Understanding the growing trends of real estate in the age of blockchain and crypto
4 min read
Cryptocurrency has evolved from being a niche digital asset to being a mainstream financial tool, easily applied to the real world. One of the industries that has been experiencing a real revolution because of crypto has been the real estate industry. Investors are now leveraging blockchain technology, crypto payments, smart contracts and DeFi to gain greater access to global real estate markets.
Take Australia, for instance. Research has shown that at least one out of three Aussies is interested in crypto. Only recently, a couple in Ballarat, instead of working to convert btc to aud, decided that they were only accepting Bitcoin payments for the sale of their land. They did this in a bid to reduce the middleman costs, and reducing the time lost to real estate agents and bank operations.
In a recent survey, Janine Grainger, the CEO of a popular crypto exchange in Australia, said that crypto is gaining cross-generational appeal as the dream of home ownership becomes increasingly unattainable. This is true, especially for the younger generation. However, the integration of crypto into real estate is making things easier.
For example, tokenisation allows people to own fractions of real estate in the form of digital tokens.
More of this will be explained below.
Crypto-backed mortgages
Today, companies are bringing in the concept of using digital assets like Bitcoin or Ethereum as collateral to secure loans for purchasing real estate. Companies like Milo and Figure are leading the charge in this emerging trend offering 30-year loan terms. By the first quarter of 2025, Milo had given out crypto-backed mortgages of over US$250 million. In fact, Milo gives up to 100% financing on home purchases with loans up to US$5 million.
By using digital assets as collateral, clients are given the opportunity to invest in real estate while at the same time taking advantage of crypto appreciation. Another advantage of these mortgages is that since you don’t have to sell your crypto, you do not have to pay the taxes that are associated with the sale of an asset.
Tokenisation of real estate
Tokenisation has been around for as long as blockchain technology has been around with estimations by McKinsey showing that the value of tokenised assets might reach US$ 5 trillion by 2030. According to a report by Boston Consulting Group, the market for real estate tokenisation was valued at US$2.7 billion in 2022. The same report recorded that with its current growth trajectory, the market could reach US$16 million by 2030.
Tokenisation happens by dividing real estate into fractions and automating the process using smart contracts. The property owner decides how much the property can be divided and how big the portions can be. Afterwards, the property is up for purchase, bit by bit, by either one investor or many investors. For example, if you have property worth $200,000, you could portion it into 200 tokens worth $1000 a piece. This makes selling of property almost similar to crowdsourcing, where you don’t have to wait for one prominent investor. Rather, 200 or fewer small investors can do the trick.
In an interview, the co-founder of Sabai Ecoverse, Vadym Bukhkalov, said that digitalising real estate reduces market barriers, increases transparency, streamlines processes and augments liquidity in the real estate sector. Sabai Ecoverse is a company that aims to democratise real estate investments for a wider audience who might have little access to large sums of money that are real estate worthy.
Smart contracts for transactions
Smart contracts have been playing a crucial role in real estate transactions by acting as a marketplace that warrants the correct execution of agreements. With smart contracts, you don’t need a third party, as the smart contract automatically conducts the deal. For example, if Jane wants to sell her property, she creates a bid for it using a smart contract. The smart contract then finds an appropriate match and links the buyer to the seller. It also digitises the property and transfers the ownership of the property in exchange for the asset value of the property. Now, once the smart contract is begun, it cannot be altered until the transaction is well recorded on the blockchain.
The advantages of smart contracts are unmatched. For example, since there are no intermediaries involved, the cost of transactions is lower than traditional ones. For traditional transactions, you have to involve lawyers, brokers, banks and other individuals. All these increase the value of the closing deal. Smart contracts reduce this lengthy process of buying and selling property by replacing it with rules defined by code. For example, in 2021, a penthouse in Miami was sold entirely in crypto in a deal that took less than 10 days. In real estate terms, for such a huge deal, this is technically an instant transaction. Normally, real estate deals take somewhere between a few weeks and even years.
Another advantage of smart contracts is transparency and security. Since real estate involves significant values of sensitive information and financial assets, a small mistake could lead to fraud or cyberattacks. For example, Group-IM’s analysis reported that at least 54% of real estate professionals in the US reported at least one attempt at seller impersonation fraud in a period of 6 months. 77% of them had noted an increase in the cases. However, with smart contracts, you can leverage blockchain’s cryptographic technology to ensure security and transactional integrity.
As we wrap this up, you can clearly tell that the use of crypto and blockchain technology is really having a major impact on the real estate community. The presence of crypto-backed mortgages, smart contracts and tokenisation of real estate is proof enough that there is more in crypto than meets the eye. In the coming years, we are ready to see how far the crypto world can impact real estate.
