This interview is part of our new Blockchain In Real Estate series, where we interview the world's leading thought leaders on the front lines of the intersections between blockchain and real estate.
In this interview we speak with Karl Vään, CEO and co-founder of BitOfProperty, to understand how his company is using blockchain to transform the real estate business, and what the future of the industry holds.
1. What’s the story behind BitOfProperty? Why and how did you begin?
KV: The idea of BitOfProperty was born out from the founders’ challenge to start investing into real estate. Knowingly, property is an expensive asset class and one needs a lot of capital to start making its way in the real estate investment space. In addition to that, unlike any other asset class, real estate requires constant managing to make sure that the property is well maintained. Lastly, doing research about properties and locations where to buy it takes a lot of time, plus you have to find time to search for tenants.
All this doesn’t sound very appealing, but at the same time investing in real estate is relatively safe and simple to understand. This was the reason why we started BitOfProperty, to reduce the hassle (don’t require a lot of capital, information & research provided by the platform) for investors to start making property investments like they do with other investment asset classes. Also, unlike the traditional way of investing in real estate, we make it passive for the investors, as they don’t need to manage the property nor deal with tenancy matters.
We started off actually in Singapore, where we did our incubation phase with our first investor Spaze Ventures. After proving the concept and building out our MVP, we raised a larger round from the lead investor LIFULL, a Japanese property portal giant that is now expanding its reach aggressively outside Japan. Having a strong and strategic partner as a shareholder is a great recognition to us and helps us a lot by making our way to the masses. Today, we have onboarded talented people from all around the world and we are ready for the next challenges that will take the company to the next stage.
2. Please describe your use case and how BitOfProperty uses blockchain:
KV: We are currently in infancy stage of implementing blockchain and testing internally its value to end customers. Today, we are tokenizing properties that are listed on our platform and all investments are recorded on the blockchain. This is preliminary work for us to see how blockchain behaves and also to clear some of the smaller issues that we wish to prevent in the future. As the vision of BitOfProperty is to build an International Property Exchange (IPEX), which is an ecosystem of various platforms from different countries/jurisdictions, we believe that blockchain can have a huge impact on tracking, bringing transparency and facilitating ownership movements that happen cross-platform. We are gradually bringing more and more blockchain related aspects to the platform for end customers to view and engage with. Today, most people don’t fully comprehend what the blockchain is and how they can benefit from it. We believe that this falls on us to bring more clarity and education to our customers, thus we are slowly building this in our app as well, as it takes time for our customers to get used to it.
3. Could you share a specific customer/user that benefits from what you offer? What has your service done for them?
KV: Customers on our platform directly benefit from receiving monthly rental income that the properties generate and also, they can take advantage of the property price movement. The latter can happen either when the value of the property is going up and customers can sell their shares at higher price or there is an increased demand of shares in the respective property, then customers can sell their shares at a higher price on the marketplace.
Apart from putting your money to work and earning passive income, customers don’t have to worry about managing the property and dealing with tenants, as this is taken care of by us. Not to mention market research, which we have done beforehand and provided it to the customers in a simple and concise way on the platform. All this makes investing in property affordable and easy. Customers can diversify their funds and balance their investment portfolio with a new set of asset class that they did not have access before or it was too much trouble for them.
4. What other blockchain use cases in real estate are you excited about?
KV: One use case I’m excited about is Security Token Offerings or STOs. I do see a lot of potential in this field, as it has many valuable characteristics. Firstly, it brings back credibility, since there was little or no regulation behind raising money with ICOs. Secondly, it should fasten the execution process as it cuts out middlemen. Lastly, it increases liquidity since the creators can present their tokens in internet, then it exponentially increases the potential number of investors.
Second one that I see that can have significant impact in the real estate space is putting land registry on the blockchain. In many countries there is an issue with ownership tracking and having clear records in land registry. I do believe that blockchain can help out here and it is then not only about having clear records, but also about affecting purchase and sale agreement executions, property loan financing etc. in the future.
5. Where will BitOfProperty be in 5 years?
KV: The vision of BitOfProperty is to develop an international real estate investment ecosystem that consists of various connected platforms in different countries/jurisdictions. Connecting the platforms brings two key benefits. Firstly, platforms share deals, which means that investors have more variety of properties to invest in and they don’t have to go to another platform to do it. Instead, all is happening on their home platform, as all the deals are mirrored on the platforms in the ecosystem. Secondly, connecting platforms increases liquidity in the real estate investment space. Investors don’t have to rely exclusively on the platform’s capability of providing liquidity, instead investors can buy/sell shares cross-country and cross-platform with other investors without leaving their home platform.
Our goal is to help people get closer to financial freedom and building out such a technological solution that helps to create this is our way of approaching it. Thus, we aim to be the biggest real estate investment ecosystem in Europe in 5 years.