Loafer retweetledi
If these headlines make you feel nothing, keep scrolling. 🔽
Otherwise keep reading.
For most people, seeing property sales like these triggers something. Could be envy. Could be a deep drive to work harder. Or maybe you genuinely don't care, in which case, good for you!
For the rest of us, it's usually one of the first two. You're not alone.
Exclusivity and luxury is designed. It's desired. For centuries, trophy properties have been the ultimate symbol of wealth. Not just a place to live, but a vehicle to multiply into generational wealth, held by the few who can access them.
Even for those in seemingly high-flying corporate jobs: how many bonuses away are you realistically from a $50M harbour-view mansion? Keep in mind, luxury property in Australia has outperformed the ASX over the past decade. The gap isn't closing.
Fractionalisation and tokenization seemed like the obvious answer. Think BrickX, RealT, Lofty.
Split ownership into smaller pieces, let anyone buy in. Democratize access to one of the best-performing asset classes in the country - It was pitched to revolutionize the industry.
So why have these platforms been such a disappointment?
Underwhelming demand boils down to these factors:
1⃣Undesirable properties. Undesirable properties don't suddenly become desirable just because they've been fractionalised. To be clear, undesirable doesn't mean cheap. It means bad as an investment from a fundamental return perspective. People want what's unattainable. Luxury properties and assets traditionally reserved for the ultra-rich and institutions. But without the right network, getting those assets on chain is nearly impossible.
2⃣Illiquidity. Fractionalisation is easy. Letting people buy into property tokens is easy. But without liquidity, they cannot exit. Platforms like BrickX became the quickest way to lose 50% because there was simply no counterparty on the other side of the trade. Liquidity is the hardest of the three to solve. It's a chicken-and-egg problem: traders need market makers, market makers need traders. Read more on this here: x.com/Loafmarkets/st…
3⃣Terrible user experience. Apart from the liquidity issues, these platforms had clunky interfaces, unsophisticated systems and friction at every step. No one remotely experienced in trading would touch them, which only compounds the liquidity problem. Those are the users who drive volume in the first place.
The concept was well intentioned. The execution left a sour taste in people's mouths.
Fractionalization was never the hard part. Liquidity and quality assets were.
What would happen if luxury property could trade with the liquidity and speed of stocks?
Follow for more
English
