RealX, a platform for fractional ownership of properties held as Digital Asset tokens, announces completion of its first commercial transaction that recorded property co-ownership on Blockchain and token holders being issued property tokens after due registration process of a property.
RealX & Algorand team
The world of investing, often seen as the gateway to prosperity, has historically been an expensive and complex affair, discouraging ordinary individuals from participating. The lack of technical knowledge has compelled many to rely on others to invest, further entrenching wealth concentration among the elite.
This has been more profound in the case of property investing. Property investing has always been a high value, high involvement investment with a lot of friction and inefficiencies. While all other assets are available digitally and come with the ability to invest in smaller more affordable amounts today, property is one asset that is yet to see this transformation.
Manish Kumar, Co-founder and CEO of RealX says, “Lack of access to good opportunities can be attributed to be a big contributor in the wealth gap that we see increasing every year. The only solution to this is to bring legitimate products that so far were inaccessible to most of us and make it accessible to everyone digitally and in affordable amounts. This is the core of what we want to do at RealX and we wanted to do it in a way that falls within the extant legal ambit as well as leverage best of technology for the benefit of our customers.”
In recent times a positive change has been brewing – the wealth landscape has undergone a remarkable transformation. Technology, particularly the rise of Web3 and blockchain, has played a central role in reshaping our societal wealth systems. Barriers have been shattered, and the flow of money is being democratized, making financial products and services more accessible to all.
During this revolutionary shift, Real World Digital Assets (RWA) have emerged as a game-changer. These assets leverage blockchain technology to create digitally generated certificates of real-world assets, enabling fractional ownership and investment.
The Challenge
However, there remained a legal gap between the ownership of the Real-World Asset and the Digital Token holders. There was lack of legal linkage between the two and this has been the biggest challenge in the product evolution preventing it from reaching its full potential. In case of immovable properties or Real Estate, the laws and processes involved make this challenge more formidable.
A significant milestone
RealX has been working on solving this challenge and to so in a way the advantages of blockchain can be leveraged. It has taken the company more than a year of effort to develop the full solution, deploy it and complete a commercial transaction on the model, especially with external investors putting the full model to test.
This is a significant global milestone in Real World Digital Assets space. Real World Digital Assets (RWA) are considered the most acceptable frontier for development of Blockchain as it converges the traditional assets and traditional finance with the advantages of Blockchain. Dushayant, an investor who invested in the first transaction, says, “In a business known for hassle and deception, RealX with their Ease of Doing Business married with technology has come up with a whole new investment class. The investment process is completely paperless and quick at the same time the due diligence by RealX saves a lot of time and effort for the investors. Wishing RealX and their investors well in their future endeavours.”
Core Solution
RealX had already introduced an industry leading innovative solution called Registered Co-Ownership (RCO) as its first product wherein it offered a registered property deed with single registrant (as Principal Custodian) on behalf of all co-owners investing in the property.
The current product is an extension of the earlier one but with the advantages of blockchain, smaller investment sizes and easy transferability and greater customer control. It now offers blockchain based Property Tokens (NFTs) that will provide the token holders direct and proportional beneficial ownership of the property. The Property Tokens will mean a proportionate direct ‘Right to Registered Co-Ownership’ (RRO).
Saya Neera Inamdar, Co-founder and COO of RealX, “Our product is pretty simple to understand has been developed in line with similar products in the market, so that our customers can understand it easily and it can maintain its legal sanctity as well. Most of us understand Futures and Options (F&O) products in commodity (and equity) markets. In the commodity markets, there is an Option to delivery of a commodity; At RealX the Token holder holds a similar Option note to become a Registered Co-Owner. While depositories are registry for regular F&O, at RealX we have deployed public Distributed Ledger Technology as a registry.”
Converging the world of Blockchain with traditional finance and a difficult asset class like properties and various laws impacting them is a global first feat achieved by RealX.
Manish says, “We have been working very hard and for a long time to achieve this feat. The encouragement came last year when the central government notified that transfer of NFTs that are linked to a tangible asset will not come under Crypto Tax. Plus, they and the regulators have time and again clarified that they are in favour of good and legitimate uses of Blockchain. We knew it was time to get this product out. There is a lot of Intellectual property that we have developed in building this solution.”
The co-ownership construct of RealX, making token holders direct beneficial owners of a property, is very different from all other fractional ownership platforms operating globally and uses base property laws available to create a compliant model to existing laws even as the solution remains one of the most innovative in its domain.
Pavan Adipuram, a startup founder himself and an investor in the property transaction says, “Democratisation of real estate is the need of the hour in a growing economy like ours. Making retail investors part of this age-old asset class in a new way with all checks and balances in place is key. And Blockchain helps us to do exactly that. I’m happy that we are moving one step at a time in that direction. This is a new beginning and I wish the team at RealX the best to scale this in the right direction. Looking forward.”
There have been others who have tried to achieve fractional ownership of properties by issuing tokens. However, at the base they are still using the SPV method, and the tokens represent the securities. These constructs will always be constrained by regulatory and company law requirements and be restricted. RealX construct breaks all these barriers and gives direct beneficial ownership rights to the people investing to buy the tokens.
Win-Win Proposition
RealX is also the only player to operate a strict marketplace model and not pursue deals where they act as agents of sellers by taking mandates from them.
The customers can browse through a wide variety of properties. They can choose which one they want to invest in and how much. The properties curated by RealX will vary in terms of their rental yields, end-sale capital gains expected. Customers can create a very interesting and personalized portfolio of assets as they keep investing comprising of different property types, property stages and tenancy.
We are seeing very good traction within the developer and the channel partner community. RealX commercials are light and it acts as an enabler for everyone. This leaves enormous room for everyone to structure their offering and outreach. The Developers are free not just to onboard their properties, but also to set their own pricing and promotion strategy. For the channel partners, this has opened up a new revenue stream.
Devang Sheth, Co-founder and CBO of RealX says, “It is said that 90% of all millionaires made money through Real Estate. However, quality Real Estate was expensive and therefore non-participative for most common people. We are happy to make it affordable and accessible to everyone. This is a win-win situation for customers, developers, and other intermediaries involved in the process. Also, most other players create an SPV to hold the asset and issue securities of the SPV, some even tokenizing the SPV securities. This is a very compromised solution from investor protection side. We have stayed clear of such approach, and this gives a lot of comfort to even our real estate community.”
Asset Managers, the super-broking entities accredited by RealX, are associated with each property. These Asset Managers are the real face of the property for all practical matters and day to day supervision plus negotiating tenancy issues.
Algorand DLT
RealX evaluated a range of leading Blockchain platforms before deciding on its deployment. The challenge was that most Blockchain platforms were built for cryptocurrency applications and their native structures had inherent challenges making most of them unfit to deploy non speculative real-world assets. Algorand is a next generation Blockchain technology and was better suited for such applications. Also we received very good developer support from their side, supporting our unique requirements.
Mohita Gupta, India Project Lead, Algorand Foundation says, “At AlgoBharat, Algorand Foundation’s India initiative, we are excited to drive Algorand’s innovation and adoption in the blockchain space within the dynamic landscape of India as we strongly believe that India has the best devs and the most innovative builders and founders looking to solve complex real-world challenges. Through our relentless commitment, we aim to empower such developers, enterprises, and the community to harness the potential of Algorand for creating real-world solutions just as RealX is doing through its platform which is built on Algorand. RealX’s approach to fractional ownership and property tokenization showcases a remarkable leap in the realm of real-world asset digitization. Their platform democratizes access to high-value properties with direct ownership rights which is a testament to their commitment to reshaping the future of investment and ownership. We’re dedicated to fostering collaboration and driving meaningful impact in Bharat as we pave the way towards a decentralized and inclusive future.”
Way Forward
RealX will open for public access in a few weeks’ time. However, starting today, we are open to engage with Developers and other property sellers to onboard their properties. We will also be onboarding channel partners and new Asset Managers for some time. Meanwhile, customers can join the waitlist and may be given early access in batches before we open for public.For more information, please visit www.realx.in.
