Real estate as a form of investment, is not new and has been there for ages. Real estate investment has been highlighted by professionals in the game as being an important player in a lot of economies.
Savills believed that in 2015, the worth of every real estate that is developed worldwide shot past US$217 trillion.
In 2016, MSCI estimated that the size of the worldwide real estate professionally managed is $7.4 trillion.
What made the number so little? What can be used to improve the growth of real estate to include every property?
A solution that can do all these swiftly is the blockchain and smart contracts technologies. Both technologies will bring about a great improvement in real estate market.
A major problem is the high costs of investing in real estate especially during the construction process.
A University of Oregon finance professor, Stephen McKen, believes that though commercial real estate provides a considerable level of liquidity, they are very costly to start, process and own. The commercial real estate doesn’t involve only one building but a group of buildings. To get involved, the investor has to cough out a large amount of money like $25k in the case of REIT.
Not minding the large amount spent, investors usually get their money tied up for a while until the apartment is completed before it can be redeemed.
The rapidly growing cost of developing a property or real estate is very high.
Building structures all over the world, especially tourist attractions like resorts and hotels, are very expensive. In the urban areas, as well as rural areas, faces the same issue of high costs. Some reasons behind the high costs are:
The cost of building materials needed in erecting the structures is usually high. A lot of materials go into erecting real estate like resorts, making it a project for those with the financial power to get involved in.
The high cost of hiring skilled labor is another reason for the increase in costs of investing in real estate. Those involved in the building process have to be paid and paid well.
Daily, the cost of cement continues to skyrocket. When the planned building is to be erected in a place where infrastructures are weak, the investor has to think of building those infrastructures too. If the resort is to be erected in a place where electricity supply is a problem, for the real estate to be profitable, the investor has to think of solving the electricity problem to his resort.