Elements Estates is a promising ICO, focused on a potentially humongous real estate market in Europe, particularly, distraught assets. Or properties, where the borrower has difficulties paying back their loans.

The product

The company behind Elements Estates intends to build a decentralized investment platform, wherein the properties are listed on the service, and represented as offerings for prospective investors. According to the whitepaper, the product is access to a specific market. This actually raises a question about the properties themselves. The whitepaper mentions that different stakeholders are connected via smart contracts on the blockchain, and hence the blockchain establishes trust between the parties involved, but there’s no mention about security tokens representing the individual properties, yet. If such an opportunity does arise at some point, it would definitely be an improvement. Otherwise, the system is sufficient for a decentralized real estate agency to operate, successfully in theory. At the moment, the single point of failure is definitely represented by the fund. The smart contract, specifically.

This kind of settlement has to be airtight to work out, because the properties aren’t represented as tokens themselves. What makes the process unique is that the properties are intended to be auctioned on the blockchain. An auction contract could in fact work out of the box. There’s mentioned deposits, maintenance fees and so on. All separate processes definitely need their own smart contract.

The purchasing process intends to represent ELES as a utility token securing the transaction between the investor and the fund.

There are two ways to purchase a property with ELES:

-50% fiat, 50% ELES over a period of time.

-100% ELES, locking tokens down for a fixed period in case the investor has less tokens than the entire purchase price.

I personally see here a potential risk in having multiple purchasing methods available for the token holder, ie. there’s a fiat payment enabled and smart contract -based token locking mechanisms that create some initial confusion, and essentially put the fund itself as a single point of failure in the system. Eventually, streamlining the purchasing process would be the easiest if financing options were externalized and the properties themselves were ERC-721 non-fungible tokens, but this of course is my personal opinion. Maybe locking tokens for a fixed period works, at least this process works as collateral.

The ICO gains are promised fairly straightforward: Fixed number of tokens representing a growing portfolio. If the market picks up, the token value grows exponentially.

I need to judge the project here somehow. I see the main risk in the smart contract governing the purchase and in managing the fund itself, and the greatest reward in potential new market trend created or at least inspired by the fund. If the team can pull it off, and they’ll need to focus on developing the smart contract into an airtight, decentralized platform in order to accomplish that they might just create a new asset class that would end the recession in the market for years to come.

The stakeholders

The token establishes a market between banks which hold distraught real estate assets, the borrowers and the investors, mostly retail investors. As a utility, the token represents a private real estate development fund established by the company behind Elements Estates, and by using the token in question, the ELES, the investors are promised to be able to tap into the opportunities unlocked by the fund. The fund takes over as an owner and landlord of the properties it invests into.

The Market

Since the 2008 global economic crisis, despite of relative recovery in the stock market, the situation in the real estate market has been met with a large amount of distraught properties left over from the market crash, mainly because consumer spending and purchasing power hasn’t grown in concert with the financial markets. From the perspective of the banks, this means increased risk exposure from non-performing or poorly performing loans. From the investor’s perspective, this means a potential opportunity in gaining hold of undervalued assets, and from the consumer’s perspective giving up the asset is often better option than defaulting on it. Elements Estates strikes a middle ground, and establishes itself as a neutral market mechanism, a bridge between investors, consumers and the banks. This newly created marketing channel may provide liquidity in the market, and potentially help the market towards recovery at large. At least, the end result would be more opportunities for retail investors in an otherwise opaque market.

The region

Elements Estates initially focuses on the markets the founders say the team is the most familiar with, Slovenia, Croatia, Greece and Cyprus. According to the team, the size of the market in distraught real estate assets is fairly large, around 130 billion and there are a good variety of properties available for investment. The prospects range from new developments to touristic properties, homes and apartments.

All in all, a very promising ICO, with considerable risks and potentially huge rewards.

Whitepaper: https://elementsestates.io/ElementsEstates-whitepaper.pdf

Website: https://elementsestates.io/

This article was created in exchange for a potential token reward through Bounty0x.