On 22 September 2020, Korean digital asset platform operator Fund Bloc announced its collaboration with Woori Global Asset Management (Woori) to establish a blockchain-based real estate fund service, reported the Financial News. This comes after Fund Bloc was selected earlier this year to join the Woori Financial Group’s promotion program Dinno Lab, which aims to strengthen and support startups
Their blockchain initiative aims to convert real estate funds (i.e. real assets) into digital assets, selling and distributing them to investors without additional intermediaries. Woori’s role is to establish and manage the publicly offered real estate funds as well as perform financial structuring support. Fund Bloc will be responsible for operating the platform.
Woori’s CEO Dong-ho Kim believes in the integrity that blockchain has to offer, allowing for the fund transactions to be transparently and safely managed. He praises the “innovative financial service that allows ordinary investors to easily transact without restrictions on time, place and amount.” The digital asset platform will also accelerate Woori’s position in the global market.
Woori Global Asset Management is a subsidiary of Woori Financial Group Inc. and most of its asset management business involves traditional assets. With Fund Bloc and other collaborations, they’ve now expanded into global/alternative investment funds, including infrastructure.
Fund Bloc’s existing platform digitizes commercial real estate online. Using blockchain technology, ownership and transaction certificates are recorded on a distributed ledger. This makes real estate transactions easier and faster while being less exposed to duplicate sales and hacking risks.
Despite this, in reality, blockchain real estate is not risk free. It’s important to perform due diligence to ensure the blockchain entity selling tokens actually owns the real estate in question and that it hasn’t been sold both via blockchain and separately.
What differentiates the platform from existing real estate services is that it allows investors to easily and quickly diversify their real estate portfolio no matter the time or place. In theory, real estate owners can sell to a wide pool of investors, as the platform is accessible to investors around the world. It also increases the opportunities for small real estate investors who are limited by existing loans. Accounting, appraisal, and law firms can use the platform to offer their services to users, giving investors and buyers access to high-quality information quickly and transparently.
If you visit the FundBloc website, it states that it processed $1.8 billion investment in 2019. We’re guessing this is a mockup, which is a little concerning as it’s not obvious. It lists a building for sale as its 331st transaction, but if you click through to the details, it looks like it’s also a sample or mockup.
Real estate digitization is currently more prevalent in Asia. In Japan, tokenization firm Securitize launched its blockchain-based real estate investment platform using digital securities to promote real estate crowdfunding. The solution was created in collaboration with real estate information service provider LIFULL, which is listed on the Tokyo Stock Exchange with a market capitalization of ¥67 billion ($641 million).
Also in Korea, financial services firm and stockbroker SK Securities partnered with blockchain startup Kasa Korea to develop a real estate tokenization platform last year. Other real estate tokenization initiatives have taken place in Brazil,Germany, the United Arab Emirates, amongst others.