Alf Gunnar is one among the very famous personality in Scandinavia in the business of Real estate and talking about Stablecoins like Bustads are backed by co-owned homes in Scandinavia, many of the most stable countries in the world. Whatever happens with fiat or crypto, the assets will remain, ensuring a solid investment over the long run.

Q1: As the sharing economy has grown, the focus has shifted away from the ownership framework that was characteristic of the older economic model and toward access. How is Bustad addressing this shift and making it more about access rather than ownership?

Ans: The short answer is that we use the traditional ownership framework and fractionize it. The results are benefits on both sides, for the seller- as well as for the investor side.

On the seller side, we lower the cost of owning a Property as the bank loan is reduced, and many investors become a passive property “shareholder” of your apartment or house. In practice this has really no practical implications for you. The money you receive is used to lower your debt, and you decide if and when you want to buy back the fraction, that’s it!

On the crypto side, investors gain exposure to the development of the Norwegian property market by bundling these property stakes as collateral in a pool. This form of investment is the most conservative approach compared to real estate firms or securities that work often with high leverages which makes them a rather risky and volatile asset. The Bustad Coin is in practice a flatcoin as it has an inflation hedge through its exposure.

Q2: How does the value of the property is calculated? Are there any limits to how many people can share a single property in fractional ownership?

Ans: The value is calculated using public data and price history from the property and the surrounding properties. These are the same methods Norwegian Banks and realtors use to estimate a value. If we are unsure of the value, we will ask them to provide a valuation from a third-party realtor.

In theory, there is no upper limit on how many owners a property can have. Most properties are owned by couples. Both parties must sign the agreement and deed electronically.

Q3: Tokenizing real estate has so far fallen short of expectations due in part to institutional investors’ hesitance and the lack of established secondary markets.  How do you plan to address these concerns through Bustad?

Ans: Traditional tokenization of real estate is focusing on tokenizing one specific property, this means that most real estate tokens have a low and capped market cap, and the investor needs to spend significant time researching as a single property will have a higher risk profile than a portfolio. A low market cap also means low liquidity and a lack of an established secondary market.

In Bustad we are changing the model. We have one token representing an entire portfolio of co-owned residential properties. This creates a far bigger token pool, less risk, and better liquidity.

With Bustad, everyone can see the current underlying value and audit the portfolio by using the Dune dashboard (https://dune.com/bustad), and even check the ownership in the Norwegian public records. The token will be traded on both decentralized and centralized exchanges, and if Bustad’s liquidity pool surpasses the cap set by the governance token, Bustad will set buy orders in the market to buy back Bustad tokens that then will be burned. This will further increase price stability and liquidity of the token.

Q4: In light of the current real estate downturn, what is your outlook for fractional tokenized ownership during the next few years?

Ans: The current real estate downturn is brought on by an economic recession and increased living costs. Fractional ownership will be more important than ever, primarily for ensuring people can keep their homes but also for smoothing out the downturn as homeowners have a temporary value to release their economic pressure. For investors, there will of course be some volatility but that also means it could be a good time to get into the market. Bustad will price some risk into the offer to the homeowner, and have some downside protection, in return the homeowner does not pay any rent.

Q5: What is the impact of the crypto market on fractional ownership? How does Bustad estimate that house price increases and decreases?

Ans: As Bustad is funding home purchases through the Bustad Coin, volatility and scandals within crypto are causing investors to be more skeptical. We see this as the market flushing out all the bad players (like the dot-com bubble in the early 2000s). We welcome regulation and believe this will be a thriving market in the coming years.

Currently, housing prices are showing some resilience against the downturn. This is because most people in Norway (80 %) own their own house, meaning there is less speculation and fewer forced defaults as long as people can manage their mortgages. We believe the market will have a slight downturn, but in general, we expect housing prices to rise somewhat higher than average inflation, 3-6% a year.

Q6: Bustad currently targets the Scandinavian real estate market; do you plan to expand soon to other countries? If so, which countries come to your mind?

Ans: We see Bustad as a good fit for other regions, but we are starting with Norway and Scandinavia as this is the most stable region. Other regions might have higher volatility but also a higher potential growth rate. In the future, we envision that you will be able to own different types of Bustad coins representing different regions of the world. We are looking at several countries; the US would be really exciting.

Another reason why Scandinavia is a great place to start, is that these are highly digital countries with digital public infrastructure. This is crucial if Bustad is going to be scalable with a low-cost administration.

Q7: Could you tell us a little bit more about Bustad Coin and what it has to offer users?

Ans: The Bustad Coin, also called flatcoin, will develop to its growing collateral value over time. We also call this feature futureproof money!

Investors gain a low threshold, easy-to-pull-out and cheap access to the development of the Norwegian real estate market.

The Bustad Coin offers full transparency over its collateral and its value develops mostly with the development of the home properties once we have implemented the system of physical collateral by end of the year.

As Bustad is not giving out loans but buys a fraction of the property to reduce the homeowner’s debt, the chance of having an over leveraged asset (like the sub-prime crisis in 2008) is very low.

In contrast to real estate firms or securities, we are not leveraged which reduces risks and volatility.

The banks in Norway have strict regulated debt requirements and therefore simply cannot grant loans with the watering pot as seen in the US. A mortgage in Norway also follows the person, not the home. The Norwegian economic structure is more balanced, the country is richer, and the wealth is more distributed.

Q8. Do you have any exciting upcoming developments you would like to share with our readers?

Ans: Definitely! We are working now on getting the juridical and technical prerequisites finished in order to legally purchase property and store it as collateral onchain by year end.

At the same time, we are preparing a few marketing campaigns to boost the minting of the Bustad Coin.

In 2023, we shall focus on scaling up our solution.

And yes, we are also planning on further airdrops and even have a Bustad Coin bootstrap program in our pockets!

Last, not least we are working on two very promising partnerships which will help us to grow the adoption process and also increase our reputation further in the crypto space. We hope to place an announcement in Q4.

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