How blockchain is revolutionizing the Real Estate industry in today’s 21st Century Digital Economy
Given the blockchain’s disruption of financial services, it’s hard to find a segment that has not beeninfluenced by blockchain technology... eg, Insurance, Banking, Health, Retail, Logistics, Government...and Real Estate hasn’t escaped blockchain disruption either. Previously, most high value assets transactions like Real Estate have never been through any digital channels as it was never been the norm. Real estate transactions are often conducted offline involving face-to-face engagements with various entities. In today’s Digital Economy, Blockchain has opened up ways to change this mode of communication. The introduction of Smart Contracts in blockchain platforms now allows assets like real estate to be tokenized and be traded like cryptocurrencies like bitcoin and ether.
Benefits of Real Estate in Blockchain
a. According to an MSCI report, the size of the professionally managed global real estate investment market increased from $7.4 trillion in 2016 to $8.5 trillion in 2017. With rising valuations of properties and continuous development around the world, blockchain technology is primed to bring several benefits to the real estate industry:
- i) Automation and more efficient processes
- ii) Reduced costs
- iii) Network transparency and data accessibility
- iv) Real-time payment settlements
- v) Tokenization
b. Today’s global ecosystem consists of many siloed and independent real estate networks with littleto no interoperability between them or their existing systems. The blockchain presents a practical solution to optimizing current real estate processes and removing third-party intermediaries. Overall, blockchain presents the opportunity to reduce costs while enhancing transparency, minimizing human error, and increasing data accessibility.
c. One of the most exciting ways Blockchain can benefit the real estate industry is through tokenization. Programmable digital assets can represent anything, including shares in real-world assets such as real estate, real estate funds, revenue streams, governance rights, and more.
d. In the real estate market, the advice, knowledge, and know-how of real estate professionals will remain crucial to commercial buyers. However, the processing of securities, liability management, document processing, and accounting will inevitably change.
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written by: Stervey Lim
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