Real Estate Market Liquidity

While MEDRE aims to provide liquidity for its token through exchange listings, the underlying real estate assets may be less liquid than typical cryptocurrencies. This inherent illiquidity in the real estate market poses a potential risk to the project. It could make it difficult to quickly sell properties if needed to respond to market downturns, or adjust the portfolio in response to changing investment strategies. Several factors can contribute to real estate illiquidity, including:  

• Market Conditions: Economic downturns, changes in interest rates, or oversupply in specific property sectors can reduce demand and make it harder to sell properties quickly at desirable prices.  
• Property-Specific Factors: The location, condition, size, and type of property can all affect its liquidity. Unique or specialized properties may have a smaller pool of potential buyers, making them harder to sell quickly.  
• Transaction Timelines: Real estate transactions typically involve longer timelines compared to cryptocurrency transactions, due to factors such as due diligence, legal processes, and financing arrangements.  

Mitigation

MEDRE will implement the following strategies to mitigate the liquidity risk associated with its real estate assets:

• Strategic Acquisitions: Focus on acquiring properties with high liquidity potential, such as those in prime locations with strong rental demand or properties that can be easily repurposed to cater to different market needs.
• Financial Reserves: Maintain sufficient financial reserves to cover potential short-term liquidity needs and provide a buffer against unforeseen circumstances or market downturns.  
• Partnerships: Establish partnerships with real estate brokers, investment platforms, and other industry players to facilitate the sale of properties if needed and access a wider pool of potential buyers.
• Portfolio Management: Actively manage the project’s portfolio to ensure a healthy mix of liquid and illiquid assets, balancing the need for stable income generation with the ability to respond to market changes or investment opportunities.
• Asset Repurposing: In case of losses and an inability to sell a property, MEDRE will explore repurposing the asset into a different asset class to make it profitable. This could involve converting a hotel into commercial space or residential units, depending on market demand and the property’s characteristics and location.

By implementing these mitigation strategies, MEDRE aims to ensure that it can effectively manage the liquidity risk associated with its real estate assets and maintain financial flexibility to respond to market dynamics and investor needs.