It is difficult to make the statement that real estate investing is overhyped when it constitutes the largest investable asset class in the world, and knowing for example that the size of the professionally managed global real estate investment market increased from $7.4 trillion in 2016 to $8.5 trillion in 2017, according to MSCI.
Perhaps real estate is more misunderstood than overhyped?
We no longer live in an era where anyone can go shopping for properties like we do for clothes and leverage debt to the brim, knowing our rental income will always outweigh the debt service and capital appreciation will continue to grow at a rapid rate.
To achieve double digit returns nowadays in developed markets, one has to have access to a large capital pool and be ready to lock up that capital for 5-10 years. Real estate investing may be seen as overhyped due to the lack of opportunity to take part in these superior returns and most companies that state they have delivered 10%+ returns are institutional investors or well advised HNWIs: those with deep, deep pockets.
But ‘Investors’ should not be limited to solely big players but also include your everyday accredited Tom, Jenny and Harry investors who otherwise would not be able to meet the capital constraints of private equity real estate (PERE) fund investing.
Enter Blockchain technology.
Thanks to blockchain technology, small and big real estate investors can easily access innovative benefits, such as:
- Fractional ownership: minimum investment required are much lower ($1 instead of $250k to $10mios for traditional PERE funds). Therefore a broader investor mix is invited to sit at the table, with new categories of investors like millennials, or people based in emerging markets or or countries subject to (hyper)inflation like Turkey, Argentina or Zimbabwe.
- Enhanced liquidity: no more 5 to 10-year lock-up period since trading are open 24/7/365.
In Leaseum Partners’s case, through a Security Token Offering, the real estate investment manager offers a tokenized PERE fund of stabilized and income producing portfolio of US Real Estate, focused within the New York City commercial sector and aiming to deliver 10-12% net annual returns.
Blockchain technology opens up the real estate market to a much wider audience of investors and creates a new real estate investment sector to be ‘hyped’ about.
CEO TeamBlockchain Ltd