Interview with Mark Lloyd, Managing Director, Dominium
To be “Über” is to be the best. It’s a German term that means “above.” In other words, you’re number one. The American taxi company named Uber has lived up to their namesake by creating a global transportation network in 35 countries with 15.3 billion in assets in less than 10 years. They’ve achieved such enormous success that when other industries are transformed by an online company it’s known as “Uberisation.” One industry that’s escaped this trend so far is real estate. But that’s about to change.
After nearly 200 years in the real estate business, German firm Munte Immobilien and partner Max Property Group believe it time for some disruptive changes. Their international property group is moving to blockchain to create the Über of real estate. In this interview, Managing Director Mark Lloyd explains why Dominium was created, what the benefits are for everyone involved, and how it transforms the real estate industry worldwide.
What is Dominium?
“Dominium is a multi-lingual property platform using blockchain technology that helps real estate professionals, authorities, organizations and investors succeed through a global centralized marketplace for all property related activities. The spark that got it started was Max Property Group. This is a group of ten property professionals from Property Development, Financing, and Investments.
We were tired of the same old property funds, where you get a prospectus, a brochure, and a whole lot of documentation that bores you to death to read because you just want to see a few key figures. And then there’s always a fund manager who gets paid first while investors come last. Instead, we started setting up property funds where we did everything ourselves and we only share in the profits in the end.
“Why not have one big international portal with properties registered worldwide?”
We started talking about cryptocurrencies and blockchain but realized that there is a major AML (Anti Money Laundering) issue, as once a fund is tokenized the tokens can be exchanged and you don’t know where they are going or to who. You might end up paying returns to terrorists or drug dealers. So, one of the key features we were looking for was controlled trading, which we found in Ardor. And that’s how Dominium came about.
It’s a system that’s automated and transparently running on an Ardor childchain, the Dominium blockchain. Dominium will obtain an umbrella license, so people can come to us to create property funds (tokenized Assets) under our license using standardized documentation.
Assets are automatically listed on the platform and investors can choose their options and won’t have to go through a hundred-page prospectus everytime they would like to invest, as all documents are the same (apart from the key investment details). Fund creators and investors can use our platform to communicate with each other.
When we brought blockchain into the picture this all became a lot more interesting. We thought, why not store historical data of the properties? Why not have a property portal like Zillow has for the US and Zoopla in the UK? While property portals already exist on a national level, why not have one big international portal with properties registered worldwide and historical data and where the blockchain can act as a land registry? That’s what the Dominium project has become.
If you have one international land registry in all languages, everyone around the world can know exactly who owns which properties. It’s super easy for regulators and the tax man, because they can check who owns what. It becomes a system where people cannot hide behind real estate, like when a local property is owned through off-shore construction while a load of money is being laundered through real estate. By making it all transparent that becomes much more difficult.
As it is now, someone looking to buy a property would probably start by going to a property portal to find something. Then they’d end up dealing with a Real Estate agent who’ll pressure you by saying, “You better make a decision soon because there’s another four people interested.”
“The great advantage with Dominium is that you can market your property globally.”
Of course, you don’t know whether that’s true or not. But if all the offers were registered on the blockchain you’d suddenly know the truth about how many people are interested and how many offers have been made. It becomes transparent.
It’s the same if you were looking at buying a house and wanted to check what it’s been used for or sold for. It might have been used as an illegal marijuana grow operation and requires $30,000 in clean-up costs to remove the toxic mould. On Dominium you could access historical information such as independent home inspections. You’ll know if the boiler was changed, when the roof was repaired or the state of the electrical wiring. That’s vitally important information because it affects the value of the property you’re buying.
Very often you can’t get that. It’s just not there. If you registered that on a blockchain, all that information would be there, and all the obscurity would be gone. You’d be able to see what the neighbor’s house sold for too, if it recently sold. Then you can confidently make a good offer. Without that information you just don’t know if the Real Estate Agent is telling you the truth.”
Who Will Use It?
Benefits for Property Professionals (And people selling their own home)
“Dominium will not replace estate agents. Even if you want to sell your property yourself, you’ll still need to promote it and walk buyers around the house. Done through Dominium, the estate agent will be the person holding your hand through the selling process but won’t be taking a commission for marketing your properties. The platform is doing that for you.
We believe the role of the estate agent will change in the years to come. This has already begun in many places in Europe where there are platforms that let you list your property and show people around yourself. But you still need an estate agent if only to create the sales agreement.
“you’ll just Have to say — I’d like to sell my house. This is the reference number.”
The great advantage with Dominium is that you can market your property globally in all languages. If someone from China wanted to buy your property in the States, they won’t need to speak English because all your property information is translated into Chinese.
While this may not include all historical information, there’ll be a standard. For example, a buyer could know when the window frames were changed, or the double glass put in. This kind of information is easily translated into other languages.
Real Estate professionals will save time from having to list and sell properties, and instead be able to sell more. When your property is advertised to a global market you’ll be able to sell it faster and for a better price.
On Dominium you don’t have to go to escrow or go through notaries either. This can all be done on the blockchain. Notaries will become obsolete and the land registry will become a blockchain registry. Property owners will be able to provide a better value proposal for their buyer or tenant.”
Benefits for Authorities and Organizations
“Dominium will help regulators and the tax man. For example, when someone’s raising money in the US the SEC will be better able to make sure they don’t go to Bahamas with the money. The money raised could go in as a phased transaction that cannot be touched apart from using it to buy the intended property and everything becomes transparent. If I was to raise 10 million and buy 9.9 million in properties then use 100 thousand for legal fees, it’s there for everyone to see. So, the authorities and taxman are sure to love it.
While we don’t expect them to adopt it, they’ll be able to extract the information they need. It’s up to us to make it user friendly and give people better access. By the time we’re done it’s going to be quite a big registry.
“You can literally buy a house in minutes.”
As an owner selling your house, you’ll just phone your estate agent and say, “I’d like to sell my house. This is the reference number.” If I sold my property to you on Dominium the asset is then transferred to you and registered in the blockchain which becomes the land registry. Eventually, countries all over the world are going to realize how easy this is and should wonder why they’re still running a land registry.”
Benefits for Investors
“As an investor, if you want to invest in a house that’s worth a quarter of a million dollars, you’d probably have to bring 30%. 75 thousand dollars is a high point of entry to invest in real estate. That’s why real estate funds typically pool money to buy a hundred properties, to minimize investor risk. But the entry level is still often 25 thousand dollars or more.
Instead, an investor can get started for as little as $1 on Dominium with DOM tokens. Of course, if you only have one dollar invested you’ll only get around one cent return and the transaction fee would be more than that. The point is that transaction costs on the blockchain are minimal and small returns can be paid out. Normally it’d be a huge pain in the neck to calculate dividends, but on the Ardor blockchain we’re using there’s already a dividend protocol so it’s no problem.
With Dominium there’s also less reliance on financial institutions for raising funds. Let’s say you wanted to build a shopping center and need to raise 25 million. You don’t have to go to a bank anymore, as you can raise this on the platform. There’s already a decentralised market system on the platform so you can also trade, which makes the Assets more liquid.
“you can create a property fund in 30 to-60 minutes then start raising funds immediately.”
To buy or sell property investments you simply create an account and look for property. If you see something interesting, you can make an offer. If it’s accepted, you’d transfer the money and the asset comes across. You can literally buy a house in minutes.”
What Are the Industry Trends?
“Even though you can buy a house in minutes on Dominium, the land registry is still controlled by the government. Certain steps still must be taken such as going through a lawyer and notary. But on our platform, this only takes minutes.
We see the role of the notary limited to doing the transfer and making sure the deal is registered in the land registry. This is an additional requirement that probably won’t be needed long term. So, a trend I see is that notaries become obsolete in property transactions and land registries will eventually move to the blockchain.
The current cost of a notary is a percentage of the sale and this depends on your jurisdiction. In Germany it’s a fixed amount of around one and a half percent of the purchase price and similar in other countries too. But these costs are eliminated once you’re using the blockchain. If you’re selling your own home it’s the buyer that pays lawyers and notaries, so the benefit goes to them.
You’ll also be able to add video and images on Dominium to help present and sell your property. With your marketing and listing already done on the platform, there’s no need to pay up to five percent to an estate agent for selling your house. If you’re selling your own property, you’ll save a bundle.
“worries about technical issues like blockchain bloat are a thing of the past.”
The more information you upload to the system, the more transparent you become and the better your chance of selling your house. If you show me one house with full historical data and another with none, I know which one I’m going for. Historical data is critically important to property buyers and investors.
It’s hard not to love a platform where you can create a property fund in 30 to-60 minutes then start raising funds immediately. And as it grows, there’ll be more property funds, more investors and more property on the blockchain. Slowly this will spread. It’s inevitable.
To understand how ready consumers are for Dominium, you just look at the enormous success of Zillow in the US. The difference between us and them is that we expect Dominium to become a global property portal, more like Google is for search.”
Why Is Dominium a Good Investment?
“I think Dominium is a better investment than most other ICOs (ITOs) because the money we raise is used to buy residential property. And the rental income from our property portfolio is used to build the platform. This means we become self-sustainable and don’t need to continually raise money.
When Assets are created on the platform, Dominium will only charge two and a half percent of all the money raised plus five percent of the rental income, which is well below industry standards. All surplus income from the property portfolios and income derived from the platform will be used to buy back and burn DOM tokens, thus creating a diminishing supply of DOM tokens, which should in turn create increasing value. [This is not a promise and it is not investment advice]
Since we’ll buy back the DOM tokens in the open market, the best strategy for token holders will be to wait one or two years before selling. You’ll see we’re buying property because everything is transparent on the blockchain. The more funds there are on the platform, the more money Dominium receives, the more tokens we buy back and the quicker the price should go up.
“They were established in Germany in 1833 and have built entire sections of towns.”
Another reason Dominium is a good investment is because of the blockchain technology we’re using called Ardor. Ardor is built on NXT which is the original proof of stake blockchain. We’ve obtained a child chain from Ardor that came with built-in features. With their blockchain as a service platform we can avoid coding mistakes and lower software development costs. Further, Ardor has a child chain pruning system, so worries about technical issues like blockchain bloat are a thing of the past.
We originally started building Dominium for our own company, so we’ll be putting our own property funds on the system first. The advantage is we don’t need any third-party input from other people’s portfolios because we can use our own. When Dominium is working properly, we’ll open it up to our users.
The platform’s features include fund creation, property listing, and language translation modules. Secure messaging and support tickets are there and ready. We just need to complete the property listing and property management part. The asset creation will support this.
Then, the next big step is for us to connect the platform to Testnet and start listing properties. Once all is working well, we will go live with the childchain (expected before the end of the year) and then we will also list the DOM tokens on exchanges (who have already started contacting us to list DOM with them).
Earlier when I told you about Max Property Group (MPG), I didn’t mention that Dominium is a partnership between MPG and Munte Immobilien (MI). They were established in Germany in 1833 and have built entire sections of towns. While they used to be property developers, they’re now more of a property management company and own a considerable amount of property themselves. Together we have a good grasp on the German, Dutch, and English markets. We know what the real estate market needs. It needs Dominium.”
What’s Next for Dominium?
“Our platform already has over 20,000 users in 156 countries. We’re now steadily building the platform and the translations are going well. Thai, Polish and Bulgarian have recently been added and we’re constantly getting more languages and country ambassadors.
“a cost of 10 dollars instead of two weeks and 10 thousand dollars”
We’re calling our token sale an Initial Token Offering (ITO) instead of an Initial Coin Offering (ICO) because it’s a more accurate description. DOM is after all a utility token to be used to pay for transactions on the platform. Our next step is the pre-ITO which goes live on the 15th of August at 12:00 CET. People who’ve already registered and reserved tokens get a chance to pay for them on August 14th from 12:00 CET at an incredible 80 percent discount, or five Euro cents a token.
If there are any tokens left to sell, we’ll go live with our public pre-ITO on the 15th at 12:00 CET. This will run until September 3rd or until the tokens are sold out. Our ITO will run until the end of the year with the price starting at 10 cents, then going up to 15 cents, 20 cents, and finally 25 cents.
The reason we’re doing a pre-ITO at such a huge discount is that we’d like to show people how we work. The Euro 5 million will allow us to expand our property portfolios, which we will of course publish, so we can show people how we do it. You’ll be able to see how and where a property has been bought, and see the rental income coming in. We believe this will create more trust and credibility in our user group to ensure a successful ITO.
Between now and the end of the year, we’ll have the platform finished, connected to Testnet and the child chain will be live. Then the DOM token will be listed on exchanges. All this is going to happen before the end of the year.
While there are other real estate projects on the blockchain, we believe that nobody’s doing it as complete as we are. We know the market inside out and have everything in house to do this right. The land registry may be fractured at first, but as more people get on board we’ll be able to bridge the gaps. And when we prove you can do a deal on the blockchain in five minutes at a cost of 10 dollars instead of two weeks and 10 thousand dollars, a lot more people will start listening.”
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