Stefan Hickmott, CEO and founder of the Evareium project and winner of the International Finance’s Most Innovative Real Estate Fund 2017 award tells us about his vision for Evareium and the changing face of real estate investment in the modern, digital age.
Tell us a bit of history about yourself and the rest of the Evareium team
Since 1995, I’ve been working in Europe and the GCC region, based out of Dubai, almost exclusively on real estate, hospitality, and related projects in an advisory and investment management capacity. Previously, I held the role of vice-president at leading private equity firm The Abraaj Group, and prior to that I was instrumental in the formation of what is now Jones Lang LaSalle MENA in 2004. I have a passion for creating value for stakeholders in the real estate space and delivering meaningful models to pioneer new initiatives that help transition current investment and project paradigms into new ones that fit with changing investment and consumer needs.
We have hand-picked the Evareium team to comprise strong professionals from similar backgrounds with particular expertise garnered from working with leading groups in the region.
What’s more, we have been very fortunate to be partnering with world-class blockchain and fundraising advisory firms regionally and internationally which gives us great scope for launching the Evareium project, including Block Gemini Technologies and Blockvisory in Dubai, Rouge Ventures in Hong Kong, as well as asset enhancement and cost-saving specialists Tellus Environmental Specialists from the UK.
What is your new project – Evareium?
Evareium is a digitalized real estate investment initiative founded on blockchain technology. The vision is to create a Limited Partner/General Partner fund in the Cayman Islands which will raise and deploy capital initially into the real estate sector in the GCC region, with a particular focus on Dubai and the wider UAE.
With Dubai being a forerunner in the full government integration of blockchain, Evareium is a new way for people to invest digitally in real estate whilst avoiding certain key disadvantages of being a single, direct, physical owner of property.
What was the genesis of such a project?
Having lived in Dubai since 2001 and seen the exponential growth of the real estate sector in the region, I’ve noticed a heavy concentration of project capital generated from retail investors/owners, and especially the pre-selling of properties, but far less institutional capital. What’s surprising is that almost every developed city globally has a far larger proportion of institutional capital underpinning its real estate economy. Evareium sets out to bridge that gap by migrating the pool of capital investment it raises and deploys into permanent institutional format, which will help to create a pillar of stability in the market and drive value for investors wanting a more passive but valuable exposure to what is by far the most favoured asset class in the region.
What do you mean by the digitalization of real estate investment?
Real estate attracts huge volumes of investment and investors globally every day. But inherently, being a physical asset, owning real estate as a single unit owner can have some major drawbacks – mainly that you must find a tenant, collect rent, maintain the property and of course, sell it at some point. This can drain an investor’s time and resources and have very imperfect results.
Evareium removes all these issues by exchanging a token with investors, carrying the benefits of profits, dividends and gains from Evareium’s investment into real estate projects. By listing the token on exchanges, investors have much needed opportunity for liquidity and exit from their investment as they desire.
Why is that important?
By introducing a tokenized layer representing ownership of assets, it enables instantaneous transfer of interests by leveraging blockchain technology, therefore the physical processes of handling asset exchange, which can be cumbersome, time-consuming and costly, are effectively eradicated.
This is particularly evident in real estate investment, because it is inherently a very illiquid asset class; transacting property assets in a rapid manner is challenging and time-consuming.
Evareium is therefore able to offer the benefits of traditional real estate investment models whilst creating a tokenized exchange layer which eradicates inherent illiquidity. We strongly believe this will fundamentally change the way we will comprehend asset ownership and consume real estate investment over the coming decades.
Will the digitalization phenomenon affect our daily lives?
Digitalization is already affecting our lives and at a rapid pace. Almost every part of our daily lives and consuming habits are being positively affected by digitalization – from buying movies and music to using transportation, ordering groceries to controlling our homes – digitalization is creating a more convenient, instantaneous and time-efficient means to transfer interests and value in products and services.
Now with the advent of blockchain we can exchange value in a trusted and immutable manner without the identities of investors being known necessarily to one another. This maintains the key characteristic of a private equity fund model but introduces the opportunity of instant liquidity.
What are the key features of Evareium?
Evareium follows a classic limited partnership model used by private funds globally, but with the added feature of one of the limited partners being a block of EVM token holders. Blockchain exchange allows the confidentiality of investors’ interests to be maintained in exactly the same way as a private equity fund, but with the added feature of liquidity to be built into the platform. And who doesn’t want the option of liquidity over a 10 year or more investment life of a fund?
How is the project structured?
Evarei is an advisor to Evareium, which is the investment model initiative. Although the investment strategy is Middle East-focused, the Evareium initiative is domiciled in the Cayman Islands since it’s a favoured location globally for such pooled investment initiatives.
We plan to launch an Initial Token Offering (ITO) in the near future and partner with a leading, locally regulated advisor to bring additional features to the model.
How much of Evareium is a technological achievement versus a new real estate investment model?
About half and half really. The marriage of technology into real estate investment is just beginning. Huge transformation is happening in terms of growth industries like IoT (the Internet of Things), smart digital contracts based on blockchain and our ability to harness these technological phenomena to create a vastly different approach to real estate investment procurement and management in a more rapid, transparent and valuable manner.
Why is this model the future?
The overriding benefits centre around ultra-convenience and choice. The ability to tokenize an investor’s entry point and interest in a fund provides for rapid onboarding and instant exchange in essentially a direct, peer-to-peer manner. It also means the issuer does not have to deal with the costs, settlement timeframes and complexities of a public exchange listing, nor the burdens and limitations faced by limited partners in a traditional private equity fund of selling their participation by finding and agreeing to terms with another institutional investor, not to mention getting the General Partner’s approval. All while still applying requisite levels of integrity and governance.
Beyond these features, an entire new paradigm towards transparent capitalism within real estate is achievable through smart contracts and a blockchain-founded architecture; and we have been working on developing a complete symbiotic ecosystem approach to fully realise and unlock this value.