Today marks the launch of Vesta Equity, a real estate investment company with a twist.
The platform bills itself as the world’s first peer-to-peer marketplace for real estate-backed NFT assets.
It allows homeowners who have bought their property outright to sell off a portion of it as a tokenized, fractionalised, NFT — which is packaged as a security.
CEO Michael Carpentier, who began working on the concept a little over two years ago, says the advantage of the model is that you can access the value of your home without having to remortgage it or sell it.
This also means an investor anywhere in the world can theoretically benefit from the appreciating value of real estate if prices rise.
Two frenzies in one
The platform’s launch comes at a frenzied moment in the real estate sector. According to the National Association of Realtors, as people looked to move amid pandemic lockdowns, the median home sale price for a US home was $346,900 in 2021, up 16.9% from 2020. This was the highest on record going back to 1999. Home sales had the strongest year since 2006, with 6.12 million homes sold, up 8.5% from the year before.
“Investors can participate by purchasing into the future appreciation of the property and build a portfolio of real estate assets like they do with stocks,” says Carpentier.
People interested in investing can browse a searchable marketplace, make offers for desired assets, and “leverage liquidity” on the secondary market, or in the event of the traditional sale of the property.
Vesta argues that this construction democratizes wealth creation by providing unhindered access to the value locked into the real estate market.
Similar arguments have been made before by crowdfunding players in real estate, however the use of NFTs has been brought into play here due to the speed of execution on Vesta's blockchain of choice, Algorand.
Carpentier says the choice came down to the fact that Algorand is immune to forks, gives instant finality on sales, which usually clear within four seconds, as well as having low fees.
The platform is looking into future models where an NFT could be used to buy an owner out of their mortgage or constructions for first-time buyers looking for options other than debt financing.
“The model will evolve and adapt to scale-up to other use case applications,” Carpentier said.
Vesta expects to have spread across the US within 12 months, after an initial launch in California. Properties in a number of other states will also be available on the platform on launch.
“There will be an education process with homeowners where we will have to explain to them the proposition,” said Carpentier.
The proposition for owners
One such property owner, who has listed his Las Vegas home on the platform, is Mike Pitcher. As someone who had dabbled in real estate investments in the past, Pitcher had been looking for a blockchain solution.
He argues that from a buyer’s point of view, this structure is beneficial because you can buy smaller portions of the asset, which is not possible under normal circumstances in real estate.
So far, NFTs have been focused largely on tokenizing digital assets, however a recent wave of projects have set their sights on real-world applications.
Earlier in February, Propy, a real estate blockchain company, sold its first property in the United States.
The sale drew attention for the fact that, as part of the deal, the owner receives a non-fungible token as digital proof-of-ownership.
As noted by the Tampa Bay Times, the condo was previously owned by Leslie Alessandra, founder of a crypto company called DeFi Limited. Among other properties, the sale of a condo in Florida under similar conditions is forthcoming.
Carpentier says that he doesn't want to exclude potential investors or people interested in the market by only pushing the blockchain angle of the product. It has to be accessible and usable first, he said.
"You don't care about the technology in your phone -- whether it's 5G or 4G, you don't care how the camera works," he said. "You just want to know that it works, and that's exactly the approach we've taken."
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