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DAOtionary

 

 

Allotment Letter

A one pager certificate of confirmation issued and verified with our official stamp and all necessary details for the investor.

Allotment Letter

A one pager certificate of confirmation issued and verified with our official stamp and all necessary details for the investor.

Arbitrage

This is the difference between the market price which is usually higher and the declared cost price of each development round by us.

Area Allocation

This refers to the area allocated out of the total building area available in an ongoing development round against our funding requirements.

Area Exchange Matrix

This refers to the formula we use to convert an undemarcated area into a residential or commercial unit.

Asset Classes (Real Estate)

The real estate industry breaks down the asset class into property types so that investors can compare different potential investment properties more efficiently. For example, developmental real estate and mature real estate i.e. properties that are being developed and properties that have been fully developed.

Benchmark Rental Yield

This is the national and international rental yield standard we use for a specific asset class. For reference, the Benchmark Rental Yield for a commercial property is 5% and residential property is 3.5% in Pakistan.

BLOC (DAO BLOC)

BLOC is our digital platform where you access all the information related to projects, gains, updates etc. and where you start your journey to property ownership.

Capital Gains

This is the profit earned by a customer from the sale of the area accumulated in a project.

Capitalization Rate

Capitalization rate is a real estate valuation measure used to compare different real estate investments. Capitalization rate is calculated by dividing a property’s net operating income by the current market value.

Cost-Based Pricing

When the average selling price of a real estate project is equal to the cost of the project including Land, Construction costs and other Overheads. It also includes nominal service charges for developers to carry out necessary developmental tasks.

Cost of Equity

This is the best-achievable rate of return used as a benchmark by the investor to compare against key factors like risk-free bank rate, country risk, industry risk and other more specific risks involved in the investment.

Country Risk

Country risk refers to the uncertainty associated with investing in a particular country, and more specifically the degree to which that uncertainty could lead to losses for investors.

Comparable Method

Comparable method is the most widely used Valuation approach. The property in question is assumed to relate closely to the selling prices of similar properties within the same market area. This approach is heavily dependent on the availability, accuracy, completeness and timeliness of the historic data.

DAO

It is an acronym for Decentralized Autonomous Organization. This is an organization where ownership and decision making process is decentralized amongst its members. Pre-defined set of rules and automated smart contracts assist the execution journey.

Demarcated Area

This refers to an area which is specifically defined and can be pin-pointed within a building, for which title of ownership from relevant land registry authority may be made available.

Developmental Real Estate

This is the process of turning a raw piece of land into a mature real estate, including leasing of the property until it reaches a stabilization stage.

Distributed Ledger of Ownership

A protocol for data storage in such a way that the information is encrypted, replicated, shared, and synchronized across a network that tracks the transfer of ownership since its inception which, in turn, provides the utmost level of transparency and security.

Democratizing Real Estate

To make investments in real estate possible for all people from different backgrounds and financial statuses. With just a few hundred thousand, an individual interested in real estate can now be a part of a multi-million or even a multi-billion project.

Decentralized

In Blockchain, decentralization refers to the transfer of control and decision-making from a centralized entity (individual, organization, or group thereof) to a distributed network. Decentralized networks strive to reduce the level of trust that participants must place in one another, and deter their ability to exert authority or control over one another in ways that degrade the functionality of the network.

Development Rounds

This refers to our innovative way of breaking down the Total Funding Requirements of a project into smaller progress/milestone based achievements.

Early Investor Advantage

The discount earned by investors in the early stages of a developmental real estate project compared to its value at completion, or comparative market rates for a similar investment option.

Equity Multiple

This is the amount of capital growth against initial investment for a specific time duration. For example, if an investor invests PKR 1 Million in a real estate project and sells it 5 years later for PKR 3 Million, the equity multiple would be 3X.

First Right of Refusal

This is the right granted to certain investors to buy a certain percentage of area in every succeeding funding round before it’s offered to the general public.

Funding Requirements

This refers to the funds required for a developmental phase of a project as per the declared milestones.

Holding Period

This is the time between making a real estate purchase and liquidating. A minimum holding period will imply the minimum time you are required to hold your purchase before you can start selling.

Internal Rate of Return (IRR)

This is the rate used to estimate the profitability of a certain investment. It is primarily the discount rate for a project that makes the Net Present Value (NPV) zero.

Industry Risk

The chance that a set of factors particular to an industry group drags down the industry’s overall performance.

Investment Growth Method

In Valuations, this method refers to how the value of a property increases with time. The annual growth rate of real estate appreciation is highly correlated with key macroeconomic indicators such as GDP growth rate, Inflation rate, KIBOR & cost of equity etc.

Income Method

In Valuations, The income approach method is particularly common in commercial real estate and rental properties. The main idea behind the income approach is to calculate the current value of a real estate property based on the net income it generates divided by the capitalization rate.

Know Your Customer (KYC) Policy

This is our policy which is an integral part of the account opening procedure through which we will obtain information about the identity and address of our potential investor; to ensure that the services are not misused.

Net Present Value (NPV)

This refers to the difference between the present value of the investment as compared to the future value of the same investment which is usually measured against the risk-free bank interest rate. Projects are only feasible if they have a positive NPV, otherwise the bank pays better profits.

Nominal Value

This is the value of any investment in terms of money. It may be different from the selling value of the same investment.

Over Pledged

This happens when the area available in a certain funding round of a project is limited, and multiple investors pledge to purchase the remaining area. Priority is given to investors making their payments as quickly as possible.

Pledge

When you start the investment process and submit your request to purchase an area in a project. So that you don’t lose out on the area and the rate at which you intend to invest, you’ll have to make the full payment within a declared amount of time.

PropTech (Property Technology)

This is an emerging concept where Information Technology (IT) is used to solve the problems related to buying, selling and managing the real estate industry.

Receipt

This is issued to the investor as an acknowledgement of the payment received.

Rental Yield

This is the annual rent an investor receives as a percentage of the value of the property.

Risk Mitigation

This is the process of discovering uncertainties and risks associated with a venture and making all possible efforts to decrease the chance of those occurrences.

Risk-free Bank Rate

The risk-free interest rate, also referred to as the risk-free rate of return, is a theoretical interest rate of an investment which carries zero risk.

Replacement Cost Method

In Valuations, this method is used to calculate how much would it cost to replace the property i.e. reconstruct the property like-for like?

Residual Value Method

In Valuations, within the residual value method, the market value of the land is assessed in a redeveloped form. And from this value, we deduct all costs that will be incurred in putting the property into the form commanding that price.

Sales Agreement

This is a legal contract we issue which contains a detailed list of Terms & Conditions and the method to convert the area into assets at completion, obtain rent against it or make a sale.

Supply Deficiency

This is a situation where there are less than required real estate options as compared to their demand.

Stabilization Stage

Property stabilization or stabilized occupancy is a projected range of occupancy for rental property. In other words, this is the expected occupancy that the project will have after being on the open market for a certain time period.

S-Curve (S Curve)

Property stabilization The S-Curve in developmental real estate depicts the different developmental phases a project goes through and shows the flow of costs and the level of risks involved at the different stages.or stabilized occupancy is a projected range of occupancy for rental property. In other words, this is the expected occupancy that the project will have after being on the open market for a certain time period.

Unit Cost

This is the per sq. ft. cost within a building.

Use Case

This is the process of identifying the most appropriate use of a real estate, the target market and making all possible efforts to make the real estate an automatic choice for its user.

Valuations

This is the economic value of the real estate (not the market price) defined through scientific analysis of various methods and tools such as the Comparative Project Analysis (Comparable Method), Investment Growth Method, Income Capitalization Method (Income Method), Replacement Cost Method and Residual Cost Method.

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