From blocks to blockchain: How NFTs are changing the real estate market for the better

In 2021, an apartment in Kyiv sold for $124,000. That might not sound like a groundbreaking or even newsworthy story, but this wasn’t just your regular studio. It was a non-fungible token (NFT).

The apartment, which was the first property to be sold using blockchain technology back in 2017, was owned by Michael Arrington, founder of TechCrunch. Arrington decided to sell the studio as an NFT to emphasize how these digital assets are reshaping the industry.

It was the first of many successful blockchain real estate deals that have taken place since, capturing widespread attention and drawing in buyers, investors, and the curious. 

Now, with NFTs moving into the mainstream and predicted to reach a value of over $210 billion by 2030, many are wondering: do real estate NFTs make a good investment?

A change in how we invest in properties looks to be just around the corner. Here’s what you need to know about NFTs for real estate, including how they work, the benefits they offer, and how you can buy them. 

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Below, we cover:
What are NFTs and how do they work?
How do NFTs work in real estate?
Concrete & blockchain: an innovative approach to building and investing in real estate
The road ahead
FAQs

What are NFTs and how do they work?

A non-fungible token or NFT is a digital token that acts as a representation of value, whether it be currency, digital, or physical goods. These assets represent ownership and are bought and sold online, typically with cryptocurrency.

NFTs exist on a blockchain, a distributed public ledger that records transactions. You’re probably most familiar with blockchain as the underlying process that makes cryptocurrencies possible.

Though NFTs have been around since 2014, they broke into the mainstream in 2021, during the Covid-19 pandemic, when digital culture took center stage. High-priced digital artworks and collectibles attracted media attention and public interest. People weren’t just buying a digital file; they were buying a piece of history, a status symbol, and, in some cases, a speculative asset.

Beeple’s “Everydays: The First 5000 Days” digital artwork was auctioned as an NFT by Christie’s in March 2021 and was sold for $69,346,250

How do NFTs work?

To understand how NFTs work, we have to first look at the concept of fungibility. 

Physical money and cryptocurrencies are fungible, which means they’re equal in value and can be traded or exchanged for one another. One dollar will always be worth another dollar, and it doesn’t matter which particular one you own. NFTs are different. Each one has a digital signature that makes it impossible for NFTs to be exchanged for or equal to one another—aka they’re non-fungible.

The real beauty of an NFT is that it’s programmable through an inbuilt smart contract—a self-executing agreement with the terms written into code. Think of it as a digital rulebook that checks itself. 

An NFT is created or minted from digital objects that represent both tangible and intangible items, including art, GIFs, sneakers, videos, properties, collectibles, or even tweets. In fact, Twitter co-founder Jack Dorsey sold his first ever tweet as an NFT for $2.9 million.

The first ever tweet on Twitter, sold off as an NFT by its creator

 

What makes NFTs valuable?

An NFT essentially proves that the digital or real-world asset it represents is genuine and unique. And since NFTs can have only one owner at a time, their value comes from their scarcity

Why is proving originality important? Because anything that exists in the digital world can be copied and shared an infinite amount of times. However, just like anything that exists in the physical world, there is only one original—even for digital assets.

Leonardo da Vinci’s “Mona Lisa”, for example, has millions of iterations—on magazines, posters, mugs, and more. And yet, there is still just one original painting—the one that da Vinci painted in Florence in 1503, which is currently on display at the Louvre Museum in Paris.

Despite its many copies (and the billions more that are still to come), da Vinci's original artwork will remain the most valuable. Similarly, NFTs attach value to assets by proving their originality in a sea of copies.

What are NFTs used for?

So far, most NFTs have appeared to be works of digital art or fashionable alternatives to cryptocurrency investments. But as we understand more about how they work and what they can do, NFTs are beginning to extend to other facets of life and business.

NFTs have a range of applications and use cases. Some NFT collections grant access to exclusive groups, online and in-person events, or unique merchandise. Others are being used to sell digital memorabilia and as a way for musicians to monetise their work directly.

With how versatile NFTs are, they’re soon likely to find new uses as the technology evolves, shifting from speculative trading to practical utility. Welcome to NFT 2.0.

How do NFTs work in real estate?

When you think “real estate”, what’s the first thing that comes to mind? If it’s sluggish procedures, high closing fees, and a lack of innovation, you’re not wrong. 

The real estate sector has long been associated with reams upon reams of paperwork and antiquated systems. Now, NFTs (and the blockchain technology they’re a part of) are replacing these outdated practices with modern solutions.

A real estate NFT is created by registering a real-life asset, either tangible (like a house, an office building, or even a hotel), or intangible (like patents, stocks, or intellectual property), on a blockchain. They transfer directly and simply between peers and come with a host of features and advantages:

    • Faster transactions: smart contracts used for real estate NFTs automate processes, making it a very efficient way to buy, sell, or invest in a property

    • Secure data integrity: all investments and transactions are secure, easily tracked, and verified by leveraging the strengths of blockchain technology that works round-the-clock

    • Transparent and accessible process: taking real estate records from a corruption-riddled and inefficient system to a transparent and secure record of ownership of properties, that cannot be tampered with or altered in any way

    • Better liquidity: NFTs offer a way to add improved levels of liquidity to a notoriously illiquid industry by making it easier for investors to access the real estate market and participate with smaller amounts of capital and greater flexibility

    • Less bureaucracy: depending on where and under whose jurisdiction the transaction takes place, buyers, sellers, and investors have the capability to deal directly, eliminating the necessity for intermediaries (such as banks and attorneys), extensive paperwork, or costly fees 

Generally, the process of investing in that NFT can happen either through tokenization or fractional real estate investment. They’re two distinct concepts, even though they may sometimes overlap. Let’s take a closer look at what that means for you as an investor. 

Real estate tokenization

Real estate tokenization is a process where the property rights, value, or cash flow of a real estate asset are converted into digital tokens on a blockchain platform. 

This process classifies these real estate concepts as Real World Assets (RWAs), a class of crypto tokens that represent tangible or intangible assets that exist outside the digital spectrum.

Why would anyone do that? Well, tokenizing real estate assets as NFTs creates a record of ownership and every transaction that they’ve ever been or will be a party to. This makes them more efficient to buy, sell, trade, and invest in while also lowering the risk of fraud.

Real estate NFTs can either represent fractions of the real estate property, the entire asset, or the rights to participate in the revenue generated by it.

Fractional ownership (FO)

This method of investment allows people to gain exposure to the real estate market with limited amounts of capital by breaking a property down into smaller, more affordable portions. 

Think of fractional ownership tokenization as a crowdfunding platform, which helps investors in buying shares. But, instead of money in a GoFundMe account, tokenization investors use NFTs on the blockchain for their transactions.

The fractional owners have a specific number of tokens representing their share in the asset. The tokens are also used to digitally map properties on the blockchain or to raise capital to develop investment properties.

Entire asset (EA)

Entire asset tokenization, on the other hand, requires the conversion of the actual property deed into an NFT. This poses problems due to the regulatory environment surrounding real estate investments. 

To fully embrace this approach, lawmakers need to pass legislation for creating a new asset class that allows deeds to exist in the form of NFTs. 

Fractional real estate investment

Fractional real estate investment is a process where investors purchase properties that have been divided into smaller shares or units that are sold at lower prices than if they were buying the entire property.

Some of the most popular real estate investment activities include: buying and renting residential or commercial property, developing and selling residential or commercial property, and investing in real estate funds or REITs (Real Estate Investment Trusts).

You can think of fractionalized real estate investing like a timeshare. But, instead of owning units of time, you own part of the property and earn passive income from rent and make profits from property sales, or by selling shares at a higher value than what you initially paid.

Both fractional real estate investing and real estate tokenization allow investors to own pieces of larger investments. The main difference is that tokenization takes place on the blockchain, whereas fractionalization uses physical currency. Which one is best for you depends on your financial situation and investment goals. 

"The tokenization of real world assets isn't a thing of the future; it's happening now. We estimate that the total market for tokenization by conservative estimates will significantly exceed USD 10 trillion by 2030." Pierre Samaties, Roland Berger Partner

 

Global consulting firm’s Roland Berger’s conservative forecast of the RWA market size

Concrete & blockchain: an innovative approach to building and investing in real estate

At Build21, we're dedicated to enhancing lives by building safe, modern housing and buildings—structures that are not developed solely for profit but also for the benefit of the communities that use them. And with one of the highest homeowners rates in Europe (95%), but over 40% of them living in overcrowded households, Romania is a great place to start. 

To do that, we need to democratize how Romanian real estate is financed. No more waiting for preferential contracts to be signed and exchanged, no more middlemen to slow things down. Just safe, transparent, and reliable investing into developments that stand out and also stand for something more. 

What we stand for

Here's the exciting part—we've developed a strategy that not only benefits residents but also investors like you. 

Picture this: real estate investment that is within reach for everyone—thousands of like-minded individual investors who will be able to make decisions about where to develop, with which architectural solution, and with what yield.

To make real estate financing accessible to everyone, we're tapping into the power of blockchain technology and DeFi principles. Our unique approach involves RWA tokenization via NFT collections that give investors access to the developer's returns.

By entering a joint venture with the real estate development companies behind each Build21 project, you secure your priority share of the profits generated from their sale. None of the trials and tribulations that come with property development; just pure profit potential.

By turning directly to individuals, our unique system empowers small- and medium-scale investors to take part in the profits that come with the development and sale of the real estate projects, without taking on any of the development costs. Everybody benefits:

    • Investors grow wealth safer and easier

    • Developers raise capital with more freedom and flexibility

    • People using what we build benefit from sustainable and health-promoting spaces

In our relationship with the Romanian real estate community, we are guided by the following principles:

    • Expert-led: we’re a team of architects, engineers, contractors, urbanists, sociologists, real estate developers, project managers and more, with over 20+ years experience in our fields.

    • Community-driven: experts, investors, users. We create real, dynamic communities that share a common vision: real estate investing where communities come together and users thrive.

    • Human centric architecture: we believe that the spaces we live, work, and spend time in have a major impact on our quality of life. Every Build21 project takes into account the mental health, physical wellbeing, and prosperity of those who use them.

    • Properties with purpose: we started Build21 so retail investors can get involved in real estate developments with affordable investments. Our goal is to offer one of Romania's best investment products, delivering strong returns and keeping associated costs accessible. 

    • Easy & simple: Build21 makes it easy to enter investment markets, regardless of wealth or location. You don't need to be a millionaire, risk your life savings, or be an expert to invest in real estate.

    • Real World Assets (RWAs): Build21 exists between two realms: real world construction and blockchain investment opportunities. We develop the buildings as well as the technological and legal framework needed to build the future of real estate. 

    • Powered by Web3: with Build21 you can invest in tokenized RWAs in a very user-friendly way—totally transparent and easy to use from a mobile app powered by MultiversX and Bhero

   • Unique tokens: each Build21 project is distributed across a unique and limited set of representative NFTs. Based on token type and share, investors can collect revenue from profits, get a discount on the purchase of a Build21 property, and vote on decisions.

    • SPV-owned: each Build21 property is owned and developed by a Special Purpose Vehicle (SPV) company and made available for investment. This allows investors opportunities to invest in development projects or trade their participation rights on authorized marketplaces.

    • Above board: we're committed to transparency, making sure you know exactly how your investments are performing, and we adhere to rigorous corporate governance standards to protect your interests.

    • Safe & legal: Build21 is compliant with MiCAR (Markets in Crypto-Assets Regulation) recommendations at European level, aligned with Financial Supervisory Authority norms and with AML (Anti-Money Laundering) requirements.

How we use NFTs at Build21

Our NFT ecosystem is centered around inclusivity and transparency in real estate investing, making sure that everyone has a chance to thrive. 

Here’s how it works, and how you can get involved:

21 real estate projects with social impact, all funded via blockchain

We’re building 21 diverse real estate projects that will reset the benchmarks for the next 100 years in terms of:

    • Sustainability

    • Efficiency

    • Aesthetics

    • Quality of life

Our goal is to have a true, positive impact on the Romanian real estate market by providing quality, modern, and sustainable housing and buildings. These spaces will be designed and executed to:

    • Respect the architectural heritage and specificity of the area in which they are developed

    • Contribute to the physical and mental health of those who live, work, and spend time in them

    • Provide a context for connecting and engaging the community by designing common cultural spaces

    • Lay the groundwork for future generations by building efficiently and durably and by optimizing resource consumption

The Build21 NFT ecosystem

The Build21 ecosystem uses a dual-token model to help each community member get their fair share of value and say in decisions:

    • Build21 Helmets NFT: the token that gives you access to the ecosystem 
One collection of utility tokens that grants membership, governance, voting rights, and access to the other collections of Project NFTs.

   • Project NFT: the tokens that become your revenue stream
21 collections of security tokens, one for each of the projects, that act as a Joint Venture Agreement (JVA) allowing investors to claim their proportionate share of the associated returns. Each Build21 project has an estimated total return of 40% over 2-3 years.

Only holders of the Build21 Helmets NFT can purchase Project NFTs. Investors can buy one or more Project NFTs to fund the projects. In return, they will receive a share of the value created by these developments, which is reflected in their profits and losses.

In addition to these main NFT collections, Build21 will also offer two dedicated NFT collections designed for the other members of our communities:

    • User NFT: collections that grant residents benefits such as real time structural health monitoring, governance in owners association, or access to building generated revenue streams

    • Expert NFT: collections that grant specialists that contribute to Build21 projects benefits such as voting on company decisions and architecture contests or opportunities for future collaborations

The road ahead

Investing in real estate is often seen as a milestone of financial success—but it’s a dream that many struggle to achieve. High upfront capital limits, liquidity constraints, and strict regulatory compliance often leave small and medium investors locked out of the market. Build21 offers a solution to this problem. 

The launch of the first Build21 collection that gives you access to the entire NFT ecosystem will take place in 2024.
Join our investor community to find out when, where, and how you can get involved.

We believe in the impact that good quality construction has on people's lives and we have faith in the future of the real estate market in Romania and the region. 

Romania deserves real estate that pays more attention to what people really want. So let’s build it ourselves.

Get access to the entire Build21 NFT ecosystem

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FAQs

Why blockchain technology?
The blockchain infrastructure allows us to share good returns, perks, and decision-making power with all members of the Build21 ecosystem.

Who can invest?
The public offer is intended for both individuals and companies. The assets are accessible to both residents and non-residents, Romanian or foreign, provided they are at least 18 years old and go through a mandatory KYC/KYB procedure.

How is an NFT different from cryptocurrency?
While both NFTs and cryptocurrencies are digital assets built on blockchain technology, they serve different purposes and have different properties.

Cryptocurrencies like Bitcoin or Ethereum are fungible and primarily used as currency or investment. Unlike cryptocurrencies, each NFT is distinct, indivisible, and represents ownership of the entire asset. NFTs enable creators and collectors to tokenize, trade, and prove ownership of digital or real world assets.

More FAQs here.