Real Estates and the Blockchain: The Next Investment Frontier
The fourth industrial revolution has finally found the catalyst to spur on its growth, the Blockchain. The blockchains ushering of revolutionary mediums for securely and transparently exchanging values with no middlemen has been nothing short of a game changer across all industries. Investors from all over the world are now being afforded real-time investment opportunities through hassle-free, decentralized platforms. Industries whose accessibility have, hitherto, been mired in opacity and potentials stymied by soteric accounting have finally found the perfect vehicle for manifesting their true worth. One such industry is the distressed asset.
Following the financial crash of 2008/2009, the post-recession recovery rate of EU countries continues to be at odds with each other especially Non-Performing Loans (NPLs) backed by real estate collateral. This movement is strongly present in SEE region, as there are the highest balance NPLs since the economic crisis. The crash, brought on by NPLs and overvalued properties (basically, folks couldnt afford to pay their mortgages), has long since gone down in history as the biggest financial meltdown the world has ever seen, yet its spectre continues to haunt the real estate industry.
When you take a loan from a bank, the bank expects the loan to yield interest and be repaid under specific conditions. This is a performing loan. However, when the customer cannot fulfil the agreed repayment plan after 90 days or more, the bank now has to set aside capital on the assumption that the loan may not be repaid, drastically impacting its capacity to facilitate new loans. At this stage, the loan is now a Non-Performing Loan.
To remain profitable, banks must keep their NPLs at a bare minimum and in some cases, are prepared to sell high-collaterals to clean up NPLs and inject capital into their operations. Herein lies the opportunity that sets Elements Estates apart from all other real-estate-on-the-blockchain platforms.