Unlocking access to real estate: Tokenization of Goro's rental assets in Indonesia

Changes in the investment landscape are constantly accompanied by volatility as investors struggle to understand the nature of their investments. Indonesia, with a population of 270 million, is home to a large proportion of Indonesians who are reluctant to take investment risks because of this challenge - as evidenced by a survey by the Indonesian Financial Service, which found that the capital market is the least understood financial sector among Indonesians.

Robert Hoving presents a very different picture. By studying the real estate market on the island of Bali, he was previously able to create a stream of passive income from his investments that made his friends envious. This success sparked a thought: how can we make high-yield real estate investment options more accessible to everyone? Hoving created Goro to answer that question.

Originally from the Netherlands, Hoving met experienced entrepreneur Andrian Gow in Indonesia. Despite their different backgrounds, they shared a common vision to make real estate investing more accessible. Goro is the product of this shared vision, founded through the joint efforts of both founders, with Hoving acting as CEO and Gow as Chief Growth Officer.

All of the properties managed by Goro were purchased with no debt, and Hoving recalls relying on friends and family to get the funds he needed. Knowing his success in real estate investing, many were willing to contribute. To attract users, Goro made a serious effort to raise awareness about the platform. For Hoving, his loyalty manifested itself in a variety of ways, most notably the escalator speeches he produced in cabs.

Having recently achieved concrete results with an initial number of properties, Goro has begun negotiating with Indonesian developers, management companies and real estate agents, closing several deals.

Tokenization, but without blockchain

There are many obstacles to real estate investing, including rising real estate prices, inflation, rising interest rates, and more. These factors have hindered many. "We have effectively redefined the entry point for real estate acquisition by making it possible to invest an amount equivalent to the cost of a coffee and purchase a share of real estate," Hoving said.

Goro's approach is to issue tokens representing ownership of real estate. Each token has a value of Rs. 10,000 ($0.66), and the number of tokens issued for each property is determined by dividing the value of the property by that amount. These tokens can cover various aspects of real estate transactions, including rental yields, appreciation and voting rights, among others. Users can then trade these tokens on the Goro platform to increase their real estate holdings or cash out their assets.

The properties tokenized and listed on the Goro platform are managed by external parties with significant experience in the market, while Goro focuses on property search, user engagement and collaboration. Users can reap the dual benefits of monthly rental income and asset appreciation when real estate exit conditions are met. Token holders can vote on the sale of properties and the proceeds are shared between them.

While the tokenization of real assets on blockchain has generated considerable excitement, the Goro platform does not yet use blockchain technology.

However, Hoving aims to eventually move the Goro platform to blockchain, recognizing the technology's potential to improve transparency and accuracy. This includes creating certain records of tokens created, token sales and exchanges, and the like. According to Hoving, Goro will conduct a study to look into aspects such as gas commissions and coin volatility before the transition takes place.

Ensuring reliability

To ensure the reliability of the offered assets, each property presented on the Goro platform undergoes a thorough selection process that takes into account factors such as location, condition, type of ownership (lease or ownership), and lease term for rental properties. Detailed management reports are then requested, which typically cover a six-month period, providing information on operational and maintenance costs, as well as income generated. "We approach real estate purchases differently, starting with projected income and basing our assessments on that, rather than buying the property and then determining potential income," said Hoving.

Almost 95% of the evaluated objects do not meet the strict Goro standards. According to Hoving, compromises in the quality of objects can undermine user trust and damage confidence in the platform.

One of the greatest sources of satisfaction for Hoving is providing local residents of Bali access to facilities that they previously did not have. The shared ownership model offered by Goro allows them to become partial owners of these properties, fostering a sense of collective ownership and enabling financial rewards. This is also embodied in the name "Goro," which means "gotong royong," referring to the collaborative execution of tasks in Bahasa Indonesia. This name reflects Goro's ethic of uniting the community to achieve a common, greater goal, a principle that guides the company's operations and mission.

Prospects for development

In the future, Goro will continue to focus on the Indonesian market, which has significant growth potential, primarily due to the expansion of the country's middle class. The company is actively exploring the possibility of tokenizing other types of real estate, including hotels, shopping centers, data centers, logistics facilities, and warehouses. Additionally, Goro aims to address the housing ownership challenges faced by young Indonesians, over 81 million of whom do not own their homes. The company is currently assessing whether rent-to-own could be a practical solution. While fractional real estate investing has a long history, its integration with technology is relatively recent. By establishing a foothold in the Indonesian market, Goro could play a crucial role in democratizing access to real estate investments.