Côte d’Or City’s Blockchain layer - just a token?

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In his book Design with Nature, Ian McHarg laid the groundwork for the emergence of environmental impact assessments, which today have become a legal and mandatory requirement for all projects which will have negative or positive consequences to society as a whole. Ian McHarg also pioneered the layered approach and methodology that should be adopted to identify, predict, evaluate and mitigate the biophysical, social, ecological , economic and other relevant effects of development proposals prior to major decisions being taken and more importantly to influence the project design and planning.

City design, planning and building also requires such a layered and all-inclusive approach. In the Côte d'Or City project, we had defined five layers for the purpose of developing this City: basic infrastructure with an overall masterplan (first layer), the detailed regulating plan with its innovative form-based code (second layer), an economic infrastructure with its inclusive mixed use and mixed income development model (third layer), the "City for people" layer based on the works of the Danish Urban designer Jan Gehl (fourth layer).  

In the past, the planning of this government-sponsored City concentrated all the thinking process on the development of a physical master plan with a main focus placed on the site-planning of the 2,000 acres site with road reticulation, electricity, water, telecommunication and other services. There are today very clear indications that influential financial institutions are starting to leverage blockchain technology and tokenization to improve their offerings. Recently the World Bank has announced the creation of a blockchain-based bond.

With Blockchain technology being adopted by trustworthy institutions, Landscope Mauritius Ltd is also working on its 5th Blockchain layer for Côte d'Or City, which will comprise a comprehensive platform for remote online real estate transactions for the purchase and sale of land and buildings properties using smart contracts. The implementation of a Blockchain platform for Côte d'Or City will develop new and enhanced relationships with real estate brokers, notaries, lawyers and the property registry while improving liquidity for buyers/investors and security for land and building owners. Apart from improving the liquidity of Côte d'Or City properties, its Blockchain platform will enable it to reach the global real estate market with a real-time purchase interface and a decentralized property title registry.

Mauritius has recently introduced more liberal policies for foreigners to buy commercial and business properties. While many foreign investors with excess liquidity would welcome the opportunity to invest in the commercial assets (office complexes, shopping malls, mixed-use real estate, hotels, self-storage, medical office, senior housing, student housing and multi-family housing) which are planned at Côte d'Or City, there are currently substantial impediments to such investment activity by foreigners.

The Côte d'Or Blockchain platform aims to solve the problems facing the forthcoming international real estate transactions by creating an innovative real estate asset transfer platform for local and overseas investors/buyers of Côte d'Or City to make investment in real estate in Mauritius more liquid. As an example, a local or foreign buyer of a multi-family apartment project can be trapped for a long time as their commitment of investing in the construction of an apartment block cannot be easily redeemed. The Blockchain platform will be designed to solve such liquidity issues.

This Blockchain platform will initially comprise the legal transfer of commercial properties and the legal registration of that transfer. Presently it takes several weeks or months to close transactions on real estate property transfers. The platform will make it possible for every single step of a real estate transaction within the limits of Côte d'Or City, from the buyer's reservation of the property to the signing of the purchase agreements for the delivery of the title deeds, to be recorded on a blockchain and executed with sophisticated smart contracts.

Smart contracts

By leveraging the Côte d'Or City Blockchain and smart contracts platform, unnecessary delays in transfer of ownership and impediments will disappear while enhancing the security of property transactions and reducing inefficiencies through real time linking brokers, buyers, sellers, escrow/title agents/notaries, high net worth individuals and investors around the world and the property registry. The culmination of the blockchain transaction will be a digital transfer of ownership on the property registry with the integrity, transparency and security that Blockchain technology provides with immutable and encrypted information such as identity record, the result of the Know Your Customer,  due diligence process, the geolocation of the property, address, owner details, property rights typology i.e. lease or sale, real estate typology i.e. commercial, multi-family housing and retail mall, coordinates, property condition with certificate of inspection.

However, once the Blockchain platform is built, it will not be used just as an online real estate property registry. We can well imagine how a real estate developer who has bought one acre of prime land at Côte d'Or could use the City Blockchain platform to thereafter raise funds for a project for a "to-be-built apartments" with the help of the blockchain tokenization technology. Tokenization is the process of converting rights to a real estate asset into a digital token on a blockchain.

Tokens backed by square meters of the future apartment building could be released for sale on the blockchain. After the tokens are released, all the investors have the possibility to sell their tokens any time during the construction period. By doing so, the real estate promoter is able to obtain all the money required to complete the project. There is in that case no need to have recourse to expensive bank guarantees. The buyers of the tokens also benefit as the token price is stable and appreciates while the apartment is built.

So, private developers gets the funds to invest in the illiquid real estate assets by attracting more capital to build Côte d'Or City, while the local and foreign buyers of the "apartment tokens" have an opportunity to exit prior to the end of the construction process. Tokenization will not only improve liquidity but more importantly create a deeper and broader market for Côte d'Or City. Since tokens are extremely divisible, they can have a global reach, the potential number of buyers/investors for the City will therefore be significantly higher than what we see today in the Mauritian markets for illiquid real estate assets.

Blockchain technology and smart contracts make the whole process of tokenization transparent, secure and efficient. In fact, Blockchain technology will make the illiquid real estate market of Côte d'Or City become like the equity market with the transparency and constant monitoring and regulation obtained on a stock exchange market.

The above example illustrates my point that the Côte d'Or City's Blockchain will not just be an online property registry but will allow fractional ownership by small, medium and big investors who can buy in and cash out as quickly as they trade stocks on the Stock Exchange of Mauritius. Ultimately, the City's Blockchain platform, with its immutable property ledger, will allow smart contracts to automatically make all the necessary payments, e.g.:  collect rent and pay the tenants tax, pay municipal charges based on the squares meters of building, contribute to the maintenance costs of the public infrastructure, etc.

Creating such a pioneering platform, underpinned by Blockchain technology, to challenge the status quo and starting a new mixed-use city based on numerous innovations and new technologies is a difficult undertaking. Blockchain, tokenization and fractional ownership will enable a much wider range of Mauritians to own and benefit from a small part of Côte d'Or City. However, the implementation of the Côte d'Or City's blockchain will depend on its acceptance by government authorities and other stakeholders (e.g. title registration, land registry system, cadastral system, land tenure systems, notary and legal services, land transfer tax, registration duties, etc).

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