The Potential of a Blockchain-Driven Fractional Ownership System in Addressing the Housing Financing needs of Nigeria
Akpokona, Rutejiri (2022)
Akpokona, Rutejiri
2022
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2022101621277
https://urn.fi/URN:NBN:fi:amk-2022101621277
Tiivistelmä
The staggering amount of housing deficit in Nigeria is a well-known issue to stakeholders in the country’s building industry. For more than five decades after independence, the Nigerian government, corporate real estate practitioners and individuals have grappled with the task of addressing this issue but have met various challenges. A paucity of funding realized through the traditional property financing methods has been identified as a major reason why this issue persists. Fractional property ownership - a real estate crowdfunding financing model– that raises funds through the syndicated investments of several investors, who agree to share both the costs and benefits of a property, is an emerging trend and financing option in the Nigerian real estate sector. Though this method has shown a great promise in tackling the housing financing challenge and in bridging the housing gap, the heavy reliance on intermediaries, high transaction cost, time-consuming processes, and the lack of transparency in the transaction process are major setbacks of the model. This research introduces blockchain as a novel approach, to property fractionalization and syndicated real estate financing in Nigeria. Blockchain is an immutable public repository or database that stores records through peer-to-peer transactions without the need for intermediation (H L, Gururaj, 2020). The technology can fragment assets and represent them with digital tokens. These "tokens" represent an underlying property with all its rights and obligations. The purpose of the thesis is to investigate the possibility of making the fractional property process more efficient and transparent by incorporating blockchain technology. The paper includes the exploration of issues surrounding traditional fractional funding and a discussion of the capabilities of the new blockchain technology to address these issues. Using multi-party interviews, the main pain points of the current process are identified, analyzed, and ranked statistically using the Kruskal-Wallis to develop a conceptual model which will provide the framework for an acceptable blockchain-driven fractional property ownership process. It is hoped that the proposed model will improve current fractional property financing transaction processes, drive adoption of the system and remedy the Nigerian housing crisis.