estate transactions are often slow and cumbersome, involving lengthy legal procedures, due diligence processes, and compliance with regional regulations. This complexity often requires the expertise of lawyers, agents, and other intermediaries, all of which increase transaction costs. Moreover, the market lacks liquidity—property owners cannot easily convert assets into cash, unlike stocks or bonds. This restricts investors' ability to respond to market dynamics or diversify their portfolios efficiently.
Finally, the traditional market is often opaque. Data on property values, ownership histories, and transaction details are frequently unavailable or difficult to verify. This lack of transparency creates trust issues and further alienates smaller investors who may already feel out of place in this high-stakes market. As a result, the traditional real estate model has struggled to adapt to the demands of modern, tech-savvy investors seeking speed, flexibility, and trust.
By addressing these pain points, tokenization presents an innovative solution, opening up real estate investments to a global audience.
Affordable housing problem
Housing affordability is a global issue, affecting both developed and developing nations across different regions. The main factors contributing to the lack of affordable housing include supply-demand imbalances, rapid urbanization, economic growth outpacing income levels, restrictive housing policies, and insufficient affordable housing development by governments.
Early professionals face problems in finding housing that is affordable and fits their lifestyle, and prefer more liquid and transparent real estate investing.
In Europe, 20 million of late Millennials and Gen Z’ers want to own their own property. Unfortunately, only 25% succeed! Housing market scarcity makes single home ownership hardly affordable.
10 million of them want to invest in real estate. However, existing real estate investment products lack social connection, accessibility, transparency and liquidity.
Gen Z’ers and Late Millennials favor flexible, community driven and ESG conscience living concepts. Traditional housing concepts often no longer fit with these values.
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