Future of the Collaboration between NFTs and Real Estate Industries

Non-fungible Tokens (NFTs) after empowering and boosting the tradeoff of various artworks are now getting popular in the real estate sector as well. The increasing blockchain ecosystem across the real estate industry is boosting the popularity of NFTs to tokenize virtual or real properties. A blockchain ledger developed by any top NFT development company of properties is maintained by responsible parties and NFTs are used to either prove the ownership or to make the trading part easier.

Now, NFTs and real estate are divided into two main segments of the tokenization process- Entire Asset (EA) and Fractional Ownership (FO). Here’s a little bit about these types of tokenization-

• Entire Asset (EA)- As the name gives it away, this real estate NFT tokenization takes the entire deed into the consideration and converts it into an NFT. However, in the real world, it is still a complex process to achieve due to the low popularity of NFTs in the real estate industry, government compliance, etc.
• Fractional Ownership (FO)- In this case of real estate NFT projects, owners can divide properties into multiple NFTs to invite multiple parties to buy portions of properties. For example, apartment buildings can be divided into multiple tokens representing each apartment, and interested buyers can purchase them easily in the form of NFTs.

How does NFT real estate work?

Well, as mentioned above, NFTs represent the ownership of real or virtual lands. There are certain legal requirements depending on the region of the owner that has to meet to convert deeds into NFTs. If your regulatory bodies support digital real estate NFTs, then the NFT minting process can commence. NFT minting refers to the process of uploading documents, deeds, pictures, etc of properties on blockchain servers to convert them into NFTs.

Now, in the future, the commercial real estate, NFTs of properties will be auctioned or sold just like NFTs representing other contents. Interested buyers can bid on properties and the winning bidder will get the property and NFT ownership.

The best thing is that for commercial properties such as shops, lands, etc, NFTs can work amazingly especially to keep a track of all businesses and owners that owned these commercial properties in the past.

Possible challenges that the real estate NFT projects can face

The digital world is filled with challenges of many kinds. And as NFT real estate projects are quite at an early stage, we still can only guess what problems might occur when the trend gets common across multiple countries. Some of these real estate NFT marketplace challenges that we could think of are further discussed for your reference-

1. Cyberthreats

The NFT world continuously witnesses attempts of cyberattacks. These attacks are often done by phishing or through malicious software to access user wallets. Now, property NFTs can face these attacks if cyber attackers want to steal sensitive information, destroy documents, etc. Blockchain, however, is an incredibly secure technology and that is why the majority of financial institutions find it reliable. So, if security compliances are met properly and users are well-trained against these cyberattacks, the future of property NFTs can be much safer.

2. Government regulations

To normalize NFT ownerships of real lands, governments will have to release and apply compliance guidelines. However, as real estate is one of the slowest changing industries, it is going to take time for governments from many countries to adopt the technology and modify regular property ownership procedures to involve real estate NFTs.

3. Awareness

The real estate NFTs are also required to be introduced to the masses properly so their benefits can be promoted. There are many ways to do that including social media campaigns, informatory videos, ads, etc. It is also crucial for people to understand the benefits of blockchain technology, in general, to be more interested in trusting it with their important documents.

Future of NFTs in the real estate industry

NFTs are the future for many industries indeed, but for the real estate industry, it is still quite a long journey for the world to normalize real estate NFTs. However, when governments start pushing the idea of NFTs to make more citizens aware of the benefits and when there are proper legal and regulatory bodies existing, NFTs in real estate might see a boost in their existence.

Future of NFTs in the virtual real estate market

Well, there are companies like The Sandbox that are existing to sell virtual real estate to interested organizations or individuals. Already, businesses are allowed to buy virtual lands on technologies such as Metaverse and establish virtual stores for Metaverse or VR users to explore.

Some projects such as Star Atlas have also adapted this strategy and they offer virtual lands in an intergalactic exploration experience. Business owners can establish stores for players exploring galaxies and planets to stop and shop there. Metaverse is one of the top examples of digital real estate due to its ability to provide virtual space to interested buyers. According to a CNBC report, in 2021, Metaverse’s real estate selling value touched a combined threshold of $501 million. So, you can imagine the increasing popularity.

Now, as these stores will increase in number, the demand for NFTs will also boost as decorative items, player skins, etc. Also, real estate NFTs play a crucial role in protecting the ownership of virtual land owners.

Wrapping up

Well, the NFT real estate is continuously evolving and there are many changes expected for the industry to experience. Ultimately, all these evolutions are focused on providing users with virtual worlds where they can shop, explore, travel, and experience as if they were in the real world. Except, virtual worlds will have more possibilities and imaginations.

The increasing cooperation between NFTs and real estate industries will also improve the security factor of properties and it will lead to a world where tracking previous owners, settling legal disputes, keeping deeds safe, etc will be much easier.