Tokenisation of the real estate market: Swiss BrickMark makes largest ever property purchase in tokens
2020 has started with a bang.
Swiss real estate investment firm BrickMark announced that it has signed an agreement to make the largest property purchase ever made using tokens. The building has a prime location ̶ Zurich’s Bahnhofstrasse ̶ with the total transaction valued at CHF 130 million.
In the latest episode of #FinancialFox, crypto guru Stefania Barbaglio talked to Stephan Rind, CEO of BrickMark, about this pioneering transaction and the impact of such a deal on the blockchain industry.
Founded 18 months ago, BrickMark is now a member of EPRA (European Public Real Estate Association) and has already earned the position of leading blockchain real estate investment firm. The company is combining the asset value and profitability of this asset class with the technological possibilities of smart contracts in blockchain and tokenisation to create a more efficient “form of capital designed specifically for the needs of today’s global institutional investor,” said BrickMark on the announcement.
BrickMark sees this transaction as the first of a planned large-scale international real estate portfolio . The tokens will be built on the Ethereum blockchain and will make use of smart contracts to establish rights and entitlements of the token holders. “The market was waiting for a transaction of this size,” says Stephen.
As for the high value of the purchase, Stephen says that ‘it is about trust, long-lasting relationships and track record’ and that the seller company RFR was a idealgreat international transaction partner.
Dr. Alexander Koblischek, Managing Director of RFR Management GmbH, said: “We gladly accepted the BrickMark tokens as part of the purchase price. We assume that digital financial instruments will also significantly gain in importance in the real state sector in the future.”
The BrickMark team has long-term experience in investment and real estate management. Two years ago, they realised the potential of blockchain in the industry.
“Real estate is the biggest asset class in the world and only 5% of all real estate investment is available for public investment through shares, bonds or fund units. The rest is locked in the hands of private investors. BrickMark tokens or other tokens that follow our concept are able to unlock this value and give access to these properties and wealth to people who haven’t had the chance to invest in prime properties in top locations around the world.”
Stephen believes this transaction is the first stage of BrickMark’s growth trajectory towards building a portfolio of high-quality properties.
Beyond tokens and smart contracts, blockchain technology can have other positive impacts on the real estate industry, especially in the developing world where land registry remains an issue to be solved. In many developing countries, property records are vulnerable to inconsistencies, as well as issues like tampering, damage, and loss, mainly due to the lack of a suitably secure system for land governance. These issues lead to vast areas of land ending up locked and unproductive.
The use of distributed ledger technology can streamline land and property records, reducing expropriation risks, facilitating market transactions, and unlocking access to finance, says the World Bank.
Watch the interview:
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