Author: Wang Yanhua
While investing in real estate is touted as the smart way to get rich by the likes of self-help book “Rich Dad, Poor Dad”, the glossed over but obvious reality is that real estate investors require a significant amount of capital to begin with.
Based in Singapore and operated from Estonia, BitOfProperty is an up-and-coming blockchain startup that aims to make real estate investing simple.
BitOfProperty lowers the entry barrier by allowing investors to invest small sums of money, potentially bringing real estate investment to the masses.
It already has two fully crowd-funded real estate deals, located in trendy neighbourhoods in Tallinn, Estonia.
CEO Karl Vään told Block Asia in a phone interview that the minimum amount of money investors can contribute is 500 euros, for the first two deals.
“We make things simple for everyday investors. With blockchain, it brings in more transparency and security,” he said.
EYEING ASIAN MARKETS
BitOfProperty is also setting its sights on Japan, Thailand, and the Philippines next. Vään said, “We are not only focusing on a single market in Estonia. We are looking to provide international real estate opportunities. I see huge potential in Southeast Asia and Japan.”
It has concluded two rounds of funding, with LIFULL Co, a Japanese real estate information company, as the lead investor in the second round.
Unlike in other countries, Japanese homes gradually depreciate over time, becoming completely valueless within 20 or 30 years. According to Nomura, a brokerage firm, the value of the average Japanese house depreciates to zero in 22 years.
The reasons for Japanese houses’ rapid loss of value lie partly in tradition. Japanese people have tended to see out all life stages in the same dwelling, a custom they attribute to their history as a farming nation. As a result, they never got used to second-hand homes.
But as the Japanese population shrinks, that does not make sense anymore.
Vään wishes that BitOfProperty can be part of Japanese real estate’s move towards modernisation.
“We are currently putting together portfolio and investment opportunities. Old buildings will be revitalised, renovated, and then rented out,” he said.
FROM A TECHIE COUNTRY
The country that Vään grew up in is a small post-Soviet country in the Baltics.
Few may know that its digital and blockchained government is way ahead of the rest of the world. With tech talent that usually only the private sector can afford to hire, the Estonian government is almost completely run on the blockchain.
The normal services that government is involved with—legislation, voting, education, justice, health care, banking, taxes, policing, and so on—have been digitally linked across one platform, wiring up the nation into e-Estonia.
It is the most ambitious project in technological statecraft today, for it includes all members of the government, and massively alters citizens’ daily lives.
So it seems very apt that at a time when most blockchain startups are still struggling to materialise their visions of incorporating blockchain into real-life applications, BitOfProperty already has two fully funded real estate deals in Estonia.
Vään told Block Asia, “We are a very techie country, we have e-everything. E-accounts, e-residencies. The government is very pro-technology and startups.”
The reason why the Estonian government is so technologically advanced can be traced back to its history.
Since the eleventh century, Estonian land has been conquered by Russia five times. Even now, Russian military jets still casually drift into Estonia’s airspace.
Vään was a middle school student when the 2007 Russian cyberattack on Estonia happened. It sent everything from the banks to the media into chaos. Estonians today see it as the defining event of their recent history.
The success story behind e-Estonia is a story of a small country seeking to make itself secure and impregnable from the constant threat of intrusion of a looming former invader and big neighbouring power.
Vään said, “It’s one of the characteristics of many ex-Soviet countries. We don’t have a lot of natural resources, or an edge compared to other countries. So we become good at coding.
“It started after the Soviet Union broke up. People here became interested in technology and education, even for children. Now we are in a very good place and we’re a really techie country. It’s good recognition for a country that’s so small.”