If you haven’t heard the concept of metaverse, NFT or Blockchain in the last two years, we are sorry to say that you are not up to date. And you are far from it. The set of these three words are part of a whole. Also for Nash21, a technology company based in Spain that wants to join rental contracts with NFTs. We never thought this was going to be possible, but it has arrived.
Traditionally, NFTs have been associated with the content producer sector. Works of art, more or less, of a digital nature that are unique in the digital world. We have seen from the NFT of the first tweet in history for 2.9 million dollars to a collection of monkeys that has conquered the cream of international fame. In the case of Nash, “what is sought is a redefinition of the rental market” through these non-fungible tokens –the rest of the pending accounts of the rental market correspond to other sectors–. “Our goal is for rental contracts to be liquid and transactable through blockchain technology,” explains Gabriela Roberto Baró, co-founder and Chief Business Officer of Nash21. Turn them, in a nutshell, into digital assets.
Nash21, which is barely months old and less than a month ago made its official presentation in Madrid, enters one of the most complex sectors in the country: renting. Or the real estate sector. a limited business a few hands that continues to be a source of security for investments that want a return without much risk. Because a lot has been written about renting: great landlords, prices above reality and the possibilities of salaries, squats and many regulations in this regard. Only the arrival of an NFT rental contract is missing.
How is this supposed to work?
The theory is clear. Nash21 is an intermediary within the rental ecosystem. The owner of a property rents this to a tenant; nothing new up to this point. The rental agreement –that must be adjusted yes or yes to the regulation in force at that time– is carried out through a smart contracts –one that is stored behind blockchain instructions–. And in this the mantra of “what is written goes to mass and is immutable” can be applied.
The ‘tokenization’ of the rental contract indicates that it will be fulfilled in any case. The payment of the rent is guaranteed by both parties. How? This is where Nash21 comes in in a somewhat traditional role. Because although the contract may be loaded with state-of-the-art technology, the recently created startup is an intermediary that takes care of any defaults that may arise.
“Within our group is Finnair, which is a payment guarantee company. They invested in us to start with. In this case, the payment guarantee is offered by us directly, but we use the same risk analysis processes as them.”
Gabriela Roberto Baró, co-founder and Chief Business Officer of Nash21
Through a risk analysis of potential tenants – for which they take a commission to be paid by the owner – Nash21 makes sure, or at least tries, that there are no defaults during the rental. A rate that in Spain reached 7.2% in 2021, six points more than in the same period of 2020. It does, yes, for two years. The time for which the contract is ‘tokenized’. This, needless to say, is adjusted to the 5 years established in the last regulation; 7 if it is a company.
In this way, and for a maximum of 24 months – this is the time that Nash21 manages at the moment – there will be a payment guarantee. Then it will have to be renewed for the same time. And in case of losing the tenant? There will be a maximum of two months to find a new one who will have to adjust to the previous contract. The asset, already ‘tokenized’, is immutable.
Very good Nash21, and all this for what?
Although the role of Nash21 is none other than that of intermediary between owners and tenants, the technological wants to add one more point to this story: the investors.
“With the ‘tokenization’ what we want to do is that a real asset can become a digital asset. For a long time, rental contracts are signed and a drawer is put in and until the tenant changes or the rent is renegotiated or clauses of the contract is not touched”, explains Gabriela, “it is an asset that is asleep”.
Why give it a second life? “So this can be marketed to an investor.” This is the point where Nash21 wants to do business. Or at least convince the real estate sector that a third figure can get a slice. And if there is profitability, the truth is that there will be no shortage of options. Who are these feasible investors? Profiles that either want to enter the real estate sector without much risk or that, even wanting to enter the real estate sector, do not have enough capital to get a flat. In this way, this figure of the investor “buys” some of the rental contracts. The owner of the property obtains capital quickly – instead of in 12 monthly installments – with a discount that corresponds to the profitability that the investor will obtain. How much discount? What dictates supply and demand.
The monthly payments will be paid, in this case, to the buyer of the contract or investor. The tenant, for his part, is indifferent to this whole plot. Even, they point out from Nash21, it may be the case that the tenant buys his NFT contract in order to have savings. All this, of course, is guesswork.
Could there be an effect on a complicated rental market?
The rental market data does not show good results. At least in Spain. According to data from Idealista, the average increase in rental prices –with data from February this year– point to an increase of 53 euros per month. Corresponding to the 7.6% rise in the CPI, they represent an increase of 643 euros per year. The sector of buying and selling flats does not have a better color. With a decrease in the granting of mortgages and an increase in the price of housing, the outlook remains equally tense.
Could the entry of the investor profile affect the rental sector? On the one hand, it is still early for it to have a palpable effect. On the other, Nash21 points to transparency. Also to the clarity of the negotiations between some parties and others. On the horizon, a possibility – not yet quantifiable – that the supply and demand of the sale of contracts ends up having an upward impact on the price to be paid by tenants.
In any case, Nash21’s profiles in this field follow the trend of the sector. With the firm intention of reaching more users, the technology is reaching agreements with agencies for the commercialization of contracts. But investors are sticking with local men aged 35-45. The early adopters of a sector that, they explain, they want to democratize for all. What is not clear is that the real estate business will be so open-minded.