Tokenized Real Estate Ownership: Propy vs. REAL
“When faced with disruptive technologies, the most effective companies thrive by incorporating them into the way they do business.” …and in steps Blockchain, the perfect case in point, also currently the hottest buzzword in tech.
“When faced with disruptive technologies, the most effective companies thrive by incorporating them into the way they do business.”
…and in steps Blockchain, the perfect case in point, also currently the hottest buzzword in tech. Satoshi Nakamoto introduced Bitcoin – the pioneer of cryptocurrencies – to the World in 2009; little did we anticipate the revolutionary flow-on effects of its blockchain “spinal cord”.
Today, entities across the planet are scrambling to leverage the benefits of blockchain. Please continue reading to see how two trailblazing enterprises within the property industry, Propy and REAL, are embracing this exciting opportunity.
What are the objectives of Propy and REAL?
Propy describe themselves as a “global property store with decentralized title registry”. They aim to simplify international real estate transactions by digitizing the key processes, contractual and ownership formalities.
Although property has been a top preserver of wealth and also one of the choice income-generators through the ages, the largest chunk of Earthlings are excluded – for investment purposes – from participating in this $217 trillion asset class.
One major barrier to entry is the absence of a truly borderless, global infrastructure that facilitates swift processes and opens up cross-border investment opportunities to regular folk around the Globe.
Propy’s Ethereum-based blockchain platform allows users anywhere to view properties for sale, make real estate purchases online by means of smart contracts, and pay and receive registration of ownership – all in one, fast, secure and convenient chain of digital processes.
Initially, the Platform aligns itself with existing government or state protocols and legalities surrounding property transactions, the pilot project being in California.
Ultimately, though, the Propy Registry aims to be an approved “Authority” in its own right. Put simply, once your real estate transaction and ownership is registered with Propy, it will be signed and sealed as far as the law goes, with no further requirements.
REAL is an acronym for Real Estate Asset Ledger. Their business concept hinges on the crowdfunding model, where collective funds are invested in qualifying real estate assets; participants share in rental income plus the increases in property values which accrue to their chosen investment portfolios.
The crowdfunding-method of property investment is currently valued at +$3.5 billion globally, forecasted to exceed $300 billion by the year 2025.
A major hurdle for growth in real estate crowdfunding is the inability of international investors to participate; cumbersome cross-border processes and overseas money-transfer difficulties are some of the major barriers.
REAL aim to overcome those hindrances, thereby stimulating participation trends. Their “Ethereum Smart-Contracts governed ecosystem,” as they fondly refer to it, makes the experience truly borderless. Digitized property assets, contracts, and payments can be moved and exchanged globally on their blockchain in rapid and secure fashion.
How does it work?
In a nutshell, the real estate purchase process on the Propy platform looks like this:
- Sellers list and buyers find properties in Propy’s online store (Propy DApp); select and use your native language.
- Buyer submits an offer of purchase via smart contract, which requires a Propy token (PRO) to trigger execution.
- Seller accepts the offer by digital signature of the smart contract.
- The smart contract auto-requests payment from the buyer.
- The buyer pays in cryptocurrency which triggers auto-registration of the new ownership with Propy Registry.
PRO tokens were obtainable during the Initial Coin Offering (ICO), or may now be purchased on a traded exchange.
The key process flows within the REAL Platform are as follows:
- The Platform purchases a selected investment property and transports it into their blockchain system by means of a smart contract, called a REAL Property Contract (RPC).
- The RPC is subdivided into fractions or “internal tokens” called REAL Property Participations (RPP) and offered for sale on the Platform.
- Investors purchase RPPs and pay with REAL tokens.
- The rental income derived from the specific property is divided between the RPPs, and owners are paid out in Ethereum (Ether) cryptocurrency on a monthly basis.
- If an investment property is sold, RPP owners receive the profit portion of the sale in Ether and the principal (original purchase price of the property) back in REAL tokens.
- Owners can cash out (sell) their RPPs on the Platform and get paid in Ether.
Investors may purchase REAL tokens during the ICO or at a traded exchange afterwards.
What’s their backstory, roadmap & ICO details?
Propy is the brainchild of Oxford University alma mater, Natalia Karayaneva (CEO) and Eva Otanke, both hailing from successful careers in real estate, business development, planning & sustainability. They are supported by a team of 10 colleagues and 7 advisors, covering all major business & technical disciplines.
Propy issued 100 million PRO tokens at $1 each. PRO is classed as a utility token, based on the Ethereum ERC20 standard; this means that they can be held in any Ether-compatible crypto wallet and can also be traded on open exchanges.
The crowdsale opening date for PRO was 15 Aug 2017 and it ended on 15 Sep 2017; Propy raised $15 million from 6,597 participants.
Since sale date, PRO has been trading on the LiveCoin exchange at an average of $0.41, the latest (25 Sep) being $0.60.
REAL is incorporated in Singapore as a private company, Real Estate Asset Ledger Pte. Ltd. It was founded by Enrique Dubois (CEO) and Bernardo Hernandez. Between them, they have a strong, online-startup track record and held executive positions at Yahoo, Google and top venture capital firms in Europe.
A team of 4 executive colleagues support them, as do 6 advisors across the spectrum of commerce, tech and engineering.
REAL put up for sale 25-50 million Soft Cap & Hard/Security Cap REAL tokens; the price is 1 Ether (ETH) for 220 REAL tokens.
Their ICO started on 31 Aug 2017 and ends on 30 Sep 2017. As of date (25 Sep), REAL token sales total to $10.3 million.
The value propositions of both Propy and REAL are providing the answers to significant challenges within the global real estate industry. Both enterprises aim to leverage the benefits of blockchain technology to achieve their goals.
Essentially, Propy wants to streamline the global property purchase process, while REAL focuses more on the affordability aspect by offering fractional-ownership and crowdfunded real estate investment opportunities.
The overall outcome that both are hoping for, however, is identical; to bring property – as an investment asset class – within the reach of regular folk, wherever they may find themselves in the financial world.
Propy’s future journey might be unsure. A large portion of its success hinges on future legislation trends in terms of property processes; their whitepaper acknowledges this fact.
Since trading on the open market (mid-Sep), the PRO token has lost 40% of its value. Perhaps this is an indication of market uncertainty on the legislation issue? Only time will tell.
REAL will be trading on open exchanges from October 2017. If we look past the imminent “going-to-market jitters,” industry forecasts for global real estate support the REAL token to do well. Property heavyweight Colliers International believes that the next 12 months’ global growth will exceed 11%. They further state that +85% of global survey respondents are looking to make cross-border investments.
In conclusion, REAL may be enjoying the benefits of a macroeconomic tailwind in the foreseeable future, boosting the value and growth of their token.
Propy, on the other hand, is likely to face the headwinds of uncertainty while they await key developments in the legislative space. Bureaucracy is known to move slowly; positive news, if or when it comes, will undoubtedly have a bullish impact on the PRO token. Unfortunately, the flipside might also come true.