Max Property Group Brings Innovation and Transparency To Real Estate
Despite being the most valuable asset class in the world, the technology underlying the real estate investment market has remained largely unchanged for decades. Max Property Group, a real estate investment company in the Netherlands, having suffered antiquated practices and outdated technology first-hand, has developed a platform with the potential to rock a US $228 trillion market.
The World’s Most Valuable Asset Class
In 2016, the Savills World Research team calculated the value of all global property at US $217 trillion. In 2017, their research showed that global asset price inflation had grown by 5 percent to US $228 trillion.
Real estate is a more valuable asset class than all the stocks, shares, and securities in the world combined and all the gold ever mined throughout history.
Yolande Barnes, head of Savills World Research, said, “Real estate is the pre-eminent asset class which will be most impacted by global monetary conditions and investment activity and which, in turn, has the power to most impact national and international economies.”
In other words, the real estate investment market has the power to affect the entire global economy.
Given the enormity of this asset class and its potential impact on literally the world’s finances, it is peculiar that it has not been more subject to disruption by the wave of startups and technological advancements that have emerged in recent years. In fact, real estate technology, with the possible exception of rental listing platforms, has not advanced significantly in decades.
Entry barriers
In addition to its sheer size, few asset classes deliver passive income and capital appreciation levels comparable to real estate, but similarly, few are subject to the same entry barriers. These barriers can include access to banking, credit scores, finance, cash requirements, and reliance on industry professionals. This particularly applies to cross-border investment, where anyone planning to invest in another country will most likely have to make international trips, go through several middlemen and navigate foreign languages, laws, and cultural practices.
Lack of transparency
The lack of transparency in the real estate market is reflected in the fact that, according to the United Nations, money laundering can reach up to US $2 trillion a year, of which a significant amount is laundered via real estate transactions.
On a smaller scale, many homeowners have experienced issues such as properties with hidden damages, unknown debts, problematic neighbours, and many potential problems that can be obscured. Title ownership records are often specific to a country or region, making ascertaining ownership or rights over a property difficult. For example, the majority of US states operate under a land recording system wherein there are no government officials to make an absolute determination of the property title or whether a title transfer transaction is valid.
This lack of transparency can make almost every element of property investing difficult, risky and time-consuming.
Costs and fees
International real estate investments are subject to multiple varying fees such as exchange, transfer, broker, legal, and taxes, not considering the cost of consulting lawyers, tax advisors, and accountants.
Because of the sheer number of middlemen involved, international real estate investment can be extremely expensive.
Liquidity and speed
One of the most significant problems with real estate investing is its lack of liquidity. When property investors wish to release their cash from their investment, selling a property can take months or even years, often leaving investors with their money tied up. Even investment funds often have a tie-in period, meaning investing in property often means committing cash to a lock-in period of several years.
Similarly, buying and selling a property can be extremely slow. According to a Chinese travel survey, 56% of Chinese investors spend over a year selecting a US investment property. Generally, it can take six months to find a property and a further six months to complete the transaction.
Enter Blockchain
Distributed Ledger Technology (DLT), more commonly known as the blockchain, is proving to be a major disruptive force in the financial world and is beginning to branch out into other areas in the financial sector. One of the industries that DLT could greatly impact is real estate, specifically the investment sector. Blockchain technology can greatly improve, if not overcome, some of the major hurdles holding the real estate market back, making it more transparent, accessible, and efficient.
Enter Max Property Group
Max Property Group (MPG) is a real estate company based in the Netherlands with operations in Germany and the United Kingdom. MPG has been managing property funds since 2016, but its founders, including Munte Immobilien in Germany, have been active in the real estate industry for decades. They also engage in property sales, management, and rental activities. Having endured the challenges of the property investment sector first-hand, MPG decided to streamline the real estate investment process and has been developing the Max Crowdfund platform since 2018.
Max Crowdfund is or will be since some features are still under development. On this real estate investment platform, real estate investment opportunities can be listed by developers, purchased by investors, and overseen by authorities. The addition of DLT means that every transaction is recorded on the blockchain and can be performed almost instantaneously. Max Crowdfund is one of the first platforms leveraging blockchain technology to disrupt the real estate industry, proving that DLT can modernise the real estate investment market and open it up to a global audience.
Entry barriers
Perhaps the biggest disruptive potential of blockchain technology in the real estate investment sector is eliminating high entry levels. Historically, property investing has been exclusively for the rich, requiring outlays of tens of thousands of dollars as a minimum and often going into the millions.
However, the tokenisation of assets has made it possible to split real estate assets into small parts, thereby reducing investment to mere hundreds of dollars. For example, by placing its property funds on the Max Crowdfund platform, MPG has lowered the minimum investment amount from €10,000 to just €1,000 without affecting investment returns. It is currently working on reducing this to €100. This means anyone with €100 can become a property investor, joining the super-rich in enjoying asset-backed investments with high returns.
This in itself is a game-changer for the real estate investment market. Considering that real estate is the most valuable asset class in the world, currently only accessible to the very wealthy, opening up the market to regular people could become one of the most significant financial events in history.
Improved transparency
Blockchain technology is resistant to tampering, and once an activity has been recorded, it cannot be removed or altered, resulting in an extraordinary level of transparency.
Every transaction that will take place on the Max Crowdfund platform, whether it is an investment transaction, the signature of a rental contract, or a transfer of ownership, will be recorded on the blockchain.
The platform will also have a property management feature so that activities such as renovations, repairs, mortgages, and rental contracts can also be recorded on the blockchain. This way, when investors look at a property, they can access important information such as its repair history, rental history, previous sales price, etc., eliminating the need for agents and lawyers and reducing the risk of deception.
If authorities take blockchain technology further and adopt it, it could theoretically lead to a global land registry where all titles are recorded impartially under one international system.
Costs and fees
Max Crowdfund has eliminated many of the fees associated with property investment by automating much of the sales process. Agent fees are completely eradicated as properties are carefully vetted before inclusion on the platform, and all information relating to them is provided. Access to land registry documents, mortgage information, company accounts, etc., is available so investors can make informed decisions without using an intermediary.
Automation further eliminates notary fees, legal fees, accountancy fees, etc. Transactions happen electronically on the platform, without paperwork, and are “witnessed” by the blockchain without “official” supervision. Intermediaries are replaced by technology; thereby, fees are reduced to relatively tiny amounts.
Liquidity and speed
Historically, an individual or company would own property and, to liquidate it, would have to: list the property with an agent, market the property, wait for a buyer with enough money to buy the entire property, and then engage in the sales process which could include structural checks, finance applications, price negotiations, etc.
With tokenised assets, an individual or company owns a share of a property investment product which could be a company share, property bond, or brick (a fraction of physical property) represented by a digital token. Generally, this would be in small units of €1,000 or smaller, and all the information regarding the asset would be available on the blockchain. Therefore, the process of selling this asset would require little more than placing it on the platform and trading it electronically, an operation that could take just a few seconds.
About MPG
Max Property Group (MPG) comprises professionals with decades of experience in the real estate industry. Since its foundation in 2016, MPG has raised several millions of Euros in investment and currently holds assets valued at close to 8 million Euros (as shown in the Q2 2019 financial report). They currently manage properties in the Netherlands (Rotterdam and surrounding areas), Germany (Lower Saxony region), and the United Kingdom, offering property sales services, running a rental agency, and operating an academy that provides seminars and workshops on real estate and blockchain.
The idea for the Max Crowdfund platform grew from the company’s frustration with the historical barriers affecting their industry and their inability to find the technological tools to overcome them. The platform’s development has been successful, with all milestones being met to date. The platform has tens of thousands of registered users from around the world and is functional on many levels, with more features being added in line with the developmental roadmap.
Investing via Max Crowdfund
High-quality property investments are listed on Max Crowdfund, and registered users can purchase them, subject to KYC and AML procedures, via the platform. Payment for the use of the platform is charged in Euros but paid in MPG tokens. This allows the transactions to be registered on the blockchain. MPG tokens have been circulated since January 2019 and are listed on several exchanges, as shown on CoinMarketCap.
Max Property Group is currently applying for the relevant licenses from the Dutch Financial Authorities (AFM) to operate Max Crowdfund. Once obtained, additional licenses for operation in other jurisdictions will be applied for. As soon as they are granted, the platform will be opened to listing third-party investment products. Projects seeking funding can then apply for listing on the platform, and investors will have access to a greater diversity of high-quality investment opportunities.
MPG is currently holding an equity round to pay for the final development of the platform as well as the license applications that will allow for third-party listings. Details can be found on the Max Crowdfund platform.
