The past year has seen NFTs become a massive hit with the Web3 community, and some record-breaking sales have grabbed the attention of mainstream media.
Non-fungible tokens (NFTs) seem to be in the news almost every day. From record-breaking prices for NFT art to NFTs used as marketing tools for popular fast-food chains, the trend seems to be catching on. As a gimmick or collectible (sometimes both), NFTs are easy to implement and execute, but it’s a much bigger challenge to apply them to slow-to-change industries such as real estate.
In the past year, experimental uses of NFTs have been popping up in the industry. Everything from building projects to lending is being tested as NFTs by various companies looking to improve processes and speed real estate transactions that can often be complicated by the many layers of document verification involved
When dealing with new technology, there is always a level of potential risk. It is important to look at the downsides as much as it is important to examine the potential advantages. While NFTs could offer a solution to unlocking capital in a property, where would the legal right to control the property actually reside? Could an NFT token holder force someone to sell his or her home if the holder owned enough of the tokens? This would put those living in the property at unacceptable risk. On the other hand, if the property isn’t actually controlled by the token holders, could the residents remain in the property forever? This would prevent the investors from ever benefiting from the capital appreciation.
In terms of investment real estate, would NFTs be much different than the crowdfunding sites that allow you to invest in property? These sites have had mixed success, and many have closed down, causing issues for investors. It remains to be seen if NFTs would actually avoid such intermediaries, as there would need to be someone managing the property. For this to be overcome, there would need to be a decentralized mechanism for appointing such representatives.
Finally, NFT mortgages might come with their own set of issues. If a borrower falls into default, who can collect on the debt? It would be a problem if each creditor could collect individually, both for the lender and the debtor. On the other hand, if only one party can collect, this would make these types of mortgages not much different from peer-to-peer lending platforms and, therefore, susceptible to the same problems of centralization.
Future of NFTs in the Real estate industry of Pakistan
As with anything new, NFTs in the property space will have to work through a number of issues. That said, there is a great deal of potential as well. While widespread adoption of these technologies may be some time away, we all need to be aware of them so we are ready to take advantage of them.
So, how can you prepare for the imminent changes to the commercial real estate industry? First, if you have read this article, you are off to a great start. Education about this space is key. Without a fundamental understanding of blockchain technology and NFTs, it will be difficult to understand all of the benefits that the technologies will bring to commercial real estate.
Next? Get to buying. There’s a learning curve when it comes to buying and selling NFTs. The only way to learn is to practice. Buy an NFT, and then sell it. Familiarizing yourself with the process will pay dividends in the long run.
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