NFTs attract various spheres, investors, artists, or just basically curious people. Non-fungible tokens have caught attention among a number of social circles, where people are trading digital assets. Do NFT’s have a place in real estate and is the NFT craze coming to the NFT Real Estate as well?
The growth of NFTs in the virtual real estate
There have been basically several “virtual” real estate sales. For example, the digital “Mars House” recently sold for $500K, to which we will return later. There is also a digital real estate twitter page that is selling virtual properties. Moreover, we are going to mention virtual role-playing games such as Superworld, where digital real estate is both bought and sold. The question is, is there an opportunity to utilize NFTs in the physical world?
Well, yes — because the blockchain technology ERC721 and related standards enable frictionless, secure trading of digital assets to occur anywhere in the world.
Henry Elder, President of IBREA (International Blockchain Real Estate Association) claimed:
“Imagine I could buy a house as an NFT, and instantly borrow against the NFT using DeFi or TradFi products with a 2-4% interest rate. Why would I ever go through the brain damage of using Wells Fargo WFC +0.8% or Chase, with their months of nightmare due diligence?”
The real estate industry is actually slow in adopting new technologies. However, the very nature of real estate makes it ideal for blockchain applications. It is immobile and easy to find by third parties with blockchain-based claims on it as collateral or otherwise.
Real Estate NFT in the industry
There are interesting challenges to solve for real estate NFT to play a significant role in the industry:
- The issues that crypto tokens face such as hacks to smart contracts or lost passwords/cryptographic keys. Potential rules for NFT transfers in real estate should consider the option of locking the money but not the asset itself to avoid unclaimed property rights.
- Crowdfunding via NFTs is one of the use cases but it sets the need of filing with the SEC. So either secondary trading of NFT securities will become more user friendly- Otherwise, will the regulations need to change before fractional ownership via crypto becomes a matter of course.
It is much easier to transfer 100% property rights for a real estate asset via blockchain without triggering the securities law violation. Properties have been sold via blockchain for several years now.
How could NFT real estate work?
There is a legal preparation for the sale of a property as an NFT, firstly. Then an NFT is minted which includes descriptive and legal data about the property. It involves paperwork, disclosures, reports, image files, and even videos. NFT is a proof of ownership. Legally, whoever has possession of the NFT, owns the property.
Virtual Real estate NFT valuation
The value of the virtual properties will depend on as more people enter the market. As well as how things are structured moving forward. Some domain names go for millions, others can be bought up for $10. What if virtual properties were modelled the same? People could own parts of landmarks, or choose a handful of properties located globally. Basically some costing more than others to hold but nonetheless creating an ecosystem of exchange of real estate assets.
NFT house sold for $500 000—and it’s not real
A buyer native from Toronto has spent more than half-a-million dollars on a digital house. With the first sale of an NFT domicile. It is one of a series of head-scratching purchases of digital properties for astronomical prices.
The “Mars House” was created by Krista Kim, a digital artist who has sold it for 288 Ether, a cryptocurrency that has a value of $2,492 at the time of press. But at the time of the sale, the U.S. dollar amount was worth $514,557.79.
The digital artist designed Mars House as a “light sculpture” that is inspired by Kyoto’s architecture, which was built for zen consciousness of the community. She wanted to expand on this tradition by using the digital age.
The house was designed to reveal a healing atmosphere. It was conceived as an open plan and all floors and ceilings, including furniture, were envisioned in glass.
All physical furniture pieces in Mars House will be made of tempered printed glass in Italy. And the collector may commission them as NFT physical pieces and fabrics which will be made of renewable materials. Colorfully hued gradients made by the artist cover the floor and ceiling.
Krista Kim said:
“I want this space to showcase my passion for meditative design, a new definition of avant garde luxury for the digital age.”
The auction site states:
“Kim ventured into NFTs while exploring meditative design during quarantine; her hope was to use the influx of digital life as an opportunity to promote well-being. Composed entirely of light, the visual effects of her crypto-home are meant to omit [sic] a zen, healing atmosphere.”
Kim co-worked with the Smashing Pumpkins guitarist to create music for the virtual home’s environment.
Mars House is surrounded by floor-to-ceiling windows overlooking a mountain landscape. Although, it is not clear if it’s supposed to be the red planet in the background or not, what could insinuate the name of the house.
Where can you get an NFT Virtual Real Estate?
SuperWorld is an NFT startup that sells virtual real estate in a specific environment. It is called the metaverse—an exact picture of a real world, except that every property is linked to an NFT and tracked via the blockchain. This allows the SuperWorld’s users to virtually buy, sell and collect almost any property from the company’s catalog. It consists of more than 64.8 billion unique parcels of virtual land. Up to date the SuperWorld platform has sold roughly 5,000 virtual properties.
The SuperWorld virtual real estate platform is mapped over the entire surface of the globe, allowing users to purchase — literally — any place on Earth. From skyscrapers and stadiums to historical monuments and iconic structures including wonders of the natural world, when you step into SuperWorld, you’ll truly make a world of your own, as stated on their website.
NFT sales, while they’re baffling to some, have been red-hot lately. The Mars House NFT project is a noteworthy project at the level. We are curious about what the NFTs will bring you next. Stay with us and stay briefed with all the catchy stuff we will bring you regularly.
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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.