Cover story: Pioneering proptech: Transforming real estate through blockchain

On the cover: Robin Ubaghs; Image credit: Gulf Business

The Covid-19 pandemic stood out as one of the most signifi cant challenges of the decade.

However, amidst its adverse impact, a prominent silver lining emerged in the form of accelerated digital transformation. This unforeseen shift towards the adoption of technology led to the rise of numerous success stories, and among them, one noteworthy example is Propchain, a blockchain-powered proptech ecosystem.

Propchain, led by 26-year-old Robin Ubaghs, primarily focuses on proptech and fintech aspects of the real estate industry. “We are mainly creating a blockchain-based ecosystem where we develop and use various proptech-related concepts. One of these concepts is a fractionalised real estate investment platform, allowing people to buy fractions of global real estate assets,” explains the co-founder.

“Within our blockchain ecosystem, we are also working on a vertical that empowers home ownership within challenging markets such as the UAE, where the market is mainly investment-driven, and around 80 per cent of its residents are renting their primary home.

We believe that people should have a more convenient opportunity to build a legacy for themselves, hence why our solution is allowing tenants to build equity in the homes they are living in by reserving a percentage of the rent toward the future home purchase.

This perfectly aligns with the UAE government’s goals of establishing family-based home ownership and significantly reducing the rental-driven nature of the market, further stabilising the real estate market and the economy,” says Ubaghs.

Looking back on a successful three-year journey, Ubaghs reminisces about his decision to relocate to Dubai six years ago. He was captivated by the city’s culture, which encouraged his ambitious goals. This vibrant and entrepreneurial environment starkly contrasted with what he had experienced before, but he found it incredibly stimulating.

Ubaghs’ entrepreneurial spirit was evident from a young age, as he already owned shares in an asset management company in London when he was just 17 years old. His ventures took him to destinations worldwide, including Dubai, where he discovered the promising atmosphere the UAE offered young entrepreneurs like himself.

Encountering challenges

Meanwhile, like any new business, Ubaghs faced several challenges.

As a newcomer, establishing the brand and products was a fundamental task, as it is for most companies. Additionally, since they introduced revolutionary concepts in the proptech and fi ntech domains, they had to navigate regulatory challenges.

The regulators’ perspectives on their innovative concepts and how they fit into existing rental regulations were key considerations. “Regulatory hurdles are a common obstacle for startups, which was our second major challenge. The third challenge involved building a solid foundation for the business, including fi nding the right people, partners, and suppliers. These aspects were crucial for ensuring the company’s success and growth,” he says.

Ubaghs explains how Propchain’s initial idea was to use block-chain technology to create a fractionalised investment platform for the real estate market. “The driving force behind this concept was the belief that everyone should have access to the thriving Dubai real estate market. Real estate has long been a proven wealth creation and preservation asset class. However, despite its reliability, it has remained largely inaccessible to many. So that was our key driver to make it more accessible to democratise real estate investments.”

Furthermore, he adds that Propchain allows users to invest across borders. “And it also offers an opportunity to diversify better, and because you have a lower entry barrier, it becomes a lot easier to spread your money over multiple properties, buying a fraction of it, rather than to have a way higher capital requirement to apply diversification.”

The firm’s most notable listings include a downtown triplex penthouse in Dubai, which was sold to European investors during its private MVP (minimum viable product) launch. Additionally, they are currently accepting investments for a completed 12-villa project in Tulum, Mexico, another sought-after location; these projects are available for sale on the company’s private platform and will soon be available to the general public.

“Apart from these, we are currently actively working on developing our Dubai-based real estate portfolio that presents significant (value-add) opportunities. Our focus is not solely on acquiring aesthetically pleasing properties; we are committed to generating the highest value for our investors on the platform. To achieve this, we explore various strategies with our partners, including value-added redevelopment and, sometimes, ground-up developments. Our pipeline is already filled with exciting prospects that promise excellent returns for our investors,” adds Ubaghs.

Use of blockchain in real estate

The application of blockchain technology in the real estate industry is driven by the belief that the sector operates with outdated and cumbersome principles. These traditional practices often make it challenging to facilitate efficient trades and liquidity. “We address these issues by leveraging blockchain, particularly through tokenisation technology. We convert property fractions into security tokens, each representing a unique set of ownership rights in the property. This approach offers several advantages, such as placing property fractions on the blockchain, which makes the entire property history easily accessible on our platform. This transparency benefits investors and stakeholders by clearly recording the property’s journey,” explains Ubaghs.

“Meanwhile, multiple stakeholders and participants are involved within our blockchain ecosystem, including investors, property owners, administrative companies responsible for rental management, and valuation companies. By centralising data storage and access, our ecosystem facilitates value capture for all these participants.

“Through blockchain, we also ensure that information trends are readily available, enabling stakeholders to make informed decisions and stay updated on the latest developments,” he states. Ubaghs also notes that the rising popularity of digital assets is driven by a desire to move away from traditional and cumbersome processes.

For example, the digital asset space is gaining traction because it offers greater convenience in trading illiquid real-world assets, making markets more liquid. This trend particularly appeals to the younger generation seeking rapid access to their funds.

“The digital asset movement presents an intriguing opportunity due to the emergence of decentralised finance, which allows for convenient lending and leveraging of assets through smart contracts, eliminating the need for the cumbersome credit checks associated with traditional banking processes.

“This ease of access to credit facilitates portfolio building, akin to how mortgages operate in the real world. In summary, the increasing popularity of digital assets is attributed to their advantages, such as streamlining processes, enhancing liquidity, and enabling straightforward digital asset-backed lending through decentralised finance,” observes Ubaghs.

Another successful tale

In addition to his achievements, Ubaghs co-founded another highly successful firm – Welfare Group. His entrepreneurial competence has played a key role in the success and growth of both ventures. Welfare Group, also the owner of Propchain, or at least one of its subsidiaries within Welfare Group, named Welfare Ventures, has been actively involved as the incubating entity. Generally, Welfare operates primarily in the real estate sector, encompassing the entire supply chain.

Under its umbrella is Welfare Capital, which is focused on real estate-focused investment management, trade, and capital placements for real estate development projects. Additionally, the company actively engages in real estate development; Welfare provides attractive investment opportunities for high-net-worth clients seeking to invest in real estate assets globally.

“One of our most remarkable accomplishments is the successful establishment of our property development subsidiary known as Welfare Developments, which operates under the umbrella of the Welfare Group. Surprisingly, this venture was initiated just three years ago. Yet, we have already introduced it to global markets, with projects in Dubai, Tulum (Mexico), the UK, and Spain. This rapid expansion is truly an exceptional journey for such a short time frame.

“During this time, we have built an impressive real estate portfolio and have a substantial pipeline of projects in progress. This achievement not only sets a significant milestone for our company but also aligns well with the success of Propchain. Witnessing such extraordinary growth in the past few years is truly astonishing. I am convinced that combining these two ventures will create a formidable force in the industry by its ‘full supply chain’ and ‘renewing technological’ approach,” believes Ubaghs.

Onwards and upwards

Moving forward, Ubaghs says that the company has successfully established its presence in the European markets with its fractionalised investment platform. “We are gearing up to introduce the home-ownership model to the UAE market. Once we secure alignment with the regulator and the appropriate regulatory sandbox, we also intend to launch our fractionalised investment platform in the UAE. These expansion strategies are the key focus for the next two years and will allow us to enhance our market presence and opportunities further,” he says.

Before the closing note, Ubaghs seizes the opportunity to impart valuable advice to aspiring young entrepreneurs. With wisdom gained from his journey, he encourages them to embrace innovation, persevere through challenges, build strong networks, and remain passionate about their endeavours to achieve lasting success in business.

“The primary advice I offer is to stay focused on your own journey. Identify a market, a business model, and a product that addresses a specific problem that is serious enough. This is crucial for creating a unique and successful business. You must develop an innovative idea to captivate others and convince them to buy into your vision.

“For this reason, it’s essential to have a clear and well-defined vision, which you can effectively pitch to experts who understand your business model better than you do. Once you’ve gathered the right people around your vision, ensure they have all the necessary resources to execute your crystal-clear objectives effectively. Afterward, you let them do their magic without micromanaging them. This valuable lesson results from my experiences and learnings over time,” he concludes.