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You may have heard that it’s possible to buy land in the Metaverse using open source blockchain Ethereum. Apparently rapper Snoop Dog and companies like PwC, JP Morgan, HSBC and Samsung have all got into the action.
However, now property buying with blockchain, smart contracts and non-fungible tokens (NFTs) is moving into the real world. This month property consultants West London City Lets launched a new sub agency ‘Tokenized Properties’ to facilitate the sale of a plot of land on the English coast using an NFT for the transaction.
They claim it’s the first UK property company to support the sale of land through NFTs. But what exactly is an NFT and will this type of transaction be the way forward elsewhere in the world? Estate Living looks at this unusual way of purchasing land.
What is an NFT?
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According to Forbes.com an NFT is a digital asset that represents real world objects like art, music, in game items and videos, which are bought and sold online using cryptocurrency. They’ve been around since 2014 and are a popular way of buying and selling digital artwork and apparently now can be used to purchase land.
The NFT market has now ballooned to $41 billion in 2021, which is significant if you compare it to the conventional art market which stood at around $50 billion, Businessinsider.com points out.
By the sea
So, what’s the land deal all about? Tokenized Properties says it has partnered with tech firm Mattereum, NFT Agency Mint Collective and a team of investors to facilitate this first of its kind sale in the UK. It involves the sale of a prime beach plot in Milford-on-Sea in Lymington, Hampshire and is approximately 2,680sqm.
The NFT will represent he land and the contract and will not be connected to any planning application. The land has never been sold so no planning permission has ever been sought. However, the property company has included 3D designs to develop the land into an art gallery, multiple artist studio or a high-end café to inspire future investors.
‘NFTs being paired with physical assets is becoming increasingly popular within the crypto-sphere. We truly believe that this is the future of property transactions and are delighted to be embarking on this as our next adventure,’ says Idris Anjary, founder of West London City Lets and Tokenized Properties.
Removing bureaucracy and cost
Tokenised Properties claims on its website that selling the land as an NFT has its advantages as it will eliminate bureaucracy in standard property transactions.
When asked by Estate Living how this bureaucracy is reduced, a spokesperson responded: ‘Currently, buyers entrust lawyers and title insurance companies to certify deeds and search for encumbrances in public title records. This can often be a painfully long and expensive process.
‘Real Estate sales with Non-Fungible Tokens and Smart Contracts provide a way to bypass intermediaries and eradicate this process by storing the title deed information, legal rights, and guarantees on the blockchain allowing for a more efficient, cheaper transaction. We’re excited about the way that this technology will transform the property market.’
Mattereum’s founder CEO Vinay Gupta also pointed out the cost benefits: ‘Real estate is the biggest asset class in the world, and one of the most stable, particularly in geographically diverse portfolios. But the transaction costs are extraordinarily high, both in terms of diligence on the buildings and the mechanics of legal transfer of title.
‘Innovation in the space to make buying and selling real estate cheaper and easier is going to liberate a lot of dormant potential in the sector. We’re very happy to be working with West London City Lets to show the world what is possible!’
Could you lose money?
The UK is in danger of another recession as the cost-of-living crisis escalates and the country holds its breath as the new government headed up by Liz Truss rolls out its plans for dealing with rising energy costs, war in Ukraine and inflation.
While this deal may be revolutionary, investors may have concerns – particularly given that NFT sales hit a 12-month low recently after the cryptocurrency market crashed. The Guardian highlighted sales of NFTs totalled just over $1 billion in June after reaching a sales peak of $12.6 billion in January, according to research by blockchain data platform Chainalysis.
When Estate Living asked what would happen if the value of the NFT went down and the property value went up, a spokesperson reassures: “The NFT value is controlled by the holder by way of accepting a bid. The asset property value is not directly linked to the NFT value.
‘However, the land asset value does not depreciate. Property trend has shown that even in a recession property prices still go up in value. This is the beauty of our particular NFT sale. Whoever wishes to re-sell the NFT will simply bump up the price to reflect the asset value.’
