.png)
Parcl is a Web3 real estate investing platform that allows anyone to invest in real estate assets for as low as $1, by offering a platform for users to get exposure to entire real estate markets in US cities through REIT-like indexes.
In this article, I will attempt to explore the market context & viability of Parcl’s business model, the Parcl v2 product, and some of my own opinion & feedback.
Real estate investment trusts (“REITs”) have been around for a long time. According to Investopedia, a REIT is a company that owns, operates, or finances income-generating real estate. Similar to mutual funds, REITs pool the capital of numerous investors, making it possible for individual investors to invest in real estate — without having to buy, manage, or finance any properties themselves.
REITs can be invested in through public or private channels, through equity and/or mortgage. However, for retail investors, public equity REITs would be the most common way to get exposure to the real estate sector.
Zooming out further from REITs, retail investors can also get access to real estate asset via fractional real estate investing. This is when many different investors split the cost of property among them. Fractional ownership gives them a stake in the real estate and makes them part-owners.
Fractional real estate investing comes in different formats. Sometimes the investor receives a deed and equity in the property; other times one can buy shares in a property, which is then operated by a management firm. In some cases, the fractional ownership interest entitles its investor to stay in the property for vacation, for a portion of the year. In other cases, you can invest in the properties with no intent to actually stay in them, but to rent out via platforms like Airbnb.
Expanding from the concepts of REITs and Fraction Ownership, a number of web3 firms have attempted to offer access to real-world assets (RWAs), particularly real estate, by leveraging blockchain technology.
Here’s a basic use case for blockchain in Real Estate investing:
Source: LeewayHertz.
Propy is one of the earliest companies attempting to leverage blockchain for property auctioning. In 2021, Michael Arrington, the co-founder of TechCrunch and Arrington XRP Capital, tokenized his apartment near Kyiv, Ukraine, as an NFT and sold it on an auction for 36 ETH.
Michael Arrington’s apartment NFT. Source: Arrington Capital.
Fraction is an example, in which the company allows retail investors to buy partial ownership of a particular property for a price. The categories of offering RWAs can range from beachfront pool villas, penthouses, EV charging stations, to luxury yachts, which means it is not limited to real estate. Currently, the company only operates in Thailand and does not allow US citizens to access its products.
Then there is HomebaseDAO, a property deed tokenization platform on Solana that allows individuals to buy partial deed ownership as NFTs by tokenizing properties on Solana using a smart contract that was tied to an NFT. It has managed to tokenize its first NFT title deeds for a house in south Texas. The property was valued at $235,000, but Homebase was able to raise $246,800 (in USDC) for the property.
Above are some of the most recent and relevant examples of Web3 Real Estate companies and their practices. A more detailed mapping of the landscape can be found here:
2022 Web3 Real Estate Landscape. Source: Zofuku.