Rental Performance of CitaDAO’s 1st Tokenised Property
Members of the public can now participate in opportunities that were once exclusive to institutions, including commercial assets or development projects, which usually require a significant amount of money.
How?
Through the CitaDAO platform.
CitaDAO unlocking opportunities for individuals
CitaDAO provides a permissionless 2-way tokenization bridge that connects real estate assets with the blockchain. It allows real estate assets to be conveniently brought on and off the blockchain.
First things first.
What is Tokenization?
Tokenization can be defined as the process of digitalizing property into tradeable tokens that are stored on a blockchain.
Additionally, tokenization automates various processes like compliance, document verification, and trading, thus eliminating the need for intermediaries like property managers, lawyers, and banks. All of the above contribute to reduced fees and increase the efficiency of the real estate market.
Tokenization democratizes access to commercial real estate and enhances liquidity in a traditionally illiquid market.
To tokenize a property, landlords can list their real estate on CitaDAO's platform using Introducing Real Estate On-chain (IRO).
Ensuring legality is a crucial aspect of the CitaDAO platform, and the process involves listing Real Estate post due diligence and ownership verification.
This is followed by inviting the community members to express their interest through commitments.
Once enough commitments are secured, a Special Purpose Vehicle (SPV) purchases the property. All those who commit to the property receive Real Estate Tokens (RETs).
The RET represents ownership of a portion of the real estate asset and brings the property on-chain.
Once on the blockchain, any RET holder can buy out the RET of other holders, allowing them to claim the title deed of the real estate and become the sole owner of the property. This process takes the real estate off-chain.
RETs are indirectly supported by the property, providing a legal means of redeeming the title deed.
In the past, we've covered what an IRO is. What happens if it fails/succeeds? And in today's issue, we shall cover the first successful IRO, wherein we tokenized Midview City, an industrial property in Singapore, to raise US$617,647.
Let's now talk about the property itself.
This property is a 1,356 sq ft strata industrial space on the second floor of an industrial building in Singapore's bustling Midview City area.
Singapore
Thanks to government initiatives and a skilled workforce of humans and robots, Singapore's manufacturing industry has attracted big companies like Micron, Shell, and Merck.
Additionally, Singapore is ranked third in the Global Talent Competitive Index due to the government's investment in human talent and robotic technology. This, in turn, has caused demand and prices for industrial assets, including high-spec warehouses and factories such as Midview City, to rise. Plus, with growth in industries like food, media, logistics, technology, and biomedical sectors, along with increased economic digitalization, demand is expected to accelerate further!
But that's not all; Singapore has always been a top investment destination owing to its low taxes, the rule of law, and great airport. And now, with tech giants from China and the US setting up shop in the city-state, the country is quickly becoming the tech hub of Asia.
Midview City
Midview City is an integrated business hub located in the central part of Singapore, comprising an eight-story building and an exclusive three-story terrace block on over 552,000 sq ft of land area. The development is well-connected and offers plenty of amenities for its tenants, including childcare, cafes, studios, and a gym.
The space is leased to a well-capitalized non-profit organization, offering a gross rental yield of 4.1%. The property's prime location and excellent connectivity make it highly sought-after, with a strong demand for its occupancy.
Rental from the Property
Let’s do a financial analysis of the rental income and the expenses of the property post the IRO.
After the IRO, the SPV (Special Purpose Vehicle) Director has been responsible for the management of the property as well as securing the tenant for the property through an agent.
The property rental from July 22 till Dec 22 was SGD$ 3,210/month. From Jan 23, there has been a hike of $30/month to 3,240/month.
The government service tax that was paid on the property for 2022 was SGD$ 210/month.
From Jan 2023, it has been increased to SGD$240/month. The $30 rental hike has entirely gone into the government service tax.
The maintenance charge paid on the property is SGD$185.58/month, and the property tax SGD $2,770/year.
Maintenance charges are paid for the upkeep of the common area and paid to MCST (Management Corporation Strata Title). Newman and Goh Property Consultants Pte Ltd manage the MCST.
The rent collected from the property is utilized to cover the cost of MCST Fees, Government Service Tax, and Property Tax. The remaining amount is accumulated in a sinking fund until it reaches SGD$ 18,000. Once the fund hits the target amount, the balance will be used to purchase and burn Real Estate Tokens.
At present, there's approximately SGD$19,790 in rent accumulated net of expenses.
This would now entail SPV buying and burning Real Estate Tokens from March 2023 onwards.
Conclusion
CitaDAO has several properties under consideration for IRO in the near future. The goal is to focus on exceptional commercial real estate in Commonwealth countries that boast prime locations, reliable tenants, generous rental rates, significant markdowns, and attractive yields.
If you are a landowner or have information about a commercial property you believe would be a good fit, you can contact CitaDAO via Discord.
Participating in real estate opportunities such as the Midview City property has always been challenging. However, CitaDAO empowers individuals by giving them access to the commercial property market. Additionally, it provides a secure and efficient platform for users to collaborate with others and in opportunities previously exclusive to high-net-worth individuals/institutions.
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Contributors: EverythingBlockchain (Article), Cheetah (Editor), Sujith (Leader) (Ecosystem Updates, Great Reads), AB Colors (Thumbnail, Meme)